Types of Planning

1. UNIT II
Planning
Nature and Purpose planning – Planning process
– Types of plans – Objectives – Managing by
objective (MBO) Strategies – Types of strategies
– Policies – Decision Making – Types of decision
– Decision Making Process - Rational Decision
Making Process – Decision Making under
different conditions.

2. What Is Planning?
 Planning - a primary managerial activity that involves:
 Defining the organization’s goals
 Establishing an overall strategy for achieving those goals
 Developing plans for organizational work activities

3. Nature of planning
 Planning – a primary function
 Planning – a dynamic process
 Planning – based on objective and policies
 Planning - a selective process
 Pervasiveness of Planning
 Planning – an intellectual process
 Planning is directed towards efficiently
 Planning – focus with future activities
 Flexibility of Planning
 Planning is based on facts

4. Importance or objective of
planning
 Primary of planning
 To achieve objectives
 To cope with uncertainty and changes
 To facilitate control
 To help in coordination
 To increase organisational effectiveness
 To guide decision making

5. Planning process
1. Identification of opportunities
2. Establishment of objectives
3. Developing planning premises
4. Identification of alternatives
5. Evaluation of alternatives
6. Selecting an alternative
7. Formulating derivative plans
8. Establishing sequence of activities

6. Elements of Planning
 Goals (also Objectives)
 Desired outcomes for individuals, groups, or entire
organizations
 Provide direction and evaluation performance criteria
 Plans
 Documents that outline how goals are to be accomplished
 Describe how resources are to be allocated and establish
activity schedules

7. Types of Goals
 Financial Goals - related to the expected internal financial
performance of the organization.
 Strategic Goals - related to the performance of the firm
relative to factors in its external environment (e.g.,
competitors).

9. Types of Plans
 Strategic Plans
 Establish the organization’s overall goals
 Seek to position the organization in terms of its
environment
 Cover extended periods of time
 Operational Plans
 Specify the details of how the overall goals are to be
achieved
 Cover a short time period

10. Types of Plans
 Long-Term Plans
 Time frames extending beyond three years.
 Short-Term Plans
 Time frames of one year or less.

11. Types of Plans
 Specific Plans
 Plans that are clearly defined and leave no room for
interpretation.
 Directional Plans
 Flexible plans that set out general guidelines and provide
focus, yet allow discretion in implementation.

12. Types of Plans
 Single-Use Plan
 A one-time plan specifically designed to meet the need of a
unique situation.
 Standing Plans
 Ongoing plans that provide guidance for activities
performed repeatedly.

13. Advantages
 Helps in achieving objectives
 Better utilization of resources
 Economy in operation
 Reduces uncertainty and risk
 Improves competitive strength
 Effective control
 Coordination
 Encourage motivation
 Guide in decision making
 Provides decentralization
 Improves efficiency
 Anticipation of crisis

14. Limitations
 Lack of accurate information
 Time and cost
 Inflexibility
 Delay during emergency period
 False sense of security

15. OBJECTIVE
 Objective are the aims, purposes or goals
that an organization wants to achieve over
varying period of time

16. Important characteristics of
objective
 Objectives have an hierarchy
 Objectives form a network
 Multiplicity of Objectives
 Objectives have a time span
 Objectives may be tangible or intangible
 Objectives must have social sanction

17. Significance or role or advantages of
Objective
 Unified planning
 Defining an organization
 Direction
 Individual motivation
 Basis for decentralization
 Basis for control
 Co-ordination

18. Management By Objectives (MBO)
 Specific performance goals are jointly determined by
employees and managers.
 Progress toward accomplishing goals is periodically
reviewed.
 Rewards are allocated on the basis of progress towards
the goals.

19. Management By Objectives (MBO)
 Key elements of MBO:
 goal specificity
 participative decision making
 an explicit performance/evaluation period
 feedback

20. Exhibit 8-3:
Steps in a Typical MBO Program

21. Does MBO Work?
 Reason for MBO Success
 Top management commitment and involvement
 Potential Problems with MBO Programs
 Are less effective in dynamic environments that require
constant resetting of goals
 Over emphasis on individual accomplishment may create
problems with teamwork
 Allowing the MBO program to become an annual
paperwork shuffle

22. THE PROCESS OF MBO
i. Setting preliminary objectives
ii. Fixing key result areas
iii. Setting subordinate’s objectives
iv. Recycling objectives
v. Matching resources with objectives
vi. Periodic performance reviews
vii. Appraisal

23. Benefits of MBO
1. Improvement of managing
2. Clarification of organization
3. Personal satisfaction
4. Team work
5. Development of effective control
6. Fast decision making

24. Weakness of MBO
1. Failure to teach the philosophy of MBO
2. Failure to give guidelines to goal setters
3. Difficulty of setting goal
4. Emphasis on short term goals
5. Danger on inflexibility
6. Time consuming
7. Increased paper work

25. Contingency Factors in Planning
 Manager’s level in the organization
 Strategic plans at higher levels
 Operational plans at lower levels
 Degree of environmental uncertainty
 Stable environment: specific plans
 Dynamic environment: specific but flexible plans

26. Contingency Factors in Planning
 Length of future commitments
 Commitment Concept: Current plans affecting future
commitments must be sufficiently long-term in order to
meet those commitments.

27. Exhibit 8-5:
Planning in the Hierarchy Organizations