PLANNING

MADE BY:- MOHIT SHARMA INDRAJEET KUMAR REEMA MAGGON GAURAV KUMAR ODIL LAKRA

DEFINITIONPlanning bridges the gap from where we are to where

we want to go. It makes it possible for things to occur which would not otherwise happen"

- Koontz and O'Donnell.

Planning is deciding in advance what to do, how to do it, when to do it & who is to do it . It bridges the gap from where we are to where we want to go.

GOALS ARE IMPORTANT FOR FOLLOWING REASONS

GOALS PROVIDE A SENSE OF DIRECTION: By setting goals, people and their organizations bolster their motivation and gain a source of inspiration that helps them overcome the inevitable obstacles they encounter.

GOALS FOCUS OUR EFFORTS: In selecting a single goal we establish priorities and make a commitment about the way we will use our scarce resources.

Contd…….

GOALS GUIDE OUR PLANS AND DECISIONS: It shapes both our short term and long term plans and help you make key decisions.

GOALS HELP US EVALUATE OUR PROGRESS: Goals are an essential part of controlling- the process of making sure that actions are in keeping with goals and the plans created to achieve them.

Nature of planningGoal Oriented : It is closely associated with

the objectives of the organization. It lays down the action that will lead toward the ultimate objectives.

Forward looking : Planning is always concerned with looking into the future.

Primary function : The beginning phase of the management process is planning. It is based upon the organizational objectives.

Effectiveness of planning : The effectiveness of planning is measured by its contribution in reaching organizational objectives versus its corresponding costs.

Contd………

Unity & consistency : It leads to achievement

of overall objectives with consistency in behavior & action.

Pervasive : It is inherited at every level of an organization. The higher one goes in the management structure, the more time will spent on planning.

Selection of alternatives : It is concerned with selecting the best course of action among the alternatives.

Objectives of PlanningReduces uncertainty- future is uncertain so

we have to Convert uncertainty in to certainty.Brings co-operation & co-ordination- in

various sections of the organization there are Rivalries & conflicts among departments these could be avoided through planning.

Economy in operation-By selecting best alternatives among various alternatives and best utilization of resources objectives of the organization are achieved easily.

Anticipates unpredictable contingencies- some events are unpredicted and this could affect smooth functioning of an enterprise planning is a provision to tackle this problem.

Contd……..

Achieving the predetermined goals- This is the main objective of an organization

Reducing competition- stiff competition should be avoided

By Avoiding business failuresBy conducting an environmental analysisBy Creating an organizational missionBy Creating an organizational vision

Steps in PlanningA planning is one of most importance to an

organisation. Most organizations follow the same set of fundamentals when dealing with management. Planning is basically preparing, scheduling, arranging, or setting up to achieve organization goals.

Process of planning should be carried out in a systematic manner.

Steps in Planning

Identify objectives/goals

Review of current status/ premises

SWOT

Collection and forecasting of Information

Formulation of derivative plans

Select the alternative Course of action

Communicating the plan

FEEDBACK

Why Planning is Important

Good Planning provides:Increases efficiencyReduces business-related risks Facilitates proper coordinationAids in organisingGives right directionKeeps good controlHelps to achieve objectivesMotivates the personnel Encourages creativity and innovation Helps in decision making

Why Planning Fails

Lack of reliable data : Planning loses its values if reliable information is

not available or if the planner fails to utilize the reliable information

Rigidity in organizational working : Inflexibility in the organization may lead to rigid plans. Managers should not required to follow the procedures rigidly.

Lack of understanding : There are different levels in an organization and steps involved in planning process. It may create confusion among subordinates or they may not skilled in understanding all steps of the planning requirements.

Resistance to change : Employees do not like change and sometimes they do not think that it desirable to bring change. The reasons may be loss of status, fear of failure, insecurity, lack of understanding etc.

Time consuming : Planning involves analyzing information and evaluation of various alternatives and also involves cost of gathering it. Result may not achieved if desired time not spent on plans.

Advantages of Planning Planning facilitates management by

objectives – It highlights the purposes for which various

activities are to be undertaken. Planning helps in focusing the attention of

employees on the objectives or goals of enterprise.

Planning minimizes uncertainties – Planning helps in reducing uncertainties of future

as it involves anticipation of future events. Planning facilitates co-ordination – Planning revolves around organizational goals. All activities are directed towards common goals.

Planning improves employee’s moral - Planning creates an atmosphere of order and

discipline in organization. Employees know in advance what is expected

of them and therefore conformity can be achieved easily.

Planning helps in achieving economies – Effective planning secures economy since it

leads to orderly allocation of resources to various operations.

It also facilitates optimum utilization of resources which brings economy in operations.

Planning facilitates controlling – Planning facilitates existence of certain

planned goals and standard of performance.

It provides basis of controlling.

Planning encourages innovations – In the process of planning, managers have

the opportunities of suggesting ways and means of improving performance.

It creates a forward looking attitude amongs the managers.

Planning processPlanning starts with the setting of goals and

objectives to be achievedPlanning requires a systematic approach. Planning premises may be internal or external.

Internal includes capital investment policy, management labour relations, philosophy of management, etc. Whereas external includes socio- economic, political and economical changes.

Steps involved in Planning Process

1. Goal setting: Plans are the means to achieve certain

ends or objec tives. Setting objectives is the most crucial part of planning. The organizational objectives should be set in key areas of operations. Establishment of goals is influenced by the values and beliefs of executives, mission of the organization, organizational resources, etc. The objectives must be clear, specific and informative. 

2. Developing the planning premises: Before plans are prepared, the

assumptions and conditions underlying them must be clearly defined these assumptions are called planning premises and they can be identified through accurate forecasting of likely future events. Assessment of environment helps to reveal opportunities and constraints. Analysis of internal (controllable and external (uncontrollable) forces is essential for sound planning premises are the critical factors which lay down the bounder for planning.

3. Reviewing Limitations:In practice, several constraints or limitations

affect the ability of an organization to achieve its objectives. These limitations restrict the smooth operation of plans and they must be anticipated and provided for. The strong and weak points of the enterprise should be correctly assessed.

4. Deciding the planning period:Once the broad goals, planning premises and

limitations are laid down, the next step is to decide the period of planning. The planning period should be long enough to permit the fulfillment of the commitments involved in a decision.

5. Formulation of policies and strategies: After the goals are defined and planning

premises are identified, management can formulate poli cies and strategies for the accomplishment of desired results. 

Alternative plans of action should be developed and evaluated carefully so as to select the most appropriate policy for the organization.

6. Preparing operating plans: After the formulation of overall operat ing

plans, the derivative or supporting plans are prepared. Several medium range and short-range plans are required to implement policies and strategies.

These plans consist of procedures, programmers, sche dules, budgets and rules. Such plans are required for the implementation of basic plans.

7.Integration of plans:Different plans must be properly balanced

so that they support one another. Review and revision may be necessary before the plan is put into operation. Moreover, the various plans must be communicated and explained to those responsible for putting them into practice.

Planning levels

Characteristics of Plans

Time Horizon: refers to how far in the future the plan applies.

Hierarchy of Organization Plans

Organizations are typically managed according to two types of plans.

STRATEGIC PLANS: Plans that are designed by high ranking managers and define the broad goals for the organization.

OPERATIONAL PLANS: Plans that contain details for carrying out, or implementing those strategic plans in day to day activities.

MISSION STATEMENT: Broad organizational goal, based on planning premises, which justifies an organization’s existence.

THE SEVEN-S MODELMCKINSEY &CO has proposed the seven-s model for successful

strategy implementation. MCKINSEY’S consultants found that neglecting any one of seven key factors could make the efforts to change a slow, painful, and even doomed process.

STRUCTURE: A successful organization may make temporary structural changes to cope with specific strategic tasks without abandoning basic structural divisions throughout the organization.

STRATEGY: The seven-s model emphasizes that the development of strategies poses less of a problem than their execution.

STAFF: Successful organizations view people as valuable resources who should be carefully nurtured, developed, guarded and allocated. Top managers devote time and energy to planning the progress and participation of existing managers

Contd…..

SUBORDINATE GOALS: This refers to guiding concepts, values and aspirations that unite an organization in some common purpose.

SYSTEM: This category consists of all the formal and informal procedures that allow the organization to function, including capital budgeting, training, and accounting systems.

SKILLS: It refers to those activities organizations do best and for which they are known.

STYLE: It refers to the pattern of substantive and symbolic actions undertaken by top managers. It communicates priorities more clearly than words and may influence performance.

OPERATIONALISING STRATEGY

OPERATIONAL PLANS: Plan that provides details needed to incorporate strategic plans into the organization’s day to day operations.

SINGLE USE PLANS: Detailed course of action used once or only occasionally to solve a problem that does not occur repeatedly.

PROGRAM: A single used plan that covers a relatively large set of organizational activities and specifies major steps, their order and timing, and the unit responsible for each step.

PROJECT: The smaller and separate portions of the program.

BUDGETS: Formal quantitative statements of the resources allocated to specify programs or projects for a given period.

STANDING PLAN: An established set of decisions used by managers to deal with recurring or organizational activities; major types of policies, procedures and rules.

POLICY: A standing plan that establishes general guidelines for decision making.

RULES: Standing plans that detail specify actions to be taken in a given situation.

PROCEDURE: A standing plan that contains detailed guidelines for handling organizational actions that occur regularly.

INSTITUTIONALISING STRATEGY

An Institution is a collection of values, norms, roles, and groups that develops to accomplish a certain goal. To emphasize systems, style, staff, skills, and super ordinate goals, we need to look at how strategy is institutionalized.

THE ROLE OF THE CEO Chief executive officers(CEOs) spend most of their time

developing and guiding strategy their personal goals and values inevitable shape organizational strategy. Their role in strategy formulation makes CEOs especially important to strategy implementation. First they interpret strategy, acting as final judges when managers disagree on implementation. Second, CEOs enact- through their words and actions- the seriousness of an organization’s commitment to a strategy. Third, CEOs motivate, providing intangible incentives beyond pay or bonuses.

THE STRATEGIC MANAGEMENT PROCESS

Strategic management provides a disciplined way for managers to make sense of the environment in which their organization operates, and then to act. Two phases are involved:-

Strategic Planning: this includes both the goal setting and the strategy formulation process.

Strategy Implementation: there is a shift from analysis to administration- the task of achieving predetermined goals.

BUSINESS STRATEGIES LOW COST: Gain a competitive advantage by driving

down organizational cost.Managers manufacture at lower cost, reduce waste.Lower cost than competition means lower prices. DIFFERENTIATION: Gain a competitive advantage by

making our product different from others.Differentiation should be valued by customers.Successful differentiation allows you to charge more for

a product.

Corporate level Strategies Concentrate in single business: MC Donald's

focuses in the fast food business.• Can become very strong, but can be risky. Diversification: Organization moves into new

business and services.• Related diversification: firm diversifies in similar

areas to build upon existing divisions. Synergy: two divisions work together to obtain

more than the sum of each separately. Unrelated diversification: buy business in new

areas.• Build a portfolio of unrelated firms to reduce risk

or trouble in one industry

“FIVE FORCES” CORPORATE STRATEGY

An Organization’s ability to compete in a given market is determined by that organization’s technical and economic resources, as well as by five environmental forces each of which threatens the organization’s venture into a new market.

The five forces are:- THREAT TO NEW ENTRANTS. BARGAINING POWER OF BUYERS(CUSTOMERS). BARGAINING POWER OF SUPPLIERS. THREAT OF SUBSTITUTE PRODUCTS. RIVALRY AMONG COMPETITORS.

FUNCTIONAL LEVEL STRATEGIES

Seeks to have each department add value to a good or service.

Marketing, service, production all add value to a good or service.

Value is added in two ways:Lower the operational cost of providing the value in

products.Add new value to the product by differentiating.Functional strategies must fit with business level

strategies.