Planning & Decision making

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3. Recommended Reading
• Management 6th Edition by Stephen P Robbins & Mary Coulter published by Prentice Hall International Editions
pp. 236-237
• Open Educational Resource
• www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
•

5. • Planning is concerned with deciding in advance
what, when, where, why and how is to be done
and who shall do it. Thus, planning is the process
of setting goals and choosing the means to achieve
those goals.
• Without plans managers cannot know how to
organize people and resources effectively for
achieving Simply, planning is the process by
which managers define goals and take necessary
steps to ensure that these goals are achieved

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(1) OVERLAPPING AND WASTEFUL
ACTIVITIES
•Through planning, the efforts of various individuals and departments are coordinated properly to eliminate overlapping & wasteful activities.
•It ensures clarity in thoughts and actions, work is carried on smoothly without any confusion and misunderstanding.
•Useless and wasteful activities are reduced or eliminated.
•It is easier to detect inefficiencies and take corrective measures to deal with them.
(2) PROVIDES DIRECTIONS
• By stating in advance how work is to be done, planning provides direction for action.
• Planning guarantees that goals and aim are distinctly defined so that they
• operate as a pattern for determining what direction should be taken.
• Planning makes the goals and objectives clear in the minds of all individuals working in different capacities.
• Lack of planning brings chaos and lack of coordination.
Example:
A car manufacturing company gives targets to employees who decide their direction of work.
(3) INNOVATIVE IDEAS •Planning is thinking in advance what to do and how to do it.
•New ideas can take the shape of concrete plans and innovation.
•Innovation is required to modify the plans for the growth and expansion of the business.
•Example:
•Through innovative products, the companies maintain a competitive edge in the market and it is planning through which it is decided how to innovate.
•In a company of real estate, there are different departments like Marketing, HR, Sales, and Finance. Each department has assigned targets and jobs. This reduces overlapping of work and
wastage of efforts.
(4) REDUCES THE RISKS OF
UNCERTAINTY
•Planning is done for the future and the future is full of uncertainties.
•Planning enables a manager to look forward and take appropriate steps to deal with future uncertainties and changes.
•Mis-happenings and uncertain events cannot be eliminated completely but their effect on the organisation can be minimised if we plan how to overcome such situations.
•Example:An organization might ensure its inventory yet an accident can take place and damage its assets. So, the future is uncertain yet we can minimise the risks by proper planning.
(5) DECISION MAKING •Through planning, managers compare different alternatives with their benefits and limitations.
•Planning helps make rational decisions by choosing the best most profitable alternative which may bring lower cost, adaptable to the organisation and situations.
•Example: A group of marketing experts (deciding for best marketing strategy for the product) chalk out different alternatives evaluates these alternatives and finally selects the best alternative.
(6) SET STANDARDS FOR
CONTROLLING
•Planning involves the setting of goals and these predetermined goals are accomplished with the help of managerial functions like planning, organising, staffing, directing
and controlling.
•Planning provides standards against which actual performance is measured.
•Without standards, the actual performance of each individual, department, and division cannot be measured.
•With the help of standards, deviations in the performance are found and such deviations become the basis of effective planning for future planning.
•Planning provides a basis to bring the desired output under controlling function and result of controlling function provides guidelines for effective planning.
•Example: A torch manufacturing company decides to manufacture 8000 torches in the month of December. However with the passage of 15 days only 2000 torches were manufactured. So
the company decided to revise its standard for production.

9. •Strategic Plans are formulated to provide direction for mission, objectives, and strategies for the
organization. It defines the course of action by which a company intends to attain strategic goals.
•Strategic plans are created by Top management such as the CEO, Board of Directors, Chairmen of the
company. These plans become the framework and set dimensions for the lower-level planning in the
organization.
•For Example – Strategic Plans consist of the Vision, Mission, Values, and overall-Objectives of the
Organisation. These are the key elements that clearly define the state of the business in terms of what to
achieve in the future.
Strategic Plan:
•Tactical Plans are formulated to create the blueprint for the strategic plan. These plans clearly define how
the strategic plan will be implemented.
•Tactical plans are often short-term and are carried out by middle-level managers such as the Head of the
Department, Sales Manager, HR Manager, Production Manager.
•For Example – Managers of the company create plans to allocate required resources to support the
strategic plan. HR Manager make plans to manage Human Resources of the company. Production
managers make plans to smooth the production process of the business.
Tactical Plan:
•Operational plan cover the day-to-day operations of the organization also. The specific results expected
from departments, workgroups, and individuals are the operational goals.
•An operational plan is one that a manager uses to accomplish his or her job responsibilities. Operational
plans are also short-term in nature and created by Supervisors, team leaders, and facilitators to support
tactical plans.
•For Example – Team leaders have to manage daily shift timing schedules and allocate tasks to their
subordinates, Supervisors make strategies to reach daily targets that should be completed according to the
daily plan.
Operational
Plan: 9

10. • Long-term planning includes strategic goals and plans and may extend as far as 3 to 5
years into the future. Top management is involved in the formulation of Long term
plans.
• For Example – Expansion of location, opening new branch offices, entering into a new
market, investment in stock, bonds, and assets.
Long-term Plan
• Intermediate-term planning includes tactical objectives and has a time horizon of from
1 to 2 years. Middle-level managers are involved in the intermediate-term plan and
they report to top management before the implementation of these plans.
• For Example – Product Development, Plans to increase Market Share, Changes in
annual Contracts
Intermediate-
term Plan
• Short-term planning includes operational objectives for specific departments and
individuals. These plans are created by Supervisors and Team Leaders. And they have
to report their manager of the department. Short term plan has a time period of 3 to 6
months or within a year.
• For Example – Plans for increase Monthly Revenue, Hiring new employees for the
company, Development programs for employees, Allocating monthly goals to
employees.
Short-term
Plan 10

11. • Standing plans are ongoing plans because they focus on organizational
situations that occur repeatedly. Standing plans include policies, standard
procedures, rules, and regulations of the organization.
• For Example – Rules and policy of any organization are good examples of
the standing plan because it provides a guideline for the course of actions
taken in the company to achieve organizational goals. All members need
to strictly follow these guidelines all the time.
Standing Plan/
On-going plan
• Single‐use plans apply to activities that do not recur or repeat at the same
time in the future. A one-time plan that is relevant for a specified time and
after the lapse of that time, these plans are formulated again according to
the situation for the next period.
• For Example – Single-use plans typically include organizational
programs, projects, budgets. A budget is also a single‐use plan because it
predicts sources and amounts of income and how much they are used for
a specific project.
Single-use
Plan
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12. • Directional plans are flexible plans that set out general guidelines. Such
plans are preferable in a dynamic environment where management must
be flexible in order to respond to unexpected changes.
• For Example – the Sales Manager provides a guideline to his subordinates
to the expected target and now how subordinates will achieve that it’s up
to them. They are free to opt for any mode of practice. Hence we can say
that the Directional plans are outcome focus.
Directional
Plan
• Those plans which are clearly defined objectives and leave no room for
interpretation are called specific plans. Such plans require specific stated
objectives and do not contain ambiguity.
• For Example – the Production Manager briefing the plan to his
subordinates as to what, when, where, how much, and by whom task will
be performed. Hence we can say that the Specific Plans are Process
Focused
Specific
Plan
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13. BASIS FOR
COMPARISON
STRATEGIC PLANNING OPERATIONAL PLANNING
Meaning The planning for achieving the vision of the
organization is Strategic Planning.
Operational Planning is a process of deciding in advance
of what is to be done to achieve the tactical objectives of
business?
Time Horizon Long term planning Short term planning
Approach Concerned the internal as well as the external
environment of business.
Concerned with the internal environment of business
Modifications Generally, the plan lasts longer. The plan changes every year.
Performed by Top level management Middle level management
Scope Wide Narrow
Emphasis on Planning of vision, mission and objectives. Planning the routine activities of the company.
Key Differences Between Strategic Planning and Operational Planning

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15. Follow Up Action
Implementing the Plan
Selecting One Best Alternative
Evaluating Alternative Course of Action
Identifying Alternative Courses of Action
Developing Planning Premises
Setting Objectives
Planning Process

16. •This is the primary step in the process of planning which specifies the objective of an organisation, i.e. what an organisation wants
to achieve.
•The planning process begins with the setting of objectives.
•Objectives are end results which the management wants to achieve by its operations.
•Objectives are specific and are measurable in terms of units.
•Objectives are set for the organisation as a whole for all departments, and then departments set their own objectives within the
framework of organisational objectives.
•Example: A mobile phone company sets the objective to sell 2,00,000 units next year, which is double the current sales.
(1) Setting Objectives
•Planning is essentially focused on the future, and there are certain events which are expected to affect the policy formation.
•Such events are external in nature and affect the planning adversely if ignored.
•Their understanding and fair assessment are necessary for effective planning.
•Such events are the assumptions on the basis of which plans are drawn and are known as planning premises.
•Example: The mobile phone company has set the objective of 2,00,000 units sale on the basis of forecast done on the premises of
favourable Government policies towards digitisation of transactions.
(2) Developing Planning Premises
•Once objectives are set, assumptions are made.
•Then the next step is to act upon them.
•There may be many ways to act and achieve objectives.
•All the alternative courses of action should be identified.
•Example: The mobile company has many alternatives like reducing price, increasing advertising and promotion, after sale service
etc.
(3) Identifying Alternative Courses of Action
Planning Process

17. •In this step, the positive and negative aspects of each alternative need to be evaluated in the light of objectives to be achieved.
•Every alternative is evaluated in terms of lower cost, lower risks, and higher returns, within the planning premises and within the
availability of capital.
•Example: The mobile phone company will evaluate all the alternatives and check its pros and cons.
(4) Evaluating Alternative Course of Action
•The best plan, which is the most profitable plan and with minimum negative effects, is adopted and implemented.
•In such cases, the manager’s experience and judgement play an important role in selecting the best alternative.
•Example: Mobile phone company selects more T.V advertisements and online marketing with great after sales service.
(5) Selecting One Best Alternative
•This is the step where other managerial functions come into the picture.
•This step is concerned with “DOING WHAT IS REQUIRED”.
•In this step, managers communicate the plan to the employees clearly to help convert the plans into action.
•This step involves allocating the resources, organising for labour and purchase of machinery.
•Example: Mobile phone company hires salesmen on a large scale, creates T.V advertisement, starts online marketing activities
and sets up service workshops.
(6) Implementing the Plan
•Monitoring the plan constantly and taking feedback at regular intervals is called follow-up.
•Monitoring of plans is very important to ensure that the plans are being implemented according to the schedule.
•Regular checks and comparisons of the results with set standards are done to ensure that objectives are achieved.
•Example: A proper feedback mechanism was developed by the mobile phone company throughout its branches so that the actual
customer response, revenue collection, employee response, etc. could be known.
(7) Follow Up Action

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Why is it so hard to make a decision?
Having too much information
Being overconfidence
Not identifying the problem correctly

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Source: www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
Programmed decisions are one that relates to the matters of routine type and
problems that are of repetitive nature.
These decisions are taken following the specific standard procedure for dealing
with all such problems.
Programmed decisions are basically taken by management at the lower level.
Such decision involves like purchasing raw materials and spare parts, granting the
leave to an employee, etc.
Non-programmed decisions are meant for dealing with problems of difficult
nature and which can’t be solved easily.
These decisions arise out of problems that are not routine or daily occurring.
There is no standard procedure for solving such issues.
Non-programmed decisions are very crucial for an organization and are taken by
upper-level management.
Decisions at a higher level may include introducing new products in the market,
setting up a new branch of business, and many more.
Programmed And Non-Programmed Decisions

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Source: www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
Strategic decisions are key decisions influencing the goals, objectives, and other
crucial policy matters of the organization.
These decisions require proper analysis and evaluation of distinct alternatives as
they require an investment of funds.
Strategic decisions are taken by the top and middle-level management teams.
These also influence the routine decisions taken on a daily basis and hence
require utmost care before taking them.
Routine decisions relate to the decisions which are taken on a routine basis for
the daily functioning of the business.
These decisions can be taken quickly without much evaluation, analysis, and in-
depth study.
Generally, higher management delegates power to their subordinates for taking
such decisions within the policy of business.
Routine And Strategic Decisions

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Source: www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
Decisions that are concerned with distinct policy matters and the
planning of business are called policy decisions.
These decisions have a long-term influence on the performance of an
organization. these decisions are taken by the top management team.
These decisions include decisions related to the volume of production,
the channel of production, location of business plants, etc.
Operational decisions related to daily operations and functioning of
business enterprise.
These decisions make it possible to implement the plan and policies
taken by managers at the top level.
Middle and low-level managers usually take these decisions.
Tactical And Operational Decisions

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Source: www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
Decisions taken by a single individual in his official capacity
are called individual decisions.
This decision type is more used by organizations that are
smaller in size and have an autocratic management style.
Group decisions, on the other hand, are taken collectively by
the management and employees of the business together.
Group decisions mainly focus on involving a large number
of individuals in their process of decision-making.
Decisions taken by the board of directors of the company
came in the category of group decisions.
Individual And Group Decisions

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Source: www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
Major decisions relate to key aspects of business
organization and are taken by top-level managers.
The decision to buying new factory premises is a
major decision.
Minor decisions are taken by peoples at lower levels
in business organizations and are of less importance.
Purchase of office stationery for daily use is a minor
decision that can be taken by the office
superintendent.
Major And Minor Decisions

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Source: www.Saylor.org/site/textbooks/Principles%20of20Management .pdf
The organizational Decisions are taken by the manger in their
formal capacity for benefit of the organizations
A sales director might decide on the incentives for a sales team.
An operations manager might decide to change the roles of certain
employees to help them perform better. Such decisions taken by
managers on behalf of the company are known as organizational
decisions.
The decisions which are taken by any person in his personal
capacity, and not as a member of the organization are known as a
personal decision, for example, decisions for leave, dress, resigning
the organization and accepting or rejecting promotions, etc..
Organizational And Personal Decisions

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Step 1: Identify the decision
• When you're identifying the decision, ask yourself a few questions:
• Why the problem should be solved?
• Who are the affected parties of the problem?
• Does the problem have a deadline or a specific time-line?
• These questions are all common goal setting techniques that will ultimately help you come up with possible solutions. When the
problem is clearly defined, you then have more information to come up with the best judgement to solve the problem.
Step 2: Gather relevant information
• ​Gathering information related to the decision being made is an important step to making an informed decision.
• Do you have any historical data related to this problem?
• Has anybody attempted to solve this problem before?
• It's also important to look for information inside and outside of your company.
• Effective decision making requires information from many different sources.
• Example : Find external resources, whether it’s doing market research, working with a consultant, or talking with colleagues
at a different company who have relevant experience. Gathering information will help you to identify different solutions to
your problem.
Step 3: Identify the alternatives
• This step requires you to look for many different solutions for the problem at hand.
• Finding more than one possible alternative is important when it comes to business decision-making, because different stakeholders
may have different needs depending on their role.

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Step 4: Weigh the evidence
• Now that you have your possible solutions, it's time to weigh all the pros and cons.
• Think about your competitors and the outcomes they've had with such decisions. Review the possible wins and losses that you could
experience for each possible alternative.
Step 5: Choose among alternatives
• Once you have weighed all the evidence, you are ready to select the alternative that seems to be best one for you.
• You may even choose a combination of alternatives.
Step 6: Take action
• Now that you’ve identified and chosen your solution from all the possible options, it’s time to put it into action.
• You can be decisive in taking action precisely because you know you’ve put in the work in the previous steps to make the best decision
possible.
Step 7: Review your decision & its consequences
• Once you’ve made a decision, you can monitor the success . Here are a few questions to consider when reviewing your decision:
• Did it solve the problem your have identified in step 1?
• Did this decision impact your compny in a positive or negative way?
• Which stakeholders benefited from this decision? Which stakeholders were impacted negatively?

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