Planning being the fundamental function of management, it explains the meaning, process and types of plans.

1. PLANNING
UNIT 2

2. UNIT 2: PLANNING
➢Nature and purpose of 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.

3. FUNCTIONS OF MANAGEMENT

4. Functions of Management
➢Planning- What is to be done?
➢Organising- What is required to be done?
➢Staffing- Who should be doing?
➢Directing- When should be done?
➢Controlling- How should be done?

5. Planning
➢Determining future course of action
➢Decides what is to be done in the future now.
➢Planning bridges the gap from where we are to where we
want to go.

6. Purpose of Planning
1. Facilitates Accomplishment of Objectives: The aim of planning is
to facilitate the attainment of objectives. It focuses its attention on the
objectives of the organization. It states the objectives of each
department in the organization and of the enterprise as a whole.
2. Ensures Economy in Operations: Since planning emphasizes
efficient operation and consistency, it minimizes costs and gains
economical operation. Coordinated group effort, even flow of work and
deliberate decisions are due to planning.
3. Precedes Control: Control involves those activities which are carried
out to force events to conform to plans. Plans serves as standards of
performance. Control seeks to compare actual performance with set
standards. So control cannot be exercised without plans.

7. Purpose of Planning
4. Provides for Future Contingency: Planning is required because
future is uncertain. Planning enables the management to look into the
future and discover suitable alternative course of action.
5. Facilitates Optimum Utilization of Resources: Various resources
that are relevant to an organization namely, funds, physical resources,
manpower, technological know-how, etc., are by and large inadequate
due to demand from competing organizations and have alternative uses.
6. Pre-requisites for other Managerial Functions: The purposes of
planning is to provide a conceptual and concrete basis for initiating and
undertaking other managerial functions like staffing, organizing,
directing and control.

8. Purpose of Planning
7. All Pervasive Function: Planning is a function of managers at all
levels though the scope, nature and extent of planning differs from
one enterprise to another and from one level to another. Irrespective
of the level and area of his operation, each and every manager has to
perform this function.
8. Provides for the Delegation of Authority: Planning provides for
the delegation of authority to subordinates. Well-formulated plans
serve as guides to subordinates and reduce risk involved in delegation
of authority.

9. Types of Plan

10. 1) Based on Breadth
A) Strategic Plans: Strategic plans define the framework of the organization’s
vision and how the organization intends to make its vision a reality. It is the
determination of the long-term objectives of an enterprise, the action plan to
be adopted and the resources to be mobilized to achieve these goals.
e.g.: ITC diversifying its products
B) Operational Plans: Tactical plans describe the tactics that the managers
plan to adopt to achieve the objectives set in the strategic plan. Tactical plans
span a short time frame and are usually developed by middle level managers.
e.g.: Encouraging employees to work from home

11. 2) Based on Time Frame
A) Long term:
Long-term planning displays how your business can be successful over a continued
period. The goals set in long-term planning are less likely to be changeable due to
the consensus a management team needs when creating them initially.
e.g.: Strategies formulated by companies
B) Short term:
Short-term planning is defined by the characteristics of an organization, such as
skills. In the workplace, managers devise strategies on how to improve these
characteristics in the short-term to meet long-term goals.
e.g.: Issues with company equipment like computers, or the quality of content
provided by employees, need to be addressed to meet short-term deadlines set by
management.

12. 3) Based on Specificity
A) Directional: These plans are flexible and set general guidelines. These
plans are preferable in a dynamic environment where management is
flexible in order to adopt the unexpected changes.
e.g.: Budget
B) Specific : These plans are clearly defined and leave no room for
interpretation. Such plans require particular objectives.
e.g.: Projects.

13. 4) Based on Frequency of Use
A) Standing plans: These are plans designed to be used again and again. Examples
include policies, procedures, and regulations. The advantage of standing plans is that they
foster unity and fairness within an organization and help to support stated organizational
values.
e.g.: Policies, procedures, methods and rules
B) Single-use plans: They refer to plans that address a one-time project or event. The
length of the plans varies, but the most common types are budgets and project
schedules. The obvious advantage of a single-use plan is that it can be very specific in
how it addresses the needs of a particular situation.
e.g.: Programme, projects and budget

14. Planning Process
1. Recognising the need for action
2. Establishing objectives
3. Planning premises
4. Identification of alternatives
5. Evaluation of alternatives
6. Choice of alternatives
7. Determining secondary plans
8. Implementation

15. Example
You have planned to go for a movie with your friends

16. 1. Recognising 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 SWOT analysis should be done.
e.g.: Socialisation

17. 2. Establishing objectives
➢This is the second and perhaps the most important step of the
planning process. Here we 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.
➢E.g.: Objective of going to movie is to entertain

18. 3. Planning premises
➢Planning is always done keeping the future in mind,
however, the future is always uncertain.
➢So in the function of management certain assumptions will
have to be made. These assumptions are the premises. Such
assumptions are made in the form of forecasts, existing
plans, past policies, etc.
➢E.g.: Weather, traffic, money resources etc.

19. 4. Identification of alternatives
➢The fourth step of the planning process is to identify the
alternatives available to the managers.
➢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.
➢E.g.: Plan A, Plan B, Plan C

20. 5. Evaluation of alternatives
➢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 light of
the organizational objectives.
➢E.g.: Analyse all the plans based on some factors

21. 6. Choice of alternatives
➢Finally, we reach the decision making stage of the planning
process. Now 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.
➢E.g.: Choose the best two or three plans

22. 7. Determining secondary 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.

23. 8. Implementation
➢And finally, we come to the last step of the planning
process, 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.
➢E.g.: Collect money, book the tickets, arrange travel

24. Objectives
Objectives are narrow, specific and time bound end targets to be
achieved by the organisations.
SMART Objectives
➢ Specific
➢ Measurable
➢ Achievable
➢ Relevant
➢ Time bound

25. Example
A company is aimed to sell 100 units of product in 3 months
in Bangalore city.
➢Specific: Selling a product
➢Measurable: Selling 100 units
➢Achievable: Selling 100 units in 3 months
➢Relevant: Making profits by selling products
➢Time bound: 3 months

26. Management by objectives (MBO)
➢The process of setting objectives in the organization to give a sense
of direction to the employees is called as Management by Objectives.
➢It refers to the process of setting goals for the employees so that they
know what they are supposed to do at the workplace.
➢Management by Objectives defines roles and responsibilities for the
employees and help them chalk out their future course of action in the
organization.

27. Process of MBO
1. Define organization goals: Setting objectives is not only critical to the
success of any company, but it also serves a variety of purposes. It needs to
include several different types of managers in setting goals.
2. Define employee objectives: Once the employees are briefed about the
general objectives, plan, and the strategies to follow, the managers can start
working with their subordinates on establishing their personal objectives.
3. Continuous monitoring performance and progress: Though the
management by objectives approach is necessary for increasing the effectiveness
of managers, it is equally essential for monitoring the performance and progress
of each employee in the organization.

28. Process of MBO
4. Performance evaluation: Within the MBO framework, the performance review is
achieved by the participation of the managers concerned.
5. Providing feedback: In the management by objectives approach, the most essential
step is the continuous feedback on the results and objectives, as it enables the employees
to track and make corrections to their actions. The ongoing feedback is complemented
by frequent formal evaluation meetings in which superiors and subordinates may discuss
progress towards objectives, leading to more feedback.
6. Performance appraisal: Performance reviews are a routine review of the success of
employees within MBO organizations.

29. Advantages of MBO
1. Efficient Management
2. Effective Planning
3. Transparency
4. Reinforces Commitment
5. Goal Setting
6. Accountability
7. Efficient Utilization of Human Resources
8. Minimizes Ambiguity

30. Strategy
➢ Term “Strategy” was first used in war
➢ Strategies were developed to defeat enemy in war
➢ Derived from Greek word “Strategos”, means
“General”
➢ Strategy is later adopted in business world to face
competition

31. Strategy
A strategy could be:
 A plan or course of action or a set of decision rules making a pattern
or creating a common thread or
 The pattern or common thread related to the organization's activities
which are derived from the policies and goals.
 Unified, comprehensive and long-term plan.

32. Types of strategies
Strategy is operated at three levels in an organisation for
the purpose of achieving the objectives and goals.
1) Corporate Level
2) Business Level
3) Functional Level

33. Corporate Level Strategies
Corporate level strategy defines the business areas in which your firm
will operate. It deals with aligning the resource deployments across
different sets of business areas, in which the company operates or
plans to operate.

34. Example
ITC Ltd. has adopted diversification strategy, which is applicable to entire organisation. They
have diversified into Hotel business, food products, FMCG, paper business, confectionary etc.

35. Business level strategies
Business level strategies are formulated for specific strategic business
units and relate to a distinct product-market area. It involves defining
the competitive position of a strategic business unit.
The business level strategy formulation is based upon the generic
strategies of overall cost leadership, differentiation, and focus.

36. Example
ITC Ltd. Is following differentiation strategy as they make different variety of biscuits to cater to
the needs of different segments

37. Functional level strategies
Functional level strategies relate to the different functional areas
which a strategic business unit has, such as marketing, production
and operations, finance, and human resources.
These strategies are formulated by the functional heads along with
their teams and are aligned with the business level strategies.

38. Example
ITC Ltd. market their FMCG with the help of advertising through
mass media like TV, Internet, News Paper and radio.

39. Policy
The term “Policy” is defined by Koontz and O ‘Donnel as “policies
are general statements or understandings which guide mangers
thinking in decision making”.
They ensure that decisions fall within certain boundaries. They
usually don’t require action but are intended to guide managers in
their commitment to the decision they ultimately make.

40. Types of Policy
1) Based on source
a. Originated policy
b. Imposed policy
c. Appealed policy
d. Implied policy
2) Based on levels
a. Basic policy
b. General policy
C. Department policy

41. Types of Policy
3) Based on managerial function
a. Planning policy
b. Organisation policy
c. Control policy
4) Based on dissemination
a. Explicit policy
b. Implicit policy

42. Types of Policy
5) Based on function
a. Marketing policy
b. Finance policy
c. Production policy
d. Human resource policy

43. Decision Making
Decision-making is regarded as the cognitive process
resulting in the selection of a belief or a course of action
among several alternative possibilities.

44. Some decisions are easy like.......
What to eat in breakfast????

45. Some decisions are difficult like.......
Choosing a career

46. 46
Stages of Decision Making
Identifying
the problem
Generating
information
Identifying
alternatives
Weigh the
evidence
Choose
among
alternatives
Review the
decision
Take Action

47. Stages of decision making
Identify the problem. The first step in making the right decision is recognizing
the problem or opportunity and deciding to address it. Determine why this
decision will make a difference to your customers or fellow employees.
Gather information. Next, it’s time to gather information so that you can make a
decision based on facts and data. This requires making a value judgment,
determining what information is relevant to the decision at hand, along with
how you can get it.
Identify alternatives. Once you have a clear understanding of the issue, it’s time
to identify the various solutions at your disposal. It’s likely that you have many
different options when it comes to making your decision, so it is important to
come up with a range of options.

48. Stages of decision making
Weigh the evidence. In this step, you’ll need to “evaluate for feasibility,
acceptability and desirability” to know which alternative is best.
Choose among alternatives. When it’s time to make your decision, be sure that
you understand the risks involved with your chosen route.
Take action. Next, you’ll need to create a plan for implementation. This involves
identifying what resources are required and gaining support from employees
and stakeholders.
Review your decision. An often-overlooked but important step in the decision
making process is evaluating your decision for effectiveness. Ask yourself what
you did well and what can be improved next time.

49. Types of decisions
1) Routine and strategic decisions: Tactical or routine decisions are made
repetitively following certain established rules, procedures and policies. Strategic or
basic decisions, on the other hand, are more important and so they are taken
generally by the top management and middle management.
2) Programmed and non-programmed decisions: The programmed decisions are
of routine and repetitive natures which are to be dealt with according to specific
procedure. But the non-programmed decisions arise because of unstructured
problems. Non-programmed decisions require thorough study of the problem and
scientific analysis of the situational factors.
3) Policy and operating decisions: Policy decisions are of vital importance and are
taken by the top management. They affect the entire enterprise. But operating
decisions are taken by the lower management in order to put into action the policy
decisions.

50. Types of decisions
4) Organisational and personal decisions: Organisational decisions are those
which a manager takes in his official capacity. Such decisions can be delegated.
But, personal decisions, which relate to the manager as an individual and not as a
member of the organization, cannot be delegated.
5) Individual and group decisions: When a decision is taken by an individual
in the organisation, it is known as individual decision. Such decisions are
generally taken in small organisations and in those organisations where autocratic
style of management prevails.
6) Major and minor decisions: Another classification of decisions is major and
minor. Decision pertaining to purchase of new factory premises is a major
decision. Major decisions are taken by top management. Purchase of office
stationery is a minor decision which can be taken by office superintendent.

51. Rational decision making
Formulating a goal: The first step is to recognise a problem or to see opportunities that may
be worthwhile. A rational decision-making model is best employed where relatively complex
decisions have to be made.
Identifying the criteria for making the decision: In this step, the decision maker needs to
determine what is relevant in making the decision.
Identifying alternatives: Once you have identified the issue and gathered relevant
information, now it is time to list potential options for how to decide what to do.
Performing analysis: After creating a somewhat full list of possible alternatives, each
alternative can be evaluated.
Making a final decision: After a careful evaluation of alternatives, you must choose a
solution. You should clearly state your decision so as to avoid confusion or uncertainty.

52. Decision making under different conditions
a) Certainty: In a situation involving certainty, people are reasonably sure about what will
happen when they make a decision. The information is available and is considered to be reliable,
and the cause-and-effect relationships are known.
b) Uncertainty: In a situation of uncertainty, on the other hand, people have only a meager
database, they do not know whether or not the data are reliable, and they are very unsure about
whether or not the situation may change. Moreover, they cannot evaluate the interactions of the
different variables. For example, a corporation that decides to expand its operation to an
unfamiliar country
c) Risk: In a situation with risks, factual information may exist, but it may be incomplete. 1o
improve decision making One may estimate the objective probability of an outcome by using, for
example, mathematical models. On the other hand, subjective probability, based on judgment and
experience may be used