pom 2 20 09 2008
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The Nature and Purpose The Nature and Purpose of of
PlanningPlanning
Plans are nothing Plans are nothing planning is every thingplanning is every thing
Planning
Planning is the design of a desired future and of effective ways of bringing it about.
____________________
Planning is looking ahead in order to visualize and decide a future course of action to allow to achieve a desired goal.
Planning
The process of setting goals, The process of setting goals, developing strategies, outline tasks developing strategies, outline tasks and schedules to accomplish goals and schedules to accomplish goals
Importance of Planning Importance of Planning
Planning is an essential stepping stone to success.
If you fail to plan, you plan to fail.
Purposes of Planning
• In business (and in life ) things are so complex that without proper planning they can not be handled.
• It is a pre- requisite not only to achieve success but even to survive in a complex and competitive world.
• It helps in determining opportunities • It helps in identification of courses of
action.• It helps in proper utilization of resources
effectively.• It helps in working in an organized
manner.
Nature of Planning
1. Planning is the most important function of management.
2. Planning has central role in linking all other managerial functions.
3. Planning is pervasive and oversees all
other managerial functions.
Functions of Managers
•Planning
•Staffing
•Organizing
•Leading
•Controlling
Managerial Skills•Human
•Conceptual
•Design
•Technical
All functions and skills are linked to planning
function.
Benefits of Planning
• Planning leads to success.
• It acts as a bridge between where
we are and where we want to be.
• It helps in saving resources, money
and time.
• Jobs are well coordinated thus
duplication of effort is avoided and
skills and potentials are fully
utilized.
Myths about Planning
• Planning that proves inaccurate is a
waste of management time.
• Planning can eliminate change.
• Planning reduces flexibility.
Plan
Is a pre-determined course of action.
•It brings orderliness.
•Avoids confusion.
•Gives better use of resources.
•Cuts waste.
Plans are changed or modified but
not abandoned.
PlansPlans
Plans outline how goals are going to Plans outline how goals are going to be met including resources allocation, be met including resources allocation, schedules and other necessary schedules and other necessary actions to accomplish the goals actions to accomplish the goals
Effectiveness:
is the achievement of objective.
Efficiency: Is the achievement of objective with least amount of resources.
Effectiveness of Plans
Effectiveness of plan
pertains to the degree to
which it achieves its
objectives.
Efficiency of Plans
Efficiency of plan refers to its
attainment of objective at a
reasonable cost.
Types of Plans • Single use or one time
plans
• Standing Plans
• Specific Plans
• Subject Plans
• Directional Plans
• Short Term Plans
• Long Term Plans
• Operational Plans
• Strategic Plans
Single Use or One Time Plan
It is specifically designed to meet the
needs of a unique situation and is
created in response to non-
programmed decisions that managers
make.
Standing Plans
Ongoing plans that provide guidance for
activities repeatedly performed and are
created in response to programmed
decisions that managers make.
Non-Programmed Decision
Unique decisions that require a
custom-made solution.
Programmed Decision
A repetitive decision that can be handled
by a routine approach.
Specific Plans
These plans are clearly defined and
explicit and leave no room for
interpretation.
Subject Plans
These plans are limited to one
particular aspect of an organization’s
activates.
eg.
Marketing
Production
Recruitment
Financial
Manpower etc
Directional Plans
These are flexible plans that set out
general guide lines and permit
considerable discretion to users.
Short Term Plans
Plans that are formulated to cover a
period of less than one year.
Long–Term Plans
Plans that are formulated to extend
upto beyond five years.
Operational Plans
Plans that specify details on how
overall objectives are to be achieved.
Strategic plans
These plans are organization–wide,
establish overall objectives and
position an organization in term of its
environments.
Cornerstone of Planning
Objectives
Goals
• Multiplicity of objectives
• Stated objectives • Real objectives
• Traditional objective setting
Objective
It is a desired outcome for groups or an entire organization.
Goal
It is a desired out come for an individual.
Stated Objectives
Official statements of what an organization says and what it wants public to believe.
Real Objectives
Objectives that an organization actually pursues, as defined by the action of its Management.
Traditional Objective Setting
Objectives are set at the top and then broken down into sub-objectives for each level in an organization. The top imposes its standards on every one below.
Principle of Planning
The more thoroughly individuals charged with planning understand and agree to utilize consistent planning premises the more coordinated and realistic planning will be.
Premises Premises
Assumptions about the environment on Assumptions about the environment on which plans are based.which plans are based.
Premising is the assessment of the Premising is the assessment of the future. future.
Components of Plans
Mission
Objectives
Premises
Policies
Procedures
Rules
Budgets
Mission
The purpose of an organization is called its mission.
Policies
Guidelines that establish parameters for making decisions.
Premises
This is the anticipated environment in which plans are expected to operate and include forecasts of the future and conditions that are likely to affect the operation in future.
Procedures
A series of interrelated sequential steps
that can be used to respond to a
structured problem.
Rules
Explicit statements that tells
managers what they ought or ought
not to do.
Structured problem
It is a straightforward, familiar and
easily defined problem.
Non Structured problem
A new problem for which information
is ambiguous or incomplete.
Budget
A budget is a numerical plan for
allocating resources to specific
activities.
A budget is a statement of expected
results expressed in numerical terms.
Types of Budget
Revenue: A budget that projects future sales
Expense: A budget that lists the primary activities by a unit and allocates amount to each
Profit: A budget to determine a unit’s contribution to overall profit of an organization
Cash:A budget that forecasts how much an organization will have and how much it will need to meet expenses
Capital Expenditure:A budget that forecasts investments in property, buildings and major equipment.
Fixed:A budget that assumes a fixed level of sales or production.
Variable:A budget that takes into account those cost that vary with volume of production.
Approaches to Budgeting
Incremental (or traditional)A budget that allocates funds to various activities according to allocations in the pervious period (and adjusted to cater for inflation etc)
Zero-baseA system in which budget requests start form scratch regardless of pervious budgetary allocations.
Steps in Planning
Pre-requisite : Awareness of opportunities
1st: Establishing Objectives2nd:Developing Premises3rd: Determining Alternative Courses4th: Evaluating5th: Selecting Best Course
Post-requisiteDerivative or Supportive Plans
Awareness of Opportunities• Not strictly a step in planning process. But
it is a real starting point.
• Managers must look at possible opportunities
in the light of their organization's strengths
and weaknesses
• Must also look at future environment both
external and internal.
• Setting realistic objectives depends on this
awareness.
1st Step: Establishing Objectives
• Selecting objectives for the entire organization.
• Based on organizational objectives, establishing objectives for
each subordinate work unit.
Organizational objectives give direction to the major plans,
which define objectives for every major department.
Major departmental objectives control objectives of subordinate
departments.
2nd Step: Developing Premises
Developing premises is critical to planning. These include:
. Forecasts
. Basic Policies
. Existing Plans
. Anticipated Environment
3rd Step: Determining Alternative Courses
• There is seldom a plan for which
reasonable alternatives do not exist.
• Common problem is not finding
alternatives but reducing their numbers.
• Most fruitful possibilities must be
looked at.
4th Step: Evaluating Alternative Courses
• Evaluate courses by examining their strong
and weak points.
• Weigh them in the light of premises and
objectives.
• Complex courses can be evaluated with the
help of operational research, mathematical
and computing techniques.
Evaluating AlternativeCourses
1. Establishing criteria
2. SFA test
5th Step: Selecting the Best Course
Selecting the best course is the real point of
decision making.
. By establishing criteria, eg
Achieving objectives at least cost
Requiring least changes
Ensuring maximum return on
investment
. SFA Test
Derivative or Supporting Plans Derivative or Supporting Plans
• Post – requisite stepPost – requisite step
• Required primarily to support basic Required primarily to support basic plans plans
• Follow their own steps of planning Follow their own steps of planning
Contingency plansContingency plans
• When something (Planned) wrong When something (Planned) wrong
• External environment undergoes External environment undergoes unexpected change unexpected change
• Criticality of time for execution Criticality of time for execution
• Follow their own steps of planning Follow their own steps of planning
Coordination of Various Plans Coordination of Various Plans
• Several Plans under implementation Several Plans under implementation simultaneously simultaneously
• Coordination amongst them critical Coordination amongst them critical
• Conserver resources, avoid Conserver resources, avoid duplication cuts waste duplication cuts waste