PLANNING

&
MANAGEMENT BY
OBJECTIVE
INTRODUCTION

 MEANING
 FEATURES
 IMPORTANCE
MEANING

 Planning is the process of thinking before doing

 Consists of deciding in advance-
 what is to be done?
 how is to be done?
 where is to be done?
 when it is to be done?
 It is called the art of the possible because planning requires both
creativity and analysis in defining business opportunities and constraints.
 It is the process of matching the resources with the opportunities

because deciding what is desired and determining the actions required

are both involved in planning.

 It is basically a problem of choosing among alternative courses of action

 The essentials of planning lie in the thinking of shaping the future of the
undertaking instead of expecting the organization to adopt to a future as
shaped by directional forces. example-McDonald’s

 Planning is a word for the processes which orient attention of the

management to the determination of desired results and the ways and
means to achieve them.
 FEATURES
 Contributes to objectives-exercise of creative thinking in the solution
of various problems .if performance is not moving in the given
direction then necessary changes are required.
 Primacy of planning-planning is the basic function and the structure
of the other functions(staffing ,organizing, directing and controlling)
depends on it.
 Forward looking-looking ahead into future and making provisions to
tackle future events and situations.
 Pervasiveness-it is required at all levels of management (top ,middle
or lower) in all departments of organization(purchase
,production ,finance or research development), in all types of
organization(small ,large ,economic,social,religious,political)
top level management-strategic and long range planning
low level management-tactical and operational planning
Cont…..
Efficiency of operations-achievement of organizational objective to
be applied with minimum cost and wastage and if possible better
technology to be used .example -Hindustan liver had established a
near monopoly and established itself within a short period through
its low cost technology.
Involves choice-identification of issues and problems requiring
decisions
 collection of relevant information
 development of alternative course of action
 evaluation of alternative course of action
 selection of appropriate course of action
and called as intellectual process also there is no need for
planning if there is only one way of doing .example-if a company
has to import raw materials and there is only one agency like STC
to get it then company has no choice but to buy through STC.
Why do Managers plan?
 Off-setting uncertainty and change-planning reduces the risk of
uncertainty-
(a) anticipates uncertain future event-rain
(b) anticipates the risk of future event-risk of getting wet
(c) provisions to reduce the risk of uncertainty by providing
for an umbrella.
 focusing attention on objectives-by making the objectives clear and
specific and by formulating the policies and programmers for
achieving those objectives.
 Facilitates control-standards against which actual performance is
compared. there is no control without planning.
 Established coordinated-planning facilitates co-ordination of
departmental operations by establishing common goals . without
planning departments could work at cross-purposes and prevent
the organization from moving efficiently towards its objectives.
TYPES OF PLANS:-

There are 8 types of plans which can be classified as follows:-

1.PURPOSES OR MISSIONS-
 Identifies the basic function or task of an organization.
 Distinguish between purposes and missions.

2.OBJECTIVES-
 Ends towards which activity is aimed.
 Represents not only the end-point of planning but the end toward
which other functions of management are being aimed.
 3.STRATEGIES-
 General programs of action and deployment of resources to attain
comprehensive objective.
 Purpose is to determine and communicate a picture of the kind of
enterprise that is envisaged.
4.POLICIES-
 General statements or understandings that guide or channel
thinking in decision making.
 Defines an area within which a decision is to be made and ensure
that the decision will be consistent with and contribute to, an
objective.
 It is a means of encouraging discretion and initiative, but within
limits.
5.PROCEDURES-
 Plans that establish a required method of handling future activities.
 Guides to action.
6.RULES-
 Specific required actions or non- actions, allowing no discretion.
 Essence of a rule is that it reflects a managerial decision that a
certain action must or must not be taken.
 Guidelines for action.
7.PROGRAMS-
 Refers to a set of clear instructions in a clear and logical sequence
to perform a particular task.
 Explain how to carry out a given course of action.
 Supported by budgets.
8.BUDGETS-
 Statement of expected results expressed in numbers.
 May be expressed either in financial terms or in terms of labor
hours, units of product, machine hours or any other numerically
measureable parameter.
 May be an expense budget, or capital expenditure budget or cash
budget.
STEPS IN PLANNING

Plans may be major or minor in nature. Minor plans are relatively

simpler & easily made. Making major plans requires a detailed
action plans.
BEING AWARE OF OPPORTUNITIES

ESTABLISHING OBJECTIVES

DEVELOPING PLANNING PREMISES

DETERMINING ALTERNATIVE COURSES

EVALUATING ALTERNATIVE COURSES

SELECTING A COURSE

FORMULATING SUPPORTING PLANS

1. BEING AWARE OF OPPORTUNITIES

 It is not strictly a part of planning process.

 It is important as it leads to formulation of further plans.
 Provides knowledge to the manager in light of strengths &
weaknesses of the organization.
 Provides an opportunity to set the objectives in real sense.
2. ESTABLISHING OBJECTIVES

• Setting of major objectives for whole enterprise & for individual work
unit.
• This is done for both short term & long term.
• These objectives specify the results expected & indicate the end
points.
3. DEVELOPING PLANNING PREMISES

 Developing certain assumptions about future on basis of which

further plans are formulated.
 Supply pertinent facts & information relating to future.
 Planning premises can be classified as:
 Internal & external premises
 Tangible & intangible premises
 Controllable & non-controllable premises
4. DETERMINING ALTERNATIVE
COURSES
 Based on objectives & planning premises various alternatives can
be identified.
 It means particular objective can be achieved through various
actions.
 The more common problem is not finding alternatives but reducing
the number of alternatives so that most promising may be analyzed.
5. EVALUATING ALTERNATIVE
COURSES
 Evaluating how each alternative contributes to organizational
objectives in light of its resources & constraints

 Evaluation can be difficult as there are many alternatives having

positives & negatives
6. SELECTING A COURSE

 It is often said that planning ends with decision making

 When the most fit one is selected it is the point at which plan is
adopted
 This is the real point of decision making as the manager leads to
the selection of best course through analysis & evaluation
7. FORMULATING SUPPORTING PLANS

 Planning process is not complete without formulating derivative

plans
 These are required to support the basic plan
 These does not reflect the main focus of the business but the way
they support the main business is strategic & critical
MANAGEMENT BY OBJECTIVE(MBO):-

 MBO was given by Peter Drucker in 1954.

 Also known as Management by result (MBR).
 It focuses sharply on the objective & result.
 It emphasizes participative management.
 So it is a “comprehensive managerial system that integrates many
key managerial activities for effective & efficient achievement of
organization objectives”.
FEATURES OF MBO:-

 It is an approach and philosophy to management and not merely a

technique.
 It is a kind of integrative device.
 It tries to match objective and resources.
 It is characterized by participation of each organization unit.
 Periodic review of performance.
 Provide guidelines for appropriate system and procedures.
 OUTLINE OF PROCESS IN MBO
Organizational purposes & objectives. Planning premises

Key result area

Superior’s objectives

Superior’s Subordinate’s statement of

recommendation for his objectives.
subordinate’s objectives.

Matching resources Subordinate’s agreed

objectives

Subordinate’s performance

Performance review and appraisal

PROCESSES OF MBO:-

1.Setting of organizational purpose and objectives:-

 Definition of objectives
 Determination of long-range strategic objective
 Determination of managerial role
2. Key result area:-
 Profitability
 Market standing
 Innovation
 Productivity
 Worker performance etc.
3.Setting Subordinate Objectives:-
 Superior and subordinate relationship
 Superior’s proposed recommendation
 Subordinate’s own objective
 Mutual negotiation
4. Matching resources with objectives:-
 Allocation & movement of resources with consultation with
subordinate.
5.Appraisal:-
 To measure whether the subordinate is achieving his objective or
not.
 To find out the deficiency in the working.

6. Recycling:-
 Appraisal is used as an input for recycling objectives.
 Setting of objectives at various levels.
 Action planning in the context of those objectives.
 Performance review.
 Setting Objectives

 For Management by Objectives (MBO) to be effective, individual

managers must understand the specific objectives of their job and
how those objectives fit in with the overall company objectives set
by the board of directors.

 The objectives should be achievable and challenging. Never set

your staff unachievable targets – it will be demoralizing for them.
 "The one thing an MBO system should provide is focus", says Andy
Grove who ardently practiced MBO at Intel. So, have your
objectives precise and keep their number small. 
 Quantitative and Qualitative Objectives.
Benefits Of MBO

 Motivation – Involving employees in the whole process of goal

setting and increasing employee empowerment increases
employee job satisfaction and commitment.

 Better communication and Coordination – Frequent reviews and

interactions between superiors and subordinates helps to maintain
harmonious relationships within the enterprise and also solve many
problems faced during the period.
 Clarity of goals
 Subordinates have a higher commitment to objectives that they set
themselves than those imposed on them by their managers.

 Managers can ensure that objectives of the subordinates are linked

to the organisation 's objectives.
Limitations of MBO

 1. It over-emphasizes the setting of goals over the working of a plan

as a driver of outcomes.
 2. It underemphasizes the importance of the environment or context
in which the goals are set.
 3. Verifiable goals are difficult to set.
 4. In most MBO programs, managers set goals for the short term
seldom for more than year and often for a quarter less.
 5. Managers often hesitate to change objectives. Henceforth there
is a danger of inflexibility.
MBO In Indian Context

 During 1970’s MBO was introduced and implemented in around 50

industrial organisations of varying nature, size and activity.
 Like BHEL, HCL, Tamil Nadu Dairy Development Corporation etc.
 Private Sectors like Shaw Wallace, Glaxo, Blue Star etc.
 State government departments such as the Commissionrate of
Industries in Gujarat, Directorate of Industries and Commerce in
Tamil Nadu etc.
REFERENCES:-

 Principles Of Management
by:
L.M.Prasad
 Principles Of Management
by:
Harold Koontz
Heinz Wiehrich
A Ramachandra Aryasri
 WWW.1000ventures.com
 www.wikipedia.org
 K Y O U
TH AN

SHANAL
KUNAL
VIJETA
YUKTI
SWATI