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22UNIT PLANNING

Source: Principles of Management

By TRIPATHI & REDDY

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OBJECTIVE OF STUDY

Nature and Purpose of Planning. Importance of Planning. Forms of Planning. Types of Plans. Steps in Planning.Limitation of Planning.

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Nature and Purpose of Planning Beginning of the process of management.

Planning is an intellectual process. Decision Making is an integral part of planning. Manager has to decide on Goals, assumption,

resource Planning is a continuous process. (principle of navigational change) Plan must be flexible. Flexibility in FIVE major areas Technology, Market ,Finance, Personnel and

organization Planning is an all-pervasive function.

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Importance of Planning

Minimizes Risk and Uncertainty

Leads to success

Focuses attention on the organization’s goals

Facilitates Control

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Forms of PlanningStrategic Planning 1. Decides major goals

and policies of allocation of resources to achieve the goals.

2.Done at the HIGHER level of management

3. It is LONG-TERM 4.Generally based ON

LONG-TERM FORECAST about technology, political environment and is more certain.

Tactical Planning 1. Decides the detailed

use of resources for achieving each goals.

2.Done at the LOWER level of management

3. It is SHORT-TERM 4.Generally based

PAST PERFORMANCE of the organization and is less uncertain.

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Forms of Planning

Strategic Planning

5. It is less detailed because it is not involved with the day-to-day operations of the organisation..

Tactical Planning

5. It is more detailed because it is involved with the day-to-day operations of the organisation..

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Types Of Plan

Objectives

Strategies

Single-Use Plan(Programmes and Budgets)

Standing Plan(Policies ,Procedures,Methods and Rules)

For Non-repetitive Activities

For Repetitive Activities

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Objectives

Objectives are the goals which the management wishes the organization to achieve. (Specific Targets)

Objective should be distinguished from other words “Vision”, ”Purpose” and “Mission”

Vision: is the dream that an entrepreneur creates in his /her waking hours of his/her preferred future.

Purpose: The primary role defined by the society in which it operates. (Broad Aim)

Mission: It is the unique aim that sets the organisation apart from others of its types. (specialization)

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Characteristics of Objectives

Objectives are multiple in number.( Market standing,innovation,prductivity,profitability, manager

performance and development,workers performance and attitude, Public responsibility)

Objectives are either tangible or intangible. Objectives have a priority.E. g.: Finance department, University Objectives are generally arranged in

hierarchy(Corporate Objectives, divisional objectives,

section objective, individual objectives) Objectives sometimes clashes with each other

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Requirement of sound objectives

Objectives must be both clear and acceptable Objectives must support one another (There must be close-Knit between long-

range and short term objectives) Objectives must be precise and measurable Objectives should always remain valid

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Advantage of objectives Provide basis for planning Acts as a motivators for individuals and

department. Eliminates haphazard actions Facilitates the coordinated behavior of various

groups. It functions as a basis for managerial control Facilitate the better management of the

enterprise Lessen the misunderstanding and conflicts and

facilitate the communication Provide legitimacy of organization's activities

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Strategies Two important activities involved in strategy

formulation are…. Environmental appraisal 1. Political and legal factors2. Economic factors (level of eco development & distribution of income, trend

in prices ,exchange rate ,BOP, supply of labour, material, capital)

1. Competitive factors2. Social and cultural factors Corporate Appraisal ( leadership, excellent product design, efficient

distribution and customer service, logistics, effective sales promotion, ability to influence legislation)

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Single-Use Plan(Non-Repetitive Activities)

Single-use plans are developed to achieve a specific ends; when that end is reached ,then the plan is dissolved.

Programmes: are the precise plan or definite steps in proper sequence which needs to be taken to discharge a given task.

E.g. Introducing new product in market, deputing employees for training

(Ingredients of Programme: time phasing and Budgeting)

Budgets: It is the plan for the future period of time containing the statements of expected results in numerical terms.

E.g. Sales Budget, Production budget, Cash Budget, Revenue and expenses budget

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Standing Plan

There are Four Types of Standing Plan (A) Policies (B) Procedures (C) Methods (D) Rules

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(A) Policy “Policy is a verbal, written, implied overall guide,

setting up boundaries that supply the general limits and direction in which the managerial actions will takes place “ . -George R Terry

Advantages of Policy 1. Ensure the Uniformity of actions in respects of

various matters at various organizational points. 2. Speed up the decisions at the lower levels 3.It is easier to delegate the authority to the

subordinates 4. Policies give a practical shape to the

objectives by elaborating and directing the way in which the predetermined objectives are to be attained

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Types of PolicyOn the basis of sources 1. Originated Policies 2. Appealed Policies 3. Implied Policies 4.Externally imposed Policies On the basis of functions On the basis of organizational level(Major Company policies, Minor derivative

policy applicable to segments)

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Guideline for effective policy-making Should be in writing and understood by all. Reflects the objectives of organization, define

method and action. Top managers and Subordinates should

participate in its formulation Must strike a balance between stability and

flexibility. Policies should not pull in different directions Should not be detrimental to the interest of

society Should cover as many contingencies as

possible Policies should be periodically reviewed

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Procedures

Policies Guide to both thinking

and actions of people at higher level

Helps in fulfilling the objectives

are broad and allow some discretion

Often established without any detailed study

Procedure Guide to action only for

people at lower level Shows the way to

implement the policies Are specific and lay down

the sequence of definite act

Often established after thorough study and analysis of work

A Procedure Provides a detailed set of instructions for performing a sequence of actions involved in doing a certain piece of work

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Advantages & Limitation of ProcedureAdvantages Standard way of performing a task Work simplification and elimination of

unnecessary steps Facilitates control over performance Enable the employee to improve their

efficiencyLimitation Limits the scope for innovation

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Methods and Rules

Methods: Prescribed way in which one step of a procedure it

to be performed. It helps in increasing the effectiveness and

usefulness of procedure.

Rules: Detailed or recorded that a specific actions

must /must not be performed in a given situations.

e.g. Sanctioning overtime, travelling allowance ,Uniform way of handling employee

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Steps in Planning

1. Establishing verifiable goals or set the goals to be achieved.

2. Establishing Planning premises.3. Deciding the planning period.4. Finding alternative courses of action.5. Evaluating and selecting a course of

action.6. Developing derivative plans.7. Measuring and controlling the

progress.

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STEP 1. Set the goals to be achieved Desired sales volume or sales growth Development of a NEW product More abstract goals like becoming more

popular in the community.Setting the goals will depend on a number of

factor…1.Mission2. Value 3. Actual and potential abilities of the

organisation

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STEP 2. Establishing Planning PremisesPlanning Premises: assumptions about

the future

(A) Internal and External Premises.

(B) Tangible and Intangible Premises.

(C) Controllable and Non-controllable Premises.

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Steps 3: Deciding the planning periodFactor influencing the choice of the period…

(A) Lead time in development and commercialization of a new product

(B) Time Required to recover the capital investments or the pay back period.

(C) Length of the commitment already made.

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Steps 4: Finding the alternative courses of action

E.g. Technological Know-How, Product distribution

Steps 5: Evaluating and selecting the best course of action

Steps 6: Developing the derivatives Plan Derivative Plan: Broad goals must be translated

into day-to-day operations of the organization. Steps 7: Measuring and controlling the

progress

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Limitation of Planning

1. Planning is an expensive and time-consuming process.

2. Planning sometimes restricts the organization to the rational and risk-free opportunities.

3. The scope of planning is limited in organization with rapidly changing situations.

4. Flexibility of planning can not be maintained.

5. Difficulty of formulating accurate premises. 6. Planning may sometimes face peoples

resistance to it.

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