Planning Function of

Management
Discussion

 Discuss Planning function?

 Why planning is important?
 Discuss cordial values of organization?
 Planning Function
 Ever-growing competition, trouble environment, stiffly competitive
environment.
 Frequent fluctuations in demand
 Discovery of new products
 Anticipatory decision making a process and improves performance
Planning
 Planning allows integrated, consistent and purposeful action.
 Planning is the primary function of management
 Choosing future course of action from among alternatives
 Bridge between the present & the future
 Deciding on today for the future.
 Definition planning
 Planning is the management of the organization's future in an uncertain
environment.
 Planning is the process by which managers set objectives, assess the future and
develop courses of action to accomplish these objectives.
 Planning – is the dynamic process of making decisions today about future actions;
 What missions or objectives be achieved
 What actions should be taken
 What organizational positions be assigned
 How the end can be achieved
 When to achieve it
 Who is to do it
 Where to do it
 Co
rpo
Nature of planning rat
e
Departmental/
pla
 It is goal oriented- Focus on achievement of goals/objective oriented. divisional plans
ns
 Primacy of planning- Function of planning precedes all other managerial
functions.
Unit plans
 Pervasiveness/ universality of planning- By all managers, by all levels, all
organization.
 Planning and information are deeply related- Information is power/basis for
Decision making.
 Planning is a continuous process- It has dynamic aspects, Environment
aspects.
 Plans are arranged in a hierarchy- Top, middle, and lower level
 It concerns future activity: Deciding currently about the future, forecasting
and DM.
 Directed towards Efficiency- Achieving purpose at a reasonable cost, resource
utilization (time, money, or production).
Importance of planning
 It provides direction and sense of purpose
 It helps to reduce uncertainties.
 It provides basis for controlling
 It forces managers to see the organization as one (consider other parts),
coordination
 It promotes efficiency (resource use)
 Developing managers (it is an intellectual activity, systematic thinking)
 It provides guideline for decision making (policies and rules for instance).
Limitations of planning
 Planning is risky (uncertainties)
 It is a difficult and complicated task
 It is expensive and time consuming
 Affected by external factors (nature, government policies,…)
Purpose of planning
 To offset uncertainty - Planning foresees the future

 To focus attention on objectives - All planning efforts

are directed towards achieving enterprise objectives.

 To gain economical operation -Attention on these

objectives, so increases efficiency.

 To facilitate control- Unplanned action cannot be

controlled, control without a plan would be meaningless,
 The Vision

 A vision or strategic intent is a view of a future reality that the organization seeks.

 Vision is a mental journey from known to the unknown, creating the future from a montage of current facts,
hopes, dreams, threats and opportunities.

 A vision statement should answer the basic question, “What do we want to become?”
 The Mission
 Mission is defined as “the fundamental purpose of the organization & its
scope of operation.”

 Organization mission is written in terms of the general set of products &

services the organization provides & the markets & clients it serves.
 The Mission…Cont’d
An organization’s mission statement is a concise introduction to its work. It describes:
 Purpose: what the organization seeks to accomplish (WHY DO WE EXIST?)

 Target Audience: the target group or beneficiaries of the organization’s work (WHO DO
WE SERVE?)

 Business: the main method or activity through which the organization tries to fulfill this
purpose (WHAT SERVICES DO WE PROVIDE and HOW DO WE GO ABOUT PROVIDING THEM?)
Mission (HEI’s)
 To produce skilled, competitive and innovative professionals and researchers through student
centered teaching & learning method in different disciplines so as to engage in research,
technology transfer and rendering accessible community services and contribute to the
development of the country and promote democratic culture.
 Key
 Teaching and learning
 Community service and engagement
 Research and technology transfer
Organizational objectives/goals
 The term objective or goal indicate an end result to be sought and
accomplished.

 Mission or purpose- reason for establishment of firms

Nature of objectives
 objectives are pre determined or stated in advance
 objectives describe future desired results
 objectives should specific and measurable
 objectives should have time frames
 objectives should be reviewed

Examples of Objectives
 Grow Market Share by 15%, by 2019
 Increase sales by 10% this month
 increase customer satisfaction 75% to 85%
cont’d

 Goals should be challenging but realistic

 Objectives have hierarchy (strategic, tactical and operational)
 Multiplicity of objectives (Different objectives at different levels)
 Integrating character (harmony between objectives)/coordination among
objectives.
 Network of objectives (interrelated and interdependent to each other)
Objective Setting

Points to consider Include:

 Quantification (if possible)
 Indicate how the mission can be achieved
 Represent specific planned levels of
achievement(Threshold)
 Provide precise points or states to be achieved
(enrollment of 3000 students)
 Allow review and appraisal of achievement (Evaluation of
plan based on standard set/performance indicators).
 Make clear:
 What is to be accomplished
 How much is to be accomplished
 By when it is to be accomplished
 By whom it is to be accomplished
 Objective Setting… Cont’d
In short an objective should be Specific, Measurable, Achievable, Relevant
and Time bound (SMART)
 Specificity indicates clearly what needs to be achieved. Example: reduce
delay.
 Measurability indicates the possibility to determine if the desired
condition is fulfilled. Example: Reduce delays by 40% by the end of 2012.
 Achievability indicates a consensus and commitment to the objectives
among the major stakeholders
 Relevance indicates objectives need to be achievable. It answers
feasibility, the availability of authority of the managers and the means of
realization.
 Time bound indicates a clear understanding of the time scales associated
with each objective as defined. It is difficult to have commitment
without time frame.
Benefits of objectives
 Provide the basis of performance for all managerial functions
 Provide guidelines for actions (clarifies expectation)
 They can limit employee activities (what should be done and not done)
 Provide a unique identity for organizations ( values that differentiate)
 Can serve as a source of motivation
 They provide performance standards and base for control
The planning process

 Planning can be considered as a serious of sequential steps.

1. Establishing objective/setting organizational goals. It has
three steps.
- Assessing the present situation
- Anticipating future conditions
- Setting the objectives
2. Developing premises- investigating the company’s
environment.
- Internal Environment
- External Environment
The planning process…

3. Determining alternative courses of action

 Roads(actions) to achieve the objective.
4. Evaluating alternative courses of action
 This is a step in planning process that
operations research and mathematical as
well as computing techniques have their
primary application to the field of
management.
5. Selecting a course of action
 A point of decision making
The planning process…

6. Formulating derivative plans(supportive plans)

7. Numbering plan by Budgeting plans.
 Plans will have meaning when they are changed into
numbers.
8. Implementing the plan.
- what resource will be used
- who will be involved
- how the plan will be evaluated
9. Controlling and evaluating the results (monitor progress)
 Skills Required in planning

1. Forecasting – Setting Assumptions/developing premises

 Qualitative : when data is unavailable/judgemental based
forecasting, hard data scarce.
 Quantitative: When data is available/numerical data.
 Predict outcomes and future trends that can serve as basis for
planning, by inferences from known facts.
 Anticipate the future environment(External and Internal)
 Developing premises about future conditions
2. Decision making
 Making analysis on opportunities, and challenges , strength and
weakness.
 Types of plan
Organizations can establish different types of plans.
Based on different diamentions

Factor Type
Time -Short-range
-Intermediate
-Long-range
How repeatedly -Single use plan(program, project,
used budget)
-Standing plans(policies, procedure,
rules)
Breadth/Scope - Strategic
- Tactical
- Operational
1. Time dimension

 Planning can be divided in to three based on the length of time a

plan covers.
1. Long-range plan- covers five year or more.
2. Medium-range/ intermediate plan- covers between one and five
years.
3. Short-range plan- covers one year or less.
 2. USE dimension
This classification is based on their usage(how repeatedly/frequently a
given plan is used)
2.1. Single use plans
 Are developed to achieve specific purposes and dissolved when these
have been accomplished.
 They are developed for relatively unique and non-repetitive situation.
A. Program
B. Project
C. Budget

23
 cont….
A. Program specifies the objectives, major steps necessary
to achieve these objectives, individuals or departments
responsible for each step, the order of the various steps,
and resources to be employed.

A program is characterized as:

 A one-time organizational goal.
 May take several years to complete.
 Large in scope and complex in nature
 May use standing plans and other single use plans to be effective.
Example: Building a new headquarters’

24
 CONT…
B. Projects
- It is a single use plan that is a component of a program
or that is on a smaller scale than a program.
characteristics of project
 It is a plan for attaining a one-time organizational goal.
 Smaller in scope and complexity than a program; shorter time
duration.
 Often one part of a large program
 Example: renovate the office
 Setting up the company's internet

25
 CONT…
C. Budget

 Budgets are statements of financial resources set aside for specific activities
in a given period of time.
 It is a device to accomplish a program or a project.
 It can be considered as a part in a program or a project

26
 2.2. STANDING PLANS

 Standing plans- are plans that provide an ongoing guidance for

performing recurring activates.
 It is formulated to be used again and again.
 Standing plans allow managers to save time.
 Standing plans become valuable under relatively stable situations.

27
 TYPES OF STANDING PLANS
A. Policies
B. Procedures
C. Rules

A. Policies
 It is a general guidelines for decision making.
 It provides boundaries or limits within which decisions are made.
 While organization's goal decide 'what to do' policies deal with 'how
to do'.

Example : Not to accept returned merchandise.

28
 B. Procedure
 Procedures are statements that detail the exact manner in which
certain activities must be accomplished.
 It provides a detailed step by step instruction as to what should be
done.
 Procedure is narrower in scope than policies.
Example,
1. Procedure for withdraw money from bank.
2. the procedure for handling orders.
3. Purchasing procedure in an organization

29
 C. Rule

 Rules specify actions that must be taken or must not be taken with
respect to a situation.
 Rules allow no discretion or judgment.
 Rules are the most explicitly stated(clearly stated) of standing
plans
 Rules demand strict compliance
Example-No smoking
Similarities of policy, procedure and
Rule
 They are directives to guide people’s behavior to the desired end.
 All are plans to be followed in the future.

DIFFERENCES OF POLICY, PROCEDURE, AND RULE

o Policy is guide to thinking.
o Procedures and rules are guides to action.
o Policy render freedom to make a judgment.
o Rules and procedures render no freedom.
 Rules guide action without specifying a time sequence.
 Procedures specify a time sequence.
 Although procedures may incorporate rules, rules do not incorporate
procedures.
Scope/breadth dimension

 Scope refers to comprehensiveness (detail) of the plan.

 Based on scope plans divided in to three
A. Strategic planning
 It is a process of developing organizational objectives.
 Mostly strategic plans are long range.
 It is expressed in relatively general terms.
 It is top level managers responsibility.
B. Tactical plan
 Tactical plans support implementation of strategic plan and achievement of
strategic goals.
 Tactical plans have shorter time frame and narrower in scope.
 Middle level managers are responsible to develop tactical plans.
C. Operational Plan
 Concerned with the day to day operation of the organization.
 Made by lower level managers.
 It is detailed plan.
 Have short time frame.
Characteristics of good plan

 Objectivity
 Futurity
 Flexibility
 Stability
 Comprehensiveness/clear
 Contingency planning/ alternative plan
END OF CHAPTER THREE