Module 2 PLANNING PLANNING “ bridges gap from where we are to where we want to go ” “ Planning and controlling are inseparable ” Fig:1.1 Close relationship of planning and controlling.
Planning – controlling relationship Planning Implementation of Plans Controlling: comparing plans with results Corrective action Undesirable deviation No undesirable deviations from plans New plans
Planning is the most basic function of management is defined as:
Intellectual process / continuous process
Thinking in advance / looking ahead
Deciding what is to be done , when, how and who to do it.
Involves decision making- choosing among alternative future courses of action.
Involves selecting missions and objectives and action to achive them
Thinking before action
Furnishes standard for control.
Importance of Planning:
Minimizes risk & uncertainty
Provides rational, fact based procedure for Decision making
Leads to better chances of Success.
Focuses attention on orgn’s goals
Helps to cope with changing environment
Deals with futurity of present decisions.
Goals and plans become standard against which Performance can be measured.
Elements or Components of Planning( Forms of Plans)
Purpose or mission
Objectives / goals
Strategies / Tactics
Elements or Components of Planning( Forms of Plans) contd.. Mission or purpose: Identifies the basic purpose or function or tasks of an enterprise or agency or any part of it. Primary role of organisation defined by society- broad aim eg. Production, Service, Education, Health care. Special purpose, unique aim eg. Production of automobiles, providing education, treating heart patients etc. Objectives and Goals: Objectives are specific targets to be achieved, in short term, end result of activities. Goals: General, descriptive statement of long term results to be achieved.
Elements or Components of Planning( Forms of Plans) Strategies: The determination of the basic long term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals. - Grand designs that describe how a firm should operate to achieve its objectives. - Tell managers what to do and how to react to competitors. - consists of programs of action and deployment of resources to achieve it. Tactics are more detailed operational plans for specific allocation. Policies: - are also plans - general statements or understandings that guide or channelise thinking in decision making.
Elements or Components of Planning( Forms of Plans)
Policies could be verbal, written or implied
Provide limits and direction for decisions
Help to decide issues before they become problems
Enables managers to delegate authority and still maintain control over subordinates.
Are plans that establish a required method of handling future activities.
Guidelines for action rather than thinking
Detailed guidelines for carrying out the polices
Details of activities to be accomplished
Prescribed manner be which work has to be performed
Instructions for sequece of action.
Elements or Components of Planning( Forms of Plans) Rules: Rules spell out specific required actions or non-actions, allowing no discretion. -detailed, recorded instructions that specify Actions that must be or must not be performed in a given situation. Programs: Complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed etc to carry out a given course of action. Programs tell what is to be done and procedures tell how. Programs could be primary and supporting. Budgets : A statement of expected results expressed In numerical terms.
Types of Planning
Major and Minor plans
STEPS IN PLANNING Setting Organisational Objectives Analyzing and evaluating the environments Identifying alternative ways of achieving the objectives Developing planning premises upon which each alternative is based Deciding the planning horizon Evaluating the alternatives and choosing the best alternative Developing plans to pursue chosen alternatives Implementing the plan Controlling and evaluating the results
Planning Through Management by Objectives (MBO) – Peter Drucker-1954
MBO: The Philosophy of management that emphasizes the setting of agreed on objectives by managers and their subordinates and the use of these objectives as the primary base of motivation, evaluation and control efforts.
MBO represents a way of thinking that concentrates on achieving results. It forces management to plan explicitly, provides a systematic and rational approach to management and helps prevent “ Management by crisis”.
MBO emphasizes measurable achievements and results (Management for results) and active participation in objective setting at all levels of management.
Today MBO is used in Linking Goals/objectives and plans.
Also used in assessing performance of individuals and for rewarding contributions of individuals as a means of motivation.
Step 1: Top management’s support and commitment.
Step 2: Establishing long-range objectives and plans( Developing over-all organisational goals or objectives)
Step 3: Establishing Specific Shorter-term Organisational Objectives
Step 4: Establishing Individual performance objectives and standards of performance for Individuals (formulating action plans)
Step 5: Appraising Results
Advantages and Disadvantages of MBO
Aids coordination of goals/objectives and plans
Helps clarify priorities and expectations
Fosters employee motivation
Enables managers to think about planning for results rather that merely planning for work.
Motivates managers to accept goals and achieve them
Provides clear standards of control
Tends to fail if strong commitment from top management does not exist.
Necessitates considerable training of managers
Can be misused as a punitive device.
Over emphasis on quantitative goals/objectives.
Difficulty in applying goal-oriented planning in a very dynamic and complex environment.
Difficulty in converting broad overall objectives into detailed unit objectives.
Levels of Strategies:
1.Corporate level- activities which define overall character & mission of the organisation.
2. Business unit level: competitive strategy
3. Functional level
The feasibility of using any one alternative to achieve organisational objective is determined by the planning premises or assumptions on which the alternative is based.
Internal premises : Sales forecasts, Capital investment. Competence of mgmt etc
External premises : General business/economic environment, technological changes, Govt policies and regulations.
Tangible premises : Quantitative measurement such as population growth, industry demand etc.
Intangible Premises : Qualitatively measure, for ex: political stability. Business and economic environment, attitudes etc.