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Transcript of Planning
Purvish Shah - NavigatorPurvish Shah - Navigator
The Nature and Purpose The Nature and Purpose of of
PlanningPlanning
Purvish Shah - NavigatorPurvish Shah - Navigator
Planning Definition :
Planning is the design of a desired future and of effective ways of bringing it about.
Planning is looking ahead in order to visualize and decide a future course of action to allow to achieve a desired goal.
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Purposes of Planning • In business (and in life ) things are so complex that
without proper planning they can not be handled.
• It is a pre- requisite not only to achieve success but even to survive in a complex and competitive world.
• It helps in determining opportunities • It helps in identification of courses of action.• It helps in proper utilization of resources effectively.• It helps in working in an organized manner.
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Nature of Planning
1. Planning is the most important function of management.
2. Planning has central role in linking all other managerial functions.
3. Planning is pervasive and oversees all other
managerial functions.
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Functions of Managers
•Planning
•Staffing
•Organizing
•Leading
•Controlling
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Managerial Skills•Human
•Conceptual
•Design
•Technical
All functions and skills are linked to planning function.
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Benefits of Planning
• Planning leads to success.
• It acts as a bridge between where we are
and where we want to be.
• It helps in saving resources, money and
time.
• Jobs are well coordinated thus duplication
of effort is avoided and skills and
potentials are fully utilized.
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Myths about Planning
• Planning that proves inaccurate is a waste of
management time.
• Planning can eliminate change.
• Planning reduces flexibility.
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Is a pre-determined course of action.
•It brings orderliness.
•Avoids confusion.
•Gives better use of resources.
•Cuts waste.
Plans are changed or modified but not
abandoned.
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Effectiveness:
is the achievement of objective.
Efficiency: Is the achievement of objective with least amount of resources.
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Effectiveness of Plans
Effectiveness of plan pertains to the
degree to which it achieves its objectives.
Efficiency of plan refers to its attainment of
objective at a reasonable cost.
Efficiency of Plans
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Types of Plans • Single use or one time plans
• Standing Plans
• Specific Plans
• Subject Plans
• Directional Plans
• Short Term Plans
• Long Term Plans
• Operational Plans
• Strategic Plans
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Single Use or One Time Plan
It is specifically designed to meet the needs of
a unique situation and is created in response to
non-programmed decisions that managers
make.
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Standing Plans
Ongoing plans that provide guidance for
activities repeatedly performed and are created
in response to programmed decisions that
managers make.
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Specific Plans
These plans are clearly defined and explicit and
leave no room for interpretation.
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Subject Plans
These plans are limited to one particular aspect
of an organization’s activates.
Marketing
Production
Recruitment
Financial
Manpower etc
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Directional Plans
These are flexible plans that set out general
guide lines and permit considerable discretion to
users.
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Short Term Plans
Plans that are formulated to cover a period of less
than one year.
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Long–Term Plans
Plans that are formulated to extend upto
beyond five years.
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Operational Plans
Plans that specify details on how overall
objectives are to be achieved.
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Strategic plans
These plans are organization–wide, establish
overall objectives and position an organization
in term of its environments.
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Cornerstone of Planning
Objectives
Goals
• Multiplicity of objectives
• Stated objectives • Real objectives
• Traditional objective setting
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Objective
It is a desired outcome for groups or an entire
organization.
Goal
It is a desired out come for an individual.
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Stated Objectives
Official statements of what an organization says and what it wants public to believe.
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Real Objectives
Objectives that an organization actually pursues, as defined by the action of its
Management.
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Traditional Objective Setting
Objectives are set at the top and then broken down into sub-objectives for each level in an organization. The top imposes its standards on every one below.
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Principle of Planning
The more thoroughly individuals charged with planning understand and agree to utilize consistent planning premises the more coordinated and realistic planning will be.
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Components of Plans Mission
Objectives
Premises
Policies
Procedures
Rules
Budgets
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Mission
The purpose of an organization is called its mission.
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Policies
Guidelines that establish parameters for making decisions.
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Premises
This is the anticipated environment in which
plans are expected to operate and include
forecasts of the future and conditions that are
likely to affect the operation in future.
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Procedures
A series of interrelated sequential steps that can
be used to respond to a structured problem.
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Rules
Explicit statements that tells managers what
they ought or ought not to do.
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Structured problem
It is a straightforward, familiar and easily
defined problem.
Non Structured problem
A new problem for which information is
ambiguous or incomplete.
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Budget
A budget is a numerical plan for allocating
resources to specific activities.
A budget is a statement of expected results
expressed in numerical terms.
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Types of Budget
Revenue: A budget that projects future
sales
Expense: A budget that lists the
primary activities by a unit and allocates amount to each
Profit: A budget to determine a unit’s
contribution to overall profit of an organization
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Cash:A budget that forecasts how much an organization will have and how much it will need to meet expenses
Capital Expenditure:A budget that forecasts investments in property, buildings and major equipment.
Fixed:A budget that assumes a fixed level of sales or production.
Variable:A budget that takes into account those cost that vary with volume of production.
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Approaches to Budgeting
Incremental (or traditional)
A budget that allocates funds to various activities
according to allocations in the pervious period
(and adjusted to cater for inflation etc)
Zero-base
A system in which budget requests start form
scratch regardless of pervious budgetary
allocations.
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Steps in Planning
Pre-requisite : Awareness of opportunities
1st: Establishing Objectives 2nd: Developing Premises 3rd: Determining Alternative Courses 4th: Evaluating 5th: Selecting Best Course
Post-requisiteDerivative or Supportive Plans
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Awareness of Opportunities
• Not strictly a step in planning process. But it is a real starting
point.
• Managers must look at possible opportunities in the light of their
organization's strengths and weaknesses
• Must also look at future environment both external and internal.
• Setting realistic objectives depends on this awareness.
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1st Step: Establishing Objectives
• Selecting objectives for the entire organization.
• Based on organizational objectives, establishing objectives for each
subordinate work unit.
Organizational objectives give direction to the major plans, which define
objectives for every major department.
Major departmental objectives control objectives of subordinate departments.
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2nd Step: Developing Premises
Developing premises is critical to planning. These include:
. Forecasts
. Basic Policies
. Existing Plans
. Anticipated Environment
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3rd Step: Determining Alternative Courses
• There is seldom a plan for which reasonable
alternatives do not exist.
• Common problem is not finding alternatives
but reducing their numbers.
• Most fruitful possibilities must be looked at.
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4th Step: Evaluating Alternative Courses
• Evaluate courses by examining their strong and
weak points.
• Weigh them in the light of premises and objectives.
• Complex courses can be evaluated with the help of
operational research, mathematical and computing
techniques.
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Evaluating Alternative Courses
1. Establishing criteria
2. SFA test
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5th Step: Selecting the Best Course
Selecting the best course is the real point of decision
making.
By establishing criteria, eg
Achieving objectives at least cost
Requiring least changes
Ensuring maximum return on investment
SFA Test