Management Theory & Practice Robbins, S. Coulter M. For Graduate and Post Graduate Students

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Lecture # 4
Planning

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Planning
Planning is a process
 That involves defining the organizational goal,
 Establishing overall strategy to achieving these
goals,
 And developing comprehensive set of plan to
integrate and coordinate organizational work.
Planning are of two type.
 Formal and Informal.

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Planning
Informal Planning
Goals are not written
down.
There is little or no sharing
of goals with others in the
organization.
The owner of business has
the vision of where he
wants the business to go
and how to get there.
Formal Planning
Specific goals covering
a period of years are
defined.
Goals are written down
and shared with org.
members.
Specific actions
programs exist for the
achievement of these
goals.

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Purposes of Planning
There are four reasons for Planning.
1) Planning gives direction:
 It gives direction to manager and nonmanagers alike.
2) Reduce impact of change:
 Planning reduce uncertainty by forcing
 Managers to look ahead,
 Anticipate change,
 Consider the impact of change and develop
appropriate response.

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Purposes of Planning
3) Minimizes Waste and Redundancy:
 Planning reduces overlapping and wasteful
activities (time, resources).
4) Sets standards used in controlling:
 Through controlling, we compare actual
performance against the goals, identify any
significant deviations, and take necessary
corrective action.

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Limitation of Planning
Planning may create rigidity.
Plan can’t be develop for dynamic environment.
Formal plans can’t replace intuition and
creativity.
Planning focuses manager’s attentions on
today’s competition and not on tomorrow's
survival.
Formal planning reinforce success, which may
lead to failure.

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Planning & Performance
Studies show that Formal planning is associated
with higher profits, higher returns on assets and
other positive financial results.
Quality of planning also results in high
performance.
Government regulation, labor unions and other
external and internal environment have high
impact on the performance of the planning.

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Approaches to Planning
In traditional approach, planning is done
entirely by top-level managers who are
assisted by a planning department.
Under this approach, plans developed by
top-level managers flowed down through
other organization levels.
In other approach to planning is to involve
other organizational members in the
process.

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How do Manager Plan?
GOALS/OBJECTIVES
Goals:
 Desired outcome for individuals, groups, or entire
organization.
 Goals are objectives and they provide direction
for all management decisions.

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Types of Goals
Goals are of two types.
1) Stated Goals
 Official statements of what an organization says, and
what its wants its various stakeholders to believe.
 These goals can be found in an org.’s charter, annual
report, public relations announcement, or public
statement made by management.
2) Real Goals:
 Those goals that an org. actually pursues, as defined
by the actions of its members.

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Traditional Goal Setting
An approach to setting goals in which
 goals are set at the top level of the org.
 and then broken down into subgoals for each
level of the organization.
One of the problems with this approach is that top
managers define the org. goals at board level.
These goals have to be made more specific as they
flow down through the organization.

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Traditional Goal Setting
Top
Managers
Division
Manager
Department Manager
Individual Employees
We need to improve company
performance.
I want to seeimprovement in Profit. Increase Profits
regardless of the means.
Don’t Worry about
quality, just work fast.

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Management by Objective (MBO)
MBO is a management system
 In which specific performance goals are jointly
determined by employees and their managers,
 Progress towards accomplishing those goals is
periodically reviewed,
 And rewards are allocated on the basis of this
progress.
MBO consists of four elements, goal specificity,
participative decision making, an explicit time
period and performance feedback.

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Management by Objective (MBO)
One problem of MBO is it can be useless in time
of dynamic environment change.
Other problem is that an overemphasis by an
employee on accomplishing his or her goals
without regards to other in the work unit can be
counterproductive.
Finally if MBO is viewed as an annually paper
filling out paperwork, employees won’t be
motivated to accomplish the goals.

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PLANS
Plans:
 Documents that outline how the goals are
going to be met including
 Resource allocations, schedule
 and other necessary actions to
accomplish the goal.

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Types of Plan
Plans are describes in the following ways.
Strategic Plan: that apply to the entire org,
establish overall goals, and seek to position the org.
in terms of the environment.
Operational Plan: Specify the details of how the
overall goals are to be achieved.
Long-Term Plans: Plans with a time frame beyond
three years.
Short-Term Plans: Plans covering one year or less.

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Types of Plans
Specific Plans: are clearly defined and that leave
no room for interpretation.
Directional Plans: that are flexible and that set
out general guidelines.
Single-use Plan: is a one time plan specifically
designed to meet the needs of unique situation.
Standing Plans: ongoing plans that provide
guidance for activities performed repeatedly.

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Breadth Time Frame Specificity Frequency of Use
Types of Plans
Strategic
Operational
Long Term Directional Single Use
Short Term Specific Standing

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Planning Tools and Techniques
Techniques for Assessing the Environment
Environment Scanning: The screening of large
amounts of information to anticipate and interpret
changes in the environment.
Managers in both small and big org. use
environmental scanning.
Extensive environment scanning affect an
organization’s current or planned activities.
Competitor Intelligence: Environment scanning
activity that seeks to identify who competitors are,
what they are doing, and how their actions will
affect the organization.

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Techniques for Assessing the
Environment
Forecasting
Means predictions of outcomes.
The second technique managers can use to assess
the environment is forecasting.
Forecasting is important part of organizational
planning.
Managers need forecasts that will allow them to
predict future events effectively and in a timely
manner.

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Techniques for Assessing the
Environment
Forecasting Techniques
Forecasting fall into two categories.
Quantitative Forecasting: A set of mathematical
rules to a series of past data to predict outcomes.
Qualitative Forecasting: that use the judgment
and opinions of knowledgeable individuals to
predict outcomes.
This technique is used when precise data are
limited or hard to obtain.

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Techniques for Assessing the
Environment
Forecasting Effectiveness
The goal of forecasting is to provide managers
with information that will facilitate decision
making.
Forecasting is most accurate when the
environment is not rapidly changing.
The more dynamic the environment, the more
likely managers are to forecast ineffectively.

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Techniques for Assessing the
Environment
Following ways can improve forecasting.
 Use simple forecasting methods.
 Compare every forecast with “ no change”.
 Make forecast with several methods and
average them.
 Don’t assume that one can accurately identify
turning point in a trend.
 Shorten the length of forecast to improve their
accuracy.
 Forecast is a managerial skills and can be
practice and improved.

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Benchmarking
Benchmark means search for the best practices
among competitors or noncompetitors that lead to
their superior performance.
Managers can improve quality by analysining and
then copying the methods of the leaders in various
fields.
In 1970s, Japanese firms were copying the
successes of others and applying what they
learned in visits to companies around the world to
improve own products and process.

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Benchmarking Process
Form a Benchmarking
Planning team.
Gather internal and
external data.
Analyze data to identify
Performance gaps.
Prepare and
implement action plan
BEST
PRACTICES

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Planning Tools and Techniques
Techniques for Allocating Budget
Once an organization’s goals have been
established.
Next aspect of the planning is to focus on the
“means”-that is determining how those goals are
going to be accomplished.
Before manager can organize and lead in order to
implement the goals, they must have resources.
Resources are assets of organization including
financial, physical, human, intangible and
structural/cultural.

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Budget is a numerical plan for allocating
resources to specific activity.
Variable Budget Fixed Budget
Takes into account Assumes fixed
The costs that level of sale
Vary with Volume. or production
Cash Budget
Forecasts cash on hand
And how much
will be needed
Revenue Budget
Projects future sale
Expense Budget
Lists primary
Activities and allocates
Amount to each.
Profit Budget
Combines revenue & expense
Budget of Various units to determine
each unit’s profit contribution.

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Scheduling
Scheduling means detailing
 what activities have to be done,
 the order in which they are to be completed,
 who is to do each
 and when they are to be completed.
Some useful scheduling devices including Gantt
chart, load chart and PERT net work analysis are
very popular.

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Scheduling
GANTT CHART
A scheduling chart developed by Henry Gantt that
shows actual and planned output over a period of
time.
It is bar graph with time on the horizontal axis and
the activities to be scheduled on the vertical axis.
It is simple but important device that lets manager
detail each activity on chart and asses whether an
activity is head of, behind or on schedule.

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Gantt Chart
Copyediting
Design Sample
Draw Art
Print gallery proofs
Printing
Activity
Goals
MONTH
1 2 3 4

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Gantt Chart
Copyediting
Design Sample
Draw Art
Print gallery proofs
Printing
Activity
Actual Progress
Goals
MONTH
1 2 3 4

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Scheduling
LOAD CHART
A load chart is a modification of Gantt Chart.
Instead of listing activities on the vertical axis,
load chart list entire department or specific
resources.
The arrangement allows mangers to plan and
control capacity utilization.
In other words, load charts schedule capacity by
work area.

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Scheduling
John
David
Dave
Penny
MONTH
1 2 3 4
Work Schedule

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Scheduling
PERT Network Analysis
PERT is a flowchart like diagram that depicts the
sequence of activities needed to complete a project
and the time and costs associated with each activity.
Four terms are important to understand PERT.
Event: are the end points that represent the
completion of major activities.
Activities: represents the time or resource required to
progress from one event to another.

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Scheduling
Slack Time: is the amount of time an individual
activity can be delayed without delaying the whole
project.
Critical Path: The longest sequence of events and
activities in a PERT network.
PERT allows manager to monitor a project’s
progress, identify possible bottlenecks and shifts
resource as necessary to the keep the project on
schedule.

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PERT-Network
Start BA GC
D
E
F
End
10 6 14
6
3
3
5
5
5
4

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Time Management
Time is unique resource, if it is wasted it can
never be replaced.
Time management is a personal form of
scheduling time effectively.
The essence of time management is to use time
effectively.
Five things are essential for using time effectively.
Identify your goals.
Prioritize your goals.

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Time Management
List the activities that must be done to accomplish
goal.
Priorities do-it list.
Schedule the day activities.

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Contemporary Planning Techniques
Managers face the challenges of planning in an
environment that’s both dynamic and complex.
Two planning techniques that are appropriate for
this type are
 Project Management
 Scenario Planning

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Contemporary Planning Techniques
Project: A one-time-only set of activities that has a
definite beginning and ending point in time.
Project Management: The task of getting a
project’s activities done on time, within budget,
and according to specification.
In the typical project, the work is done by a
project team, whose members are assigned from
different departments.
The project manager coordinates the project’s
activities with other departments.

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Contemporary Planning Techniques
When the project team accomplished its goals, it
disbands and members move on to their
permanent work area.
Define
Objectives
Identify
Activities &
Resources
Establish
Sequences
Estimate
Time for
Activities
Determine
Project
Completion
Compare
with
Objectives
Determine
Additional
Resource
Requirement
Project Planning Process

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Contemporary Planning Techniques
Scenario: is a consistent view of what the future
is likely to be.
Developing scenarios can be described as
contingency planning.
Scenario planning is useful in anticipating events
that can be dynamic and difficult to handle.
Planning tools and techniques can help managers
prepare confidently for the future.

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Summary
What is planning?
Purpose of Planning.
Planning and Performance.
Types of plan.
 Strategic Versus Operational Plan
 Short term Versus long term Plans.
 Specific Versus Directional Plans.
Traditional Goal setting
Management By Objective (MBO)

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Summary
Techniques for assessing the Environment.
Environmental Scanning.
Forecasting
Benchmarking
Budgets, Types of budget.
Scheduling
Time Management.