The document discusses the functions of management, specifically planning. It defines planning as anticipating future trends and determining strategies and tactics to achieve organizational goals. Planning accounts for changing environments and helps performance. The steps in planning include establishing objectives and premises, determining alternative courses of action, evaluating alternatives, selecting a course, formulating derivative plans, implementing plans, and reevaluating. Planning can occur at strategic, intermediate, and operational levels. Potential limitations include lack of integration, understanding, contribution across levels, information, change resistance, and contingency planning.

1. Lecture 5.
FUNCTIONS OF MANAGEMENT

2. 1. PLANNING
• Planning is important because of scarce resources and
uncertain environment with fierce competition for
these resources.
• Planning is a decision making activity requiring the
process of ascertaining the objectives and deciding on
the activities to attain these objectives.
• It is also a process of preparing for change and coping
with uncertainty by formulating future courses of
action.

3. Definitions:
• Planning is anticipating future trends and determining the best
strategies and tactics to achieve the organizational goals and
objectives.
• According to Hudson. L., “To plan is to produce a scheme for
future action, to bring about specified results at specified cost,
in a specified period of time”.
• Meanwhile Peter Drucker defined planning as “ planning is the
continuous process of making present entrepreneurial decisions
systematically and with best possible knowledge of their futurity,
organizing systematically the efforts needed to carry out these
decisions and measuring the results of these decisions against
the expectation through organized systematic feedback”.

4. Reasons for planning:
• Planning is essential in modern business or global world.
Planning accounts for the changing technologies, changing
consumer tastes, market competitions etc.
• Planning is related to performance. Organisations with formal
plans perform better than those without formal plans.
• Planning puts a focus on objectives. The effectiveness of formal
planning is primarily based upon clarity and specificity of
objectives. Objectives provide direction.
• Planning anticipates problems and helps in the smooth flow of
operations. Since planning forecasts the future, it minimises the
chances of haphazard and hurried decisions

5. Ctn.
•Planning is necessary to facilitate control. Since plans are
made to achieve objectives, periodic reviews of
operations can determine whether the plans are being
implemented correctly.
•Planning helps in the process of decision making. It helps
managers to make routine decisions about current
activities since the objectives, plans, policies, schedules,
etc are clearly laid down.

6. Some key definitions in regard to planning:
• A vision- Refers to a long term idea (mental image/ picture)
of a desired situation.
• Mission- Refers to a statement of the reason (purpose) for
being in existence as an organisation or as a project. It
fulfills the vision.
• A goal- Describes what is to be achieved at the end of the
end of the planning period.
• Aim / Purpose- Describes why the goal must be achieved
and gives the benefits to be attained after the
achievement of the goal.

7. Ctn.
• A strategy- Describes how you will achieve the objective or
the goal.
• Target – Is a specified amount of objective to be achieved in
a given time or with the given resource.
• Indicators- Seen as markers of change in a situation.
• Objectively verifiable indicators- Are quantifiable measures
of change after implementation of planned activities. E.g for
a meeting resolutions made by the end.
• Means of verification- are hard evidence that an activity was
implemented e.g reports, attendance list.

8. Defns. ctd.
•Outputs- An individual product of the implementation
process.
•Outcome- The immediate effect of the implementation
process, resulting from a combination of inputs.
•Impact- The long term results of all the outcomes of the
process. i.e inputs-----process------outputs-----outcomes-----
Impacts.
•Work-plan- Schedule of work indicating activities,
responsible person, timing, resources, indicators, budget
etc.

9. Characteristics of good planning:
• A good plan is based upon clear, well defined and easily
understood objectives.
• A good plan must be simple and comprehensive. Easily put in to
operation by all.
• It should be well- balanced but flexible for equitable allocation of
resources for both short term and long term gains.
• Every plan should be time- bound. Reasonable time for
achievement of goals should be realised.
• The plans should involve participation by subordinates. Planning
should not be an exclusive responsibility of top management.

10. Ctn.
• Characteristic of unity, planning is initiated by different
managers of different divisions at different times. All
departments should be incorporated in the plan.
• A good plan strives for optimal utility of physical as well
as human resources in unison and harmony.

11. Benefits of planning:
• Planning gives managers some purpose and direction. Since
planning is future oriented, it forces managers to look beyond
the present and creates unity of purpose.
• Proper planning helps in the process of motivation. A well
communicated plan to all levels of the organisation encourages
everyone to participate in carrying it out.
• Planning provides a framework for decision making. Knowing
the organizational objectives and the method to achieve these
objectives eliminates ambiguity in the decision making
process.

12. Ctn.
•Proper planning results in proper and effective utilisation
of organizational resources.
•This reduces the unproductive work, idle time for workers,
down time for machines which would logically result in
minimum cost of operations.
•Since accurate forecasting of future events is an integral
part of effective planning, it reduces the element of risk
and uncertainty. Since planning is done in advance, it
reduces hasty judgements and haphazard decision and
results in disciplined thinking.

13. Ctn.
• It improves the competitive strength of the company by
shopping for good raw materials, equipment and establishing
good markets in case of change in products manufactured.
• Formal planning forces managers to examine all areas of the
organisation from all angles and efficiently coordinate all the
activities of these areas. It eliminates under looking some
sectors.
• Planning provides performance standards and standards for
measuring the progress of the organisation. Well developed
plans can aid the control process. Deviations are attended to in
time.

14. Ctn.
• Planning may bring about needed change of direction
in the organisation.
• Planning helps to analyse the internal culture of the
organisation and its impact on performance.

15. STEPS IN FORMAL PLANNING
• Proper planning prevents poor performance by answering the
following questions:
• Who are we? i.e. Defines the organisation by name, purpose,
mission, values and guiding principles of the organisation.
• Where are we? Is analysing the current situation.
• Why are we here? / How did we come to be here? Knowing the
nature and the cause of the situation helps to know whether
the problem is yours or not.
• Should we stay here? Do you wish to change and why should
you change the situation?

16. Ctn.
• Where would we like to be? Focus on the vision,
mission, goal, Aim/purpose, objectives, targets,
strategy.
• How shall we get there?
• What must we do to get there? i.e. Strategies &
activities.
• When shall we get there? When do we want to be
there? i.e. time frame or time-line for all activities.

17. Ctn.
• What may stop us from getting there? i.e. Do SWOT analysis,
analyse the resources, analyse the stakeholders and do
environmental scanning.
• How shall we know we are going there? Plan to monitor and
evaluate the process.
• How shall we know we got there? i.e. use indicators, carry out
summative evaluation (outputs, outcomes and impacts).
• Once there, should we stay there? I.e. Re- assess the situation,
are you satisfied with the situation? Are there new needs to be
addressed? Decide if you need to change. Plan again for the
new changes.

18. Steps in planning are a series of sequential
steps as explained below;
• Being aware of opportunities precedes actual planning process.
• Awareness of opportunities in the external environment as well
as within the organisation is the real starting point for planning.
• All managers should take a preliminary look at possible future
opportunities and see them clearly and completely, know where
they stand in light of their strengths and weaknesses,
understand what problems they wish to solve and why, and
know what they expect to gain.
• Setting realistic objectives depends on this awareness.

19. STEP 1. Establishing objectives-
• Establish and define clearly the central and overall objectives
of the organisation.
• This should be done for long term as well as short term
objectives.
• A well defined objective can make a difference between
success and failure of an organisation.
• It defines the product or service as well as the purpose of the
company. E.g the overall objective of a hospital is to provide
quality care.

20. STEP 2. Developing premises-
• The next logical step in planning is to establish, circulate, and
obtain agreement to utilize critical planning premises such as
forecasts, applicable basic policies and existing company plans.
• They are assumptions about the environment in which the plan is
to be carried out.
• The more thoroughly individuals charged with planning understand
and agree to utilize consistent planning premises, the more
coordinated the organizational planning will be.
• Forecasting is important in premising in that it establishes the kind
of existing markets, volume of sales expected, market prices, type
of product, the technical developments required, the political and
social environment, policies etc.

21. STEP 3. Determining Alternative courses-
• This involves searching for and examining alternative
courses of action.
• The more common problem is not finding alternatives
but reducing the number of alternatives so that the
most promising may be analysed.
• The planner must usually make a preliminary
examination to discover the most fruitful possibilities.

22. STEP 4. Evaluating the alternative Courses-
•After seeking out alternative courses and examining their
strong and weak points, the next step is to evaluate the
alternatives by weighing them in light of premises and
goals.
• The alternatives are evaluated in terms of costs attached,
pay backs, profitability, risks involved, implementability etc.
• There are so many alternative courses in most situations
and so many variables and limitations to be considered
that evaluation can be exceedingly difficult.

23. STEP 5. Selecting a course-
• This is the point at which the plan is adopted. i.e the real
point of decision making.
• Occasionally an analysis and evaluation of alternative
courses will disclose that two or more are advisable, and
the manager may decide to follow several courses than
one best course.

24. STEP 6. Formulating derivative plans-
• When a decision is made, planning is seldom complete.
• Derivative plans are almost invariably required to support the
basic plan.
• Once an overall plan has been adopted, it is necessary to
develop other derivative plans for each segment of the company,
to support the formal plan.
• Sectional plans are developed in each section of the
organisation, but within the framework of the primary plan in
order to coordinate and integrate programs and policies of all the
sections of the organisation.

25. STEP 7. Numbering plans by budgeting-
• After decisions are made and plans are set, the final
step is giving them meaning.
• This is attaching of values to each suggested course of
action.
• If done well, budgets become a means of adding value
to the various plans and set important standards against
which planning progress can be measured.

26. STEP 8. Implementation of the plan-
• Implement the plan and evaluate its results.
• The success of the plan would depend upon how
effectively the plan is implemented.
• This will require all skills and coordination of all factors.
• The plan should be periodically re-evaluated to
measure its progress and effectiveness so that any
deviations are corrected.

27. Levels of planning:
• Strategic planning-
• This is conducted by the top management including chief executive
officers, General managers etc.
• This involves the process of determining the overall objectives of the
organisation and the policies and the strategies adopted to achieve
those objectives.
• It is a long- range planning and may cover a time period up to 10 years.
• It basically deals with assessing the organisation’s capabilities, its
strengths and its weaknesses and an objective evaluation of the
dynamic environment.
• It also determines the directions the organisation will be taking to
achieve these goals.

28. Intermediate planning-
• This planning covers a time frame of about 6 months to 2 years
and is contemplated by middle management who include
functional managers, department heads and product line
managers.
• They also have the task of polishing the middle managements
strategic plans.
• The middle managers will have a critical look at the resources
available and they will determine the most effective and efficient
mix of human, financial material factors.
• They therefore refine the broad strategic plans into more
workable and realistic plans.

29. Operational planning-
• These plans are a responsibility of lower level management and
are conducted by unit superiors, foremen, etc.
• These are short- range plans covering a time span from one week
to one year.
• These are more specific and they determine how a specific job is
to be completed in the best possible way.
• Most operational plans are divided into functional areas such as
production, finance, marketing, personnel etc. e.g decisions on
inventory levels of raw materials as well as finished product.
• These plans are relatively stable and linked to objectives of the
middle management and top management levels.

30. Problems and limitations in planning:
There are situations in which sometimes even well designed plans
fail to bring desired results; this can be brought by:
• Corporate planning is not integrated in to total management
system. The management fails to identify and associate properly
the formal planning with the central concept of the organisation’s
mission.
• There is a lack of understanding of the different steps of the
planning process. The management may not be skilled in
understanding all the steps of planning requirements.
• Management at different levels in the organisation has not
properly contributed to planning activities. i.e no linkage of
planning at the various levels of management.

31. Ctn.
• Poor information and inadequate inputs may have formed the
basis for planning. Reliable data, information and good
forecasting is a back-borne for formal planning.
• In starting formal planning, too much is attempted at once. Due
to excitement and emotional expectations, the plans may be
implemented too quickly with too high expectations.
• The management is not always willing to cancel or modify poor
plans. A poor plan may adversely reflect on management’s
ability and understanding, hence they may not believe that the
plans were not poorly formulated thus unwillingness to modify.

32. Ctn.
• Management fails to operate by the plans. This may
be due to lack of full understanding of all the aspects
of the plan.
• Resistance to change by the organizational members.
• Lack of contingency plans.

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