Planning bridges the gap from where we are to where
we want to go. It makes it possible for things to occur
which would not otherwise happen"
- Koontz and O'Donnell.
Planning is deciding in advance what to do, how
to do it, when to do it & who is to do it . It bridges
the gap from where we are to where we want to
GOALS ARE IMPORTANT FOR
GOALS PROVIDE A SENSE OF DIRECTION: By
setting goals, people and their organizations
bolster their motivation and gain a source of
inspiration that helps them overcome the
inevitable obstacles they encounter.
GOALS FOCUS OUR EFFORTS: In selecting a
single goal we establish priorities and make a
commitment about the way we will use our scarce
GOALS GUIDE OUR PLANS AND
DECISIONS: It shapes both our short term
and long term plans and help you make key
GOALS HELP US EVALUATE OUR
PROGRESS: Goals are an essential part of
controlling- the process of making sure that
actions are in keeping with goals and the
plans created to achieve them.
Nature of planning
Goal Oriented : It is closely associated with the
objectives of the organization. It lays down the action
that will lead toward the ultimate objectives.
Forward looking : Planning is always concerned with
looking into the future.
Primary function : The beginning phase of the
management process is planning. It is based upon the
Effectiveness of planning : The effectiveness of
planning is measured by its contribution in reaching
organizational objectives versus its corresponding
Unity & consistency : It leads to achievement of
overall objectives with consistency in behavior &
Pervasive : It is inherited at every level of an
organization. The higher one goes in the
management structure, the more time will spent on
Selection of alternatives : It is concerned with
selecting the best course of action among the
Objectives of Planning
Reduces uncertainty- future is uncertain so we have
to Convert uncertainty in to certainty.
Brings co-operation & co-ordination- in various
sections of the organization there are Rivalries &
conflicts among departments these could be
avoided through planning.
Economy in operation-By selecting best
alternatives among various alternatives and best
utilization of resources objectives of the
organization are achieved easily.
Anticipates unpredictable contingencies- some
events are unpredicted and this could affect smooth
functioning of an enterprise planning is a provision
to tackle this problem.
Achieving the predetermined goals- This is the main
objective of an organization
Reducing competition- stiff competition should be
By Avoiding business failures
By conducting an environmental analysis
By Creating an organizational mission
By Creating an organizational vision
Steps in Planning
A planning is one of most importance to an
organisation. Most organizations follow the same set
of fundamentals when dealing with management.
Planning is basically preparing, scheduling, arranging,
or setting up to achieve organization goals.
Process of planning should be carried out in a
Steps in Planning
Review of current
Collection and forecasting
Select the alternative
Course of action
W Planning is Important
Good Planning provides:
Reduces business-related risks
Facilitates proper coordination
Aids in organising
Gives right direction
Keeps good control
Helps to achieve objectives
Motivates the personnel
Encourages creativity and innovation
Helps in decision making
W Planning Fails
Lack of reliable data :
Planning loses its values if reliable information is not available or if
the planner fails to utilize the reliable information
Rigidity in organizational working : Inflexibility in the
organization may lead to rigid plans. Managers should not
required to follow the procedures rigidly.
Lack of understanding : There are different levels in an
organization and steps involved in planning process. It may create
confusion among subordinates or they may not skilled in
understanding all steps of the planning requirements.
Resistance to change : Employees do not like change and
sometimes they do not think that it desirable to bring
change. The reasons may be loss of status, fear of failure,
insecurity, lack of understanding etc.
Time consuming : Planning involves analyzing information
and evaluation of various alternatives and also involves cost
of gathering it. Result may not achieved if desired time not
spent on plans.
Advantages of Planning
Planning facilitates management by objectives –
It highlights the purposes for which various activities are to
Planning helps in focusing the attention of employees on the
objectives or goals of enterprise.
Planning minimizes uncertainties –
Planning helps in reducing uncertainties of future as it
involves anticipation of future events.
Planning facilitates co-ordination –
Planning revolves around organizational goals.
All activities are directed towards common goals.
Planning improves employee’s moral Planning creates an atmosphere of order and discipline in
Employees know in advance what is expected of them and
therefore conformity can be achieved easily.
Planning helps in achieving economies –
Effective planning secures economy since it leads to orderly
allocation of resources to various operations.
It also facilitates optimum utilization of resources which
brings economy in operations.
Planning facilitates controlling –
Planning facilitates existence of certain planned goals and
standard of performance.
It provides basis of controlling.
Planning encourages innovations –
In the process of planning, managers have the opportunities
of suggesting ways and means of improving performance.
It creates a forward looking attitude amongs the managers.
Planning starts with the setting of goals and
objectives to be achieved
Planning requires a systematic approach.
Planning premises may be internal or external.
Internal includes capital investment policy,
management labour relations, philosophy of
management, etc. Whereas external includes socioeconomic, political and economical changes.
Steps involved in Planning
1. Goal setting:
Plans are the means to achieve certain ends or objectives.
Setting objectives is the most crucial part of planning. The
organizational objectives should be set in key areas of
operations. Establishment of goals is influenced by the values
and beliefs of executives, mission of the organization,
organizational resources, etc. The objectives must be clear,
specific and informative.
2. Developing the planning premises:
Before plans are prepared, the assumptions and conditions
underlying them must be clearly defined these assumptions
are called planning premises and they can be identified
through accurate forecasting of likely future events.
Assessment of environment helps to reveal opportunities and
constraints. Analysis of internal (controllable and external
(uncontrollable) forces is essential for sound planning
premises are the critical factors which lay down the bounder
3. Reviewing Limitations:
In practice, several constraints or limitations affect the ability
of an organization to achieve its objectives. These limitations
restrict the smooth operation of plans and they must be
anticipated and provided for. The strong and weak points of
the enterprise should be correctly assessed.
4. Deciding the planning period:
Once the broad goals, planning premises and limitations are
laid down, the next step is to decide the period of planning.
The planning period should be long enough to permit the
fulfillment of the commitments involved in a decision.
5. Formulation of policies and strategies:
After the goals are defined and planning premises are
identified, management can formulate policies and strategies
for the accomplishment of desired results.
Alternative plans of action should be developed and
evaluated carefully so as to select the most appropriate policy
for the organization.
6. Preparing operating plans:
After the formulation of overall operating plans, the
derivative or supporting plans are prepared. Several medium
range and short-range plans are required to implement
policies and strategies.
These plans consist of procedures, programmers, sche
dules, budgets and rules. Such plans are required for the
implementation of basic plans.
7.Integration of plans:
Different plans must be properly balanced so that they
support one another. Review and revision may be necessary
before the plan is put into operation. Moreover, the various
plans must be communicated and explained to those
responsible for putting them into practice.
Characteristics of Plans
Time Horizon: refers to how far in the future the plan applies.
Hierarchy of Organization Plans
Organizations are typically managed according to two
types of plans.
STRATEGIC PLANS: Plans that are designed by high
ranking managers and define the broad goals for the
OPERATIONAL PLANS: Plans that contain details for
carrying out, or implementing those strategic plans in
day to day activities.
MISSION STATEMENT: Broad organizational goal,
based on planning premises, which justifies an
THE SEVEN-S MODEL
MCKINSEY &CO has proposed the seven-s model for
successful strategy implementation. MCKINSEY’S
consultants found that neglecting any one of seven key
factors could make the efforts to change a slow, painful, and
even doomed process.
STRUCTURE: A successful organization may make
temporary structural changes to cope with specific strategic
tasks without abandoning basic structural divisions
throughout the organization.
STRATEGY: The seven-s model emphasizes that the
development of strategies poses less of a problem than their
STAFF: Successful organizations view people as valuable
resources who should be carefully nurtured, developed,
SUBORDINATE GOALS: This refers to guiding
concepts, values and aspirations that unite an
organization in some common purpose.
SYSTEM: This category consists of all the formal and
informal procedures that allow the organization to
function, including capital budgeting, training, and
SKILLS: It refers to those activities organizations do
best and for which they are known.
STYLE: It refers to the pattern of substantive and
symbolic actions undertaken by top managers. It
communicates priorities more clearly than words and
may influence performance.
OPERATIONAL PLANS: Plan that provides details
needed to incorporate strategic plans into the
organization’s day to day operations.
SINGLE USE PLANS: Detailed course of action used
once or only occasionally to solve a problem that does not
AM: A single used plan that covers a relatively
large set of organizational activities and specifies major
steps, their order and timing, and the unit responsible for
PROJECT: The smaller and separate portions of the
BUDGETS: Formal quantitative statements of the
resources allocated to specify programs or projects for a
STANDING PLAN: An established set of
decisions used by managers to deal with
recurring or organizational activities; major types
of policies, procedures and rules.
POLICY: A standing plan that establishes
general guidelines for decision making.
RULES: Standing plans that detail specify
actions to be taken in a given situation.
PROCEDURE: A standing plan that contains
detailed guidelines for handling organizational
actions that occur regularly.
An Institution is a collection of values, norms, roles, and
groups that develops to accomplish a certain goal. To
emphasize systems, style, staff, skills, and super ordinate
goals, we need to look at how strategy is institutionalized.
THE ROLE OF THE CEO
Chief executive officers(CEOs) spend most of their time
developing and guiding strategy their personal goals and
values inevitable shape organizational strategy. Their role in
strategy formulation makes CEOs especially important to
strategy implementation. First they interpret strategy, acting
as final judges when managers disagree on implementation.
Second, CEOs enact- through their words and actions- the
seriousness of an organization’s commitment to a strategy.
Third, CEOs motivate, providing intangible incentives
THE STRATEGIC MANAGEMENT
Strategic management provides a disciplined way
for managers to make sense of the environment in
which their organization operates, and then to act.
Two phases are involved:Strategic Planning: this includes both the goal
setting and the strategy formulation process.
Strategy Implementation: there is a shift from
analysis to administration- the task of achieving
LOW COST: Gain a competitive advantage by driving down
Managers manufacture at lower cost, reduce waste.
Lower cost than competition means lower prices.
DIFFERENTIATION: Gain a competitive advantage by making
our product different from others.
Differentiation should be valued by customers.
Successful differentiation allows you to charge more for a
Corporate level Strategies
Concentrate in single business: MC Donald's focuses in
the fast food business.
• Can become very strong, but can be risky.
Diversification: Organization moves into new business
• Related diversification: firm diversifies in similar areas to
build upon existing divisions.
Synergy: two divisions work together to obtain more than
the sum of each separately.
Unrelated diversification: buy business in new areas.
• Build a portfolio of unrelated firms to reduce risk or
trouble in one industry
“FIVE FORCES” CORPORATE
An Organization’s ability to compete in a given
market is determined by that organization’s technical
and economic resources, as well as by five
environmental forces each of which threatens the
organization’s venture into a new market.
The five forces are: THREAT TO NEW ENTRANTS.
BARGAINING POWER OF BUYERS(CUSTOMERS).
BARGAINING POWER OF SUPPLIERS.
THREAT OF SUBSTITUTE PRODUCTS.
RIVALRY AMONG COMPETITORS.
FUNCTIONAL LEVEL STRATEGIES
Seeks to have each department add value to a good or
Marketing, service, production all add value to a good or
Value is added in two ways:
Lower the operational cost of providing the value in
Add new value to the product by differentiating.
Functional strategies must fit with business level strategies.