2. Chapter Outline
•What is Planning ?
•Nature of Planning
•Types of Planning
•Planning Process
•Planning tools
•Planning Techniques
3. What is Planning ?
• Planning involves selecting missions and objectives and the actions
to achieve them; it requires decision making, which is choosing
from among alternative future courses of action.
• Management has to plan for long-range and short-range future
direction by looking ahead into the future, by estimating and
evaluating the future behavior of the relevant environment and by
determining the enterprise’s own desired role.
• Planning involves determining various types and volumes of
physical and other resources to be acquired from outside, to
allocate these resources in an efficient manner among competing
claims and to make arrangement for systematic conversion of these
resources into useful outputs.
4. Nature of Planning
The nature of planning can be understood by
examining its four major aspects. They are;
•It is a contribution to objectives
•It is primacy among the manager’s tasks.
•It is pervasiveness, and
•The efficiency of resulting plans
5. Nature of Planning
contribution to objectives:
• Since plans are made to attain goals or objectives, every plan and
all its support should contribute to the achievement of the
organization’s purpose and objectives.
• An organized enterprise exists to accomplish group objectives
through willing and purposeful co-operation.
Primacy of Planning:
Planning quite logically, therefore, comes first before executing of
all other managerial functions as it involves establishing the
objectives necessary for all group efforts. Also, all the other
managerial functions must be planned if they are to be effective. .
Control without a plan is meaningless because the plan provides
the basis or standard of control.
6. Nature of Planning
Pervasiveness of Planning:
• Planning is a unique and universal function of all
managers. The character and scope of planning may vary
with each manager’s authority and with the nature of the
policies and plans outlined by superiors, but all managers
must have some function of planning.
• Because of one’s authority or position in the managerial
hierarchy, one may do more or less planning, but some
kind or amount of planning a manager must do.
7. Nature of Planning
The Efficiency of Plans:
• Plans should not only be effective, but also
efficient. The effectiveness of a plan relates to the
extent to which it accomplishes the objectives.
• Plans are efficient if they achieve their objective at
a reasonable cost when such a cost is the
measure not only in terms of time, money or
production but also in terms of satisfaction of the
individual or group.
8. Types of Planning
Hierarchical Plans:
These plans are drawn at three major hierarchical
levels, namely, the institutional, the managerial and
the technical core. The plans for these three levels
are;
• Strategic plan
• Administrative or Intermediate plan
• Operational plan
9. Types of Planning
Standing Plans:
Standing plans are drawn to cover issues that managers
face repeatedly. Such a standing plan may be called
standard operating procedure (SOP). Generally, five types
of standing plans are used;
• Mission or purpose
• Strategy
• Policies
• Rules
• Procedures
10. Types of Planning
Single-use Plans:
Single-use plans are prepared for single or
unique situations or problems and are normally
discarded or replaced after one use. Generally,
four types of single-use plans are used. These
are;
• Objectives or Goals
• Programs
• Projects
• Budgets
11. Types of Planning
Contingency Plans:
•Contingency plans are made to deal with
situations that might crop up if these
assumptions turn out to be wrong. Thus
contingency planning is the development of
alternative courses of action to be taken if
events disrupt a planned course of action
12. Planning Process
1] Recognizing Need for Action
2] Setting Objectives
3] Developing Premises
4] Identifying Alternatives
5] Examining Alternate Course of Action
6] Selecting the Alternative
7] Formulating Supporting Plan
8] Implementation of the Plan
13. Planning Process
1. Recognizing Need for Action:
An important part of the planning process is to be aware of the business
opportunities in the firm’s external environment as well as within the firm.
Once such opportunities get recognized the managers can recognize the
actions that need to be taken to realize them. A realistic look must be
taken at the prospect of these new opportunities and a SWOT analysis
should be done.
2. Setting Objectives:
Here establish the objectives for the whole organization and also
individual departments. Organizational objectives provide a general
direction, objectives of departments will be more planned and
detailed. Objectives can be long term and short term as well. They
indicate the end result the company wishes to achieve. So objectives will
percolate down from the managers and will also guide and push the
employees in the correct direction.
14. Planning Process
3. Developing Premises:
• In the function of management certain assumptions will have to be made.
These assumptions are the premises. Such assumptions are made in
form of forecasts, existing plans, past policies etc.
• These planning premises are also of two types – internal and external.
External assumptions deal with factors such as political environment,
social environment, advancement of technology, competition, government
policies etc. Internal assumptions deal with policies, availability of
resources, quality of management etc.
• These assumptions being made should be uniform across the
organization. All managers should be aware of these premises and should
agree with them.
15. Planning Process
4. Identifying Alternatives:
There is no one way to achieve the objectives of the firm, there is a
multitude of choices. All of these alternative courses should be identified.
There must be options available to the manager.
5. Examining Alternate Course of Action:
The next step of the planning process is to evaluate and closely examine
each of the alternative plans. Every option will go through an examination
where all there pros and cons will be weighed. The alternative plans need
to be evaluated in the light of the organizational objectives.
16. Planning Process
6. Selecting the Alternative:
•The best and most feasible plan will be chosen to be
implemented. The ideal plan is the most profitable one
with the least amount of negative consequences and is
also adaptable to dynamic situations.
• The choice is obviously based on scientific analysis and
mathematical equations. But a managers intuition and
experience should also play a big part in this decision.
Sometimes a few different aspects of different plans are
combined to come up with the one ideal plan.
17. Planning Process
7. Formulating Supporting Plan:
Once you have chosen the plan to be implemented, managers will have to
come up with one or more supporting plans. These secondary plans help
with the implementation of the main plan. For example plans to hire more
people, train personnel, expand the office etc. are supporting plans for the
main plan of launching a new product. So all these secondary plans are in
fact part of the main plan.
8. Implementation of the Plan:
This is when all the other functions of management come into play and the
plan is put into action to achieve the objectives of the organization. The
tools required for such implementation involve the types of plans-
procedures, policies, budgets, rules, standards etc.
18. Planning Tools
The Seven Management and Planning tools are:
•The Affinity Diagram
•The Tree Diagram
•The Interrelationship Diagram
•The Matrix Diagram
•Prioritization Matrices
•The Process Decision Program Chart (PDPC)
•The Activity Network Diagram
19. Planning Tools
Affinity Diagram:
An Affinity Diagram is a type of brainstorming technique that
allows you to generate, organize, and consolidate
information concerning complex processes, issues, or
problems.
Tree Diagram:
The Tree Diagram is an orderly structure similar to an
organization chart or family tree diagram. It helps in
understanding a process by graphically breaking down
complex processes to smaller levels of detail. This technique
encourages you to direct your thinking from generalities to
specifics.
20. Planning Tools
Interrelationship Diagram:
An Interrelationship Diagram (also referred to as a relations diagram)
identifies and displays all the interrelated cause-and-effect relationships
among different concepts or ideas. Basically, it establishes links between
ideas or concepts, and shows that they can be logically linked with more
than one other idea or concept at a time. This technique encourages you to
think in multiple directions (lateral thinking) rather than just thinking linearly.
Matrix Diagram:
The Matrix Diagram graphically establishes relationship between two or
more sets of items in such a way as to provide logical connecting points
between each item. The diagram displays the strength of relationships
using a grid of rows and columns. A relationship is indicated at each
intersection of rows and columns as either present or absent. Thus,
allowing you to identify the presence and strengths of relationships
between two or more items.
21. Planning Tools
Prioritization Matrices:
A Prioritization Matrix graphically displays options and criteria in
row and column format. Weights are assigned to each criteria.
The matrix allows you to identify an item’s relative importance by
deriving a numerical value for its priority. This allows you to select
and prioritize some options over others.
Process Decision Program Chart (PDPC):
A Process Decision Program Chart (PDPC) is a tool for
identifying and documenting the steps required to complete a
process. It is intended to help you prepare contingency plans by
mapping out every conceivable event that can occur when
moving from a problem to possible solutions.
22. Planning Tools
Activity Network Diagram:
This tool displays interdependent relationships
between activities, tasks, and groups as they all impact
a project. Boxes and arrows are used to depict these
activities and the links between them as well as chart
the sequential order of the entire process.
23. Planning Techniques
These are Brainstorming, Cause and Effect Diagrams, Critical Path Analysis and Gantt
Charts.
Brainstorming:
Brainstorming is a creative process designed to encourage random and lateral thinking,
it is most useful for highlighting potential problems and raising concerns that are not
immediately obvious. It can also be used to produce ideas to improve efficiency and
reduce costs.
Cause and Effect diagrams:
Cause and Effect diagrams are also known as “fishbone” or Ishikawa diagrams (after
the Japanese professor who originally invented them) and are especially useful in
project planning for gathering and identifying all issues that could cause problems.
They help to identify potential sources of problems and, in doing so, to suggest
solutions. They are also useful for giving an instant overview of the components of a
project in a clear way that is not hampered by schedules, dependencies and
milestones.
24. Planning Techniques
Critical Path Analysis:
For large, complex projects that have a large number of activities
that could be performed in parallel and where dependencies
exist between those activities, a Critical Path Analysis has 3
simple steps:
• Write down all the project tasks on an approximate timeline
• Label those tasks that must happen in parallel
• Label those tasks that are dependent on each other
• The diagram can be created manually, in a spreadsheet or by
using specialized software tools.
25. Planning Technique
Gantt Charts:
They are used for scheduling and monitoring tasks,
for showing costs and expenditure at all stages
throughout the project, for communicating progress
and producing reports. They show, on a simple
block diagram, the activities and costs over time in
an easy-to-understand way. A Gantt chart can be
created in a range of software tools or even in a
spreadsheet.
