Principles of Management

Planning

Definition

• According to Allen, “A plan is a trap laid to capture the

future.”

• According to Koontz & O’Donell, “Planning is deciding in

advance what to do, how to do and who is to do it. Planning

bridges the gap between where we are to, where we want to

go. It makes possible things to occur which would not

otherwise occur”.

• According to Alford and Beatt, “Planning is the thinking

process, the organized foresight, the vision based on fact

and experience that is required for intelligent action.”

• According to Abraham Lincoln “We must plan for the future,

because people who stay in the present will remain in the

past.”

Basic Managerial Functions

• Planning is one of the primary functions of management

• Setting of goals to be achieved and lines of action to be

followed precedes the organization, direction, supervision

and control. Hence planning precedes other functions of

management.

• Planning involves selecting objectives or goals and the

course of actions to achieve them:• Provides the bridge to take us from where we are to where we want to

go;

• Is a rational approach to achieving pre-selected objectives - based on

innovation, knowledge and purpose;

• Decision making in choosing the best from alternative courses of action

and is integral to planning;

Characteristics of Planning

• Goal-oriented

• Looks ahead

• An intellectual process

• Involves choice & decision making

• Primary function of management

• Continuous Process

• Designed for efficiency

• Planning is pervasive

Advantages

• Facilitates management by objectives

• Minimizes uncertainties

• Provides competitive edge and improves effectiveness

• Encourages innovations / brain-storming

• Facilitates control and co-ordination

• Helps in achieving economies of scale / synergies

Disadvantages• Internal Limitations

– Rigidity

– Misdirected Planning

– Time consuming

– Probability in planning

– False sense of security

– Expensive

• External Limitations of Planning

– Political Climate

– Labour Union

– Technological changes-

– Policies of competitors

– Natural Calamities

– Changes in demand and prices

Types

• Long Term & Short Term

• Formal & Informal Plans

• Proactive & Reactive Plans

• Strategic

– A strategic plan is an outline of steps designed with the goals of the

entire organization as a whole in mind, rather than with the goals of

specific divisions or departments. Strategic planning begins with an

organization's mission.

• Operational Plans

– An operational plan is one that a manager uses to accomplish his or

her job responsibilities. Supervisors, team leaders, and facilitators

develop operational plans to support tactical plans

Strategic PlanningA strategic plan is an outline of steps

designed with the goals of the entire

organization as a whole in mind, rather than

with the goals of specific divisions or

departments. Strategic planning begins with

an organization's mission.

– Formulation

– What, where

– Ends

– Vision

– Effectiveness

– risk

– Long Term

– Formal

Operational PlanningAn operational plan is one that a manager

uses to accomplish his or her job

responsibilities. Supervisors, team

leaders, and facilitators develop

operational plans to support tactical

plans

– Implementation

– How

– Means

– Plans

– Efficiency

– Control

– Short term / Long term

– Formal / Informal

Strategic Planning

vs. Operational Planning

No planning

• Creates aimlessness and wandering

Planning Process

PLANNING IN WORK

ENVIRONMENT

Case Study

The Conceptualisation

• Investors like Harshad Mehta diverted Rs. 35 Bn from the

bank system via Ready Forward Deals to the equity market

which they manipulated.

• The Government of India on the recommendation of

Pherwani Committee in 1991 set up the National Stock

Exchange of India - NSE.

• This was a planned move by the MOF to put an end to the

weaknesses of BSE like low transparency, bureaucracy and

unreliable clearing and settlement systems, which led to the

stock market crashed in April 1992.

• The Government & the Ministry of Finance Strategically

Planned the inception of a new generation Stock Exchange

• Today the NSE is the largest stock exchange in India and

the fourth largest in the world.

• Proper planning, has led this achievement.

Operational / Functional Planning

• 20 yrs ago we started in Mumbai and then went nation wide

electronically using technological advancements.

• We also planned for segments like

– Capital Market

– Futures & Options

– Currency Derivatives

• All this required planning at different stages

– By scouting the investment market potential – understanding of

market dynamics and investor appetite

– Laying a detailed procedure for implementation with timelines

– Creating investor awareness and educating the common man on

investing safely

– Developed the necessary back-end system for implementation

– Going live with the project !!

• This entire process involved leading a group of people and

monitoring the progress of the plan at different stages

Planning for Unforeseen Eventuality

• As we grew the volumes increased, we needed a robust

system and a Disaster Recovery (DR) site to protect us from

any unforeseen circumstances

• We planned for a DR site at Chennai.

• We implemented a Business Continuity Management (BCM)

plan and deployed elaborate DR solutions as a part of the

BCM exercise in the form of a four-step plan

– Business Impact Analysis

– Strategy Selection

– Detailed Plan development and plan maintenance

– Testing, revisions and modifications

LONG-TERM, FORMAL,

PROACTIVE, OPERATIONAL PLAN

A Case Study on

The Planning Process

• Set Goal

– A pharmaceutical company set a goal for itself to venture into the

obesity drug market since it is one of the major lifestyle diseases.

– The goal set, objective is established and a Mission is set !

• Gather / Analysis Data

– To do a market assessment it assigned the task to a research

agency to gather and analysis the data on the target audience and

market dynamics.

– Guideline for Strategy formulation, evaluation of alternates, market reality,

risk assessment

– Basically preparing the ground for formulation the business plan

The Planning Process (contd.)

• Create Plan

– Based on the analysis the company formulated a phased Business

Plan with proper implementation timelines to roll out the drug in the

market

– A rational approach to achieving pre-selected objectives - based on market

analysis, knowledge and purpose

– choosing the best option action from the alternates available by brain-

storming through involvement and co-operation of the functional

management team

– A business plan formulated has the investment layout, the projected profit &

loss for a period of 5-10 years keeping in mind the best and the worst case

scenarios based on internal and external factors.

• Implement & Monitoring the Plan

– Using the Formulated Plan as a guideline company implemented the

same and continuously monitored its progress until successful

Market Launch of the Drug !

THANK YOU