TRƯỜNG ĐẠI HỌC BÁCH KHOA HÀ NỘI

HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY

CHAPTER 2: PLANNING FUNCTION

DR. NGUYEN THANH HUONG
PROCESS OF MANAGEMENT
HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY

OBJECTIVES
1.Present the concept of planning and explain the significance of
the planning function in organizations.
2.Differentiate between the types of plans used in organizations.
3.Explain and apply the characteristics of effective objectives for
goal setting.
4.Describe planning methods and processes.
5.Present the foundations and principles of planning.
HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY

CONTENT
2.1. Planning concept

2.2. Role of planning function

2.3. Classification of plans

2.4. Principles of planning

2.5. Planning hierachy

2.6. Planning process

2.6.1. Planning foundation

2.6.2. Planning methods

2.6.3. Planning procedures

 2.1. WHAT IS PLANNING?

Planning involves defining

objectives, developing strategies,
and outlining methods to achieve
those objectives
 2.1. WHAT IS PLANNING?

• Vinamilk's goal in 2025: increase

revenue by 10% compared to the
previous year

• Strategy: Research and

Development (R&D), Mergers and
Acquisitions (M&A), farm
development

•Action plan: R&D for pre-mixed

formula milk, acquisition of GTN,
farm development in various
provinces
 2.1. WHAT IS PLANNING?

WHAT DOES THE ORGANIZATION NEED TO DO?

HOW SHOULD IT BE DONE?

HOW ARE RESOURCES ALLOCATED FOR IMPLEMENTATION?"

 2.1. WHAT IS PLANNING?

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5W2H

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2.1. WHAT IS PLANNING?
2.2. THE ROLE OF PLANNING FUNCTION

•For the organization

• Develop with direction
• Optimize resource utilization
• Adapt to environmental
changes
• Establish standards to apply
during inspection
 THE COST OF PLANNING

Time Management

The planning process demands a significant amount of time

and effort (if done thoroughly).

Delays in decision-making
 2.3. PRINCIPLES OF PLANNING

•Proactive Planning

• Involvement of managers at all levels in

the planning process
• Creating an environment for planning and
implementation within the organization
•Coordinating and prioritizing different plans

•Ensuring flexibility
 2.4. CLASSIFICATION OF PLANS

Definition of plans

Types of plans
 2.4. CLASSIFICATION OF PLANS

Definition of a plan
- The result of planning process

- A temporal set of intended future course

of actions through which one expects to
achieve specific goals or objectives.

- Involves 3 main elements: Objectives,

action schedules and budget.
2.4. CLASSIFICATION OF PLANS
 2.4. CLASSIFICATION OF PLANS

STRATEGIC PLANS TACTICAL PLANS

• Establish the general goals of • Related to the implementation

the company and its position of specific strategies in
within the environment. specific situations and within
a short timeframe.
• Formulate long-term strategic
plans that serve as the • It involves devising tactics or
foundation for organizational specific steps to execute
development. strategic plans.
• This involves defining
objectives, business philosophy, • The main content includes
and setting priorities for policy- defining short-term activity
making. programs and utilizing
allocated resources to
accomplish tasks.
 2.5. PLANNING HIERACHY
PLANNING HIERARCHY
Goals
Strategic plans
Objectives

Strategies

Policies
Tactical plans

Procedures and Rules

Programs

Budgets
 2.5. PLANNING HIERACHY

PLANNING AND LEVELS OF MANAGEMENT

Top-level
STRATEGIC PLANS management

Middle-level
management

First-line
TACTICAL PLANS management
 2.5. PLANNING HIERACHY

2.5.1. Goals

 A goal is a desired future state that an

organization attempts to achieve. It represents
the long-term motivation of organization in the
legal framework and normal market practice.

 To achieve the goal, it is supposed to set

specific objectives and assignments
 2.5. PLANNING HIERACHY

2.5.2. Objectives

 Objectives imply concrete attainments that can

be achieved by following a certain number of
steps.

 Each division in an organization has specific

objectives harmonious combination of
general objectives and specific ones.

 Objecitves vary from period to period, from

simple to complex in relation to organizational
life cycle
 2.5. PLANNING HIERACHY

Classification
• Timeframe: short-term, long-
term
• Management level of
issuance: Strategic and
operational
 2.5.2. OBJECTIVES

Ensure the alignment of objectives

Company Increase profit by 8% compared to 2024

Fabric Manufacturing Increase production capacity of the manufacturing

Plant line by an additional 3000 tons. Increase revenue by
1.5 billion VND

Technical department Increase equipment operational time to 85% and

maintain machinery maintenance costs.

Maintenance team Ensure machine maintenance time is 175 hours per

year
 2.5.2. OBJECTIVES

SMART CRITERIA
 2.5. Sơ đồ tháp kế hoạch

MỤC TIÊU
 2.5. PLANNING HIERACHY

2.5.3. Strategies

• Definition of strategies
• Types of strategies
• Steps in building a strategy
 2.5. PLANNING HIERACHY

Definition of strategies
An organizational strategy is the sum of the
actions that a company intends to take to
achieve specific objectives. It consist of following
contents:
Elementary objectives in the organization
General guidelines for the organization in
long- term
Resources and potentials used to achieve
objecitives
Operating policies in attracting and using
required resources as well as potentials to
reach objectives
Control and evaluate
 2.5. PLANNING HIERACHY
Types of strategies

Strategies provide overall directions to enterprises. There are

some types of strategy for specific fields as follows:
Product strategies
Marketing strategies
Technological strategies
Financial strategies
Organizing strategies
Human resource strategies (HR)
 Relationship strategies
 2.5. PLANNING HIERACHY
Steps in building a strategy
There are 4 key steps in building an organizational strategy:

1. Evaluate the situation of organization (Where’s the

organization?)

2. Determine strategic objectives (Where does organization

want to go?)

3. Determine the required tasks to implement (What should

organization do?)

4. Carry out strategic objectives, strategic tasks (How to

implement efficiently?)
 STEPS IN THE STRATEGIC
MANAGEMENT PROCESS

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Copyright ©2017 Pearson Education, Inc.
EXTERNAL AND
INTERNAL ANALYSES
External Analysis Internal Analysis
 Competition  Resources
 Components of  Capabilities
environment  Core competencies
 Threats and  Organizational
opportunities strengths and
weaknesses

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Copyright ©2017 Pearson Education, Inc.
1. Evaluate the situation of organization (Where’s the
organization?) SWOT analysis

Strengths Weaknesses

Opportunities S-0 strategies W-O strategies

Threats S-T strategies W-T strategies

2. Determine strategic objectives

-Where does organization want to go?

- Answer: desired position, desired rate of business growth, etc.

3. Determine the required tasks to implement

- What should organization do?

- Determining specific job ‘s duties for each divisions

4. Carry out strategic objectives, strategic tasks

- (How to implement efficiently?)

- Organizing corporate system in accordance with

implementing strategic objectives

- Implementing, controlling, evaluating and adjusting ( if

necessary)
 2.5. PLANNING HIERACHY

2.5.4. Polices

 A policy is a standing plan that

furnishes broad guidelines for taking
action consistent with reaching
strategic objectives.

 A policy provides guidance to

managers who must make decisions
about circumstances that occur
frequently within the organization.
 2.5. PLANNING HIERACHY

2.5.5. Rules
A rule is a standing plan that designates
specific required action. It indicates what an
organization member should or should not do
and allows no room for interpretation.

Rules are not intended to serve as guidelines

for making organizational decisions; instead,
they provide detailed and specific regulations
for action.
 2.5. PLANNING HIERACHY

2.5.6. Procedures
A procedure is a standing plan that outlines a
series of related actions that must be taken to
accomplish a particular task.
Procedures outline more specific actions than
policies do.
Managers must be careful to apply the
appropriate organizational procedures for the
situations properly and pay attention to time
sequence in procedures.
 2.5. PLANNING HIERACHY

2.5.7. Programs
A program is a single use plan that govern a
relatively compre­hensive set of activities that are
designed to accomplish a particular set of goals.
 Such plans outline the major steps and specific
actions necessary to implement the activities
prescribed by the program.
The timing and sequencing of the efforts of
individuals and units are also articulated in the
plan.
 2.5. PLANNING HIERACHY

2.5.8. Budgets
A budget is a statement of allocation
of (scarce) resources to achieve an
organization's objectives for a specific
time period.
It is the financial plan for how an
organization will receive and spend
money for a set time period
 It details how funds will be spent on
labour, raw materials, capital goods,
information systems, marketing and
so on, as well as how the funds will be
obtained.
 2.6. PLANNING PROCESS

• Planning foundation
• Internal factors
• External factors
• Planning methods
• Traddtional
• MBO
• Factors afecting quality of a plan
•Planning procedure
 PLANNING FOUNDATION

INTERNAL EXTERNAL

Human resource Competitors

Financial capabilities Customers

Machinery & equipment Suppliers

Technology Distributors

Relevant agencies

Characteristics & Focasted

Industrial Development Trends
 PLANNING METHODS

 Traditional way:
o General objectives are established by top-managers. Then,
they are assigned to lower –levels in an organization
 Managament By Objectives (MBO):
o MBO is applied to motivate employees instead of used as a tool
for supervision.
o MBO is a system in which specific performance objectives are
jointly determined by subordinates and their supervisors.
o Progress toward objectives is periodically reviewed and
rewarded are allocated on the basis of that progress
 TRADITIONAL GOAL SETTING

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Copyright ©2017 Pearson Education, Inc.
MANAGEMENT BY OBJECTIVES
• Goal specificity
• Participative decision making
• Explicit time period
• Performance feedback
 PLANNING METHODS

 Traditional way:
o General objectives are established by top-managers. Then,
they are assigned to lower –levels in an organization
 Managament By Objectives (MBO):
o MBO is applied to motivate employees instead of used as a tool
for supervision.
o MBO is a system in which specific performance objectives are
jointly determined by subordinates and their supervisors.
o Progress toward objectives is periodically reviewed and
rewarded are allocated on the basis of that progress
 PLANNING METHODS

FACTORS AFFECTING QUALITY OF A PLAN

1) Investment for planning
2) Planners’ capacity
3) Necessary information
4) Planning method /process
5) Evaluation for feasibility of a plan

48
 PLANNING PROCEDURE

Being aware of Considering planning Evaluating alternative

opportunities premises courses

Establishing objectives Selecting the best course

Formulating supporting
plans

Determining alternative
courses Quantifying plans by
making budgets
 PLANNING PROCEDURE

1. Being aware of opportunities

Searching for, analyzing, and screening the
most promising business opportunities:

• One must be aware of what opportunities the

company is facing in terms of production and
business in general.

• At any given time, a company may be

presented with various opportunities.

• Due to limited resources, it can only pursue

turning a few opportunities into reality.
 PLANNING PROCEDURE

2. Considering planning premises

• The step is to estimate market demand, organizational environment;
evaluate the current ability, production capacity, capital, materials
reserve…

• Analyze and evaluate strengths and weaknesses covering the

whole organizations. For example :
+Finance (Profit; ROE; ROA; Solvency…)
+Production and technology ( labour productivity; technology;
product quality; R&D ability…)
+ Human resources (labour quality, labour structure, managerial
ability…)
 PLANNING PROCEDURE

Step 3. Establishing objectives

Answering the question of what a business aims to achieve after
implementing a business opportunity:
• Planning objectives indicate the endpoint of the planning process,
where the company will reach.
• Depending on the stage of development, there are corresponding
characteristic indicators.
•Note: there should be alignment between the overall goals and specific
objectives, between long-term goals and short-term goals.
 PLANNING PROCEDURE

Step 4. Determining alternative courses

• Searching for and examine alternative courses of action which is

based on detemined objectives and premises.
• A business can follow various different paths, each of which entails
different costs and yields different revenues for the company, so
there are multiple options to choose from.
 PLANNING PROCEDURE

Step 5. Evaluating alternative courses

Conduct qualitative & quantitative analysis to identify feasible
options:
• After proposing different options, we need to establish
evaluation criteria based on the objectives and prerequisite
conditions.
• Assess both qualitative and quantitative factors.
 PLANNING PROCEDURE

Step 6. Selecting the best course

• The step is to make a decision based on evaluated

results.
• The optimal course of action is selected in accordance
with detemined standards in each circumstance
 PLANNING PROCEDURE

Step 7. Formulating supporting plans

A major plan often requires supporting plans to achieve objectives
efficiently

Step 8. Create a budget

Determine the financial resources required to execute the plan.
HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY