PRINCIPLES AND PRACTICE OF MANAGEMANT

Personal management

Introduction

You have already been introduced to five essential managerial functions,

Namely, Planning, Organizing, stuffing, Leading and controlling .This is also the widely
accepted conceptual framework of management.
*Planning is the most basic of all managerial functions. It is the process by which management
establish goals and define the methods by which these goals are to be attained.
*According to weihrich and koontz ,”Planning involves selecting missions and objectives and
the actions to achieve them; it requires decision making, that is, choosing from among
alternatives future course of action.”
*It is therefore, a rational approach to achieving pre-selected objectives.
What is planning and its function?

Management comprises planning, organizing, staffing,

leading /directing, and controlling an organization (a group of one or more people
or entities) or effort for the purpose of accomplishing a goal.
THE FUNCTIONS OF MANAGERS
PLANNING,
ORGANIZING,
STAFFING,
LEADING AND
CONTROLLING

PLANNING
*PLANNING INVOLVES SELECTING MISSIONS AND OBJECTIVES AS WELL AS THE
ACTIONS TO ACHIEVE THEM.
*PLANNING INVOLVES DECISION MAKING.
*THE DECISIONS REQUIRE COMMITMENT OF RESOURCES – HUMAN AND
MATERIAL.

Planning is the process of thinking about the activities required to achieve a

desired goal. It involves the creation and maintenance of a plan, such as
psychological aspects that require conceptual skills. There are even a couple of
tests to measure someone’s capability of planning well. As such, planning is a
fundamental property of intelligent behavior. An important further meaning, often
just called "planning" is the legal context of permitted building developments.

Also, planning has a specific process and is necessary for multiple occupations
(particularly in fields such as management, business, etc.). In each field there are
different types of plans that help companies achieve efficiency and effectiveness.
An important, albeit often ignored aspect of planning, is the relationship it holds to
forecasting. Forecasting can be described as predicting what the future will look
like, whereas planning predicts what the future should look like for multiple
scenarios. Planning combines forecasting with preparation of scenarios and how to
react to them. Planning is one of the most important project management and time
management techniques. Planning is preparing a sequence of action steps to
achieve some specific goal. If a person does it effectively, they can reduce much
the necessary time and effort of achieving the goal. A plan is like a map. When
following a plan, a person can see how much they have progressed towards their
project goal and how far they are from their destination.

*Planning is required to set goals and determine methods of achieving them

*Good planning is done with both the present resources and the future ones to be
acquired by the organization in mind.

*Action statement delineate plans for pursuing goals in certain ways .planning
takes into account the organization’s past records, present status and future
prospects

Nature of planning

What is Planning and its Nature, Importance, and Types

We have already been introduced to five essential managerial functions, namely,

planning, organizing, staffing, leading and controlling. This is also the widely
accepted conceptual framework of management.

Planning is the most basic of all managerial functions. It is the process by which
managers establish goals and define the methods by which these goals are to be
attained.

It is, therefore, a rational approach to achieving pre-selected objectives.

Planning is thus taken as the foundation for future activities. Newman has thus
defined it as, “Planning is deciding in advance what is to be done; that is a plan is a
projected course of action.”

So, planning can be thought of as deciding on a future course of action. It may also
be treated as a process of thinking before doing.

Management has to plan for long-range and short-range future direction by looking
ahead into the future, by estimating and evaluating the future behavior of the
relevant environment and by determining the enterprise’s own desired role.

Planning involves determining various types and volumes of physical and other
resources to be acquired from outside, to allocate these resources in an efficient
manner among competing claims and to make arrangement for systematic
conversion of these resources into useful outputs.

As it is clear from the above discussion, plans have two basic components: goals
and action statements.
*The essential nature of planning can be understood by examining its four majour
aspects. They are
*1) Its contribution to purpose and objectives
*2) Its primacy among the manager’s tasks
*3) Its pervasiveness, and
*4) The efficiency of resulting plans.
 Since plans are made to attain goals or objectives, every plan and
all its support should contribute to the achievement of the organization’s purpose
and objectives. An organized enterprise exits to accomplish group objectives
through willing and purposeful co-operation

Importance of planning/Why should managers Plan?

*Conceptually Importance of planning/why should Managers plan? Planning is

necessary, because
*1) It Can make the most effective and efficient use of limited resources by cutting
wastage;
*2) It can meet contingencies in the event of environmental upset .Besides ,
managers have several practical reasons for formulating plans for themselves ,
their employees ,and various organizational units ,Viz..,
*1) To offset uncertainty and change;
*2) To focus organizational activity on a set of consciously created objectives;
*3) To provide a co-ordinate, systematic road map for future activities;
*4) To increase economic efficiency via efficient operation; and
*4) To facilitate control by establishing a standard for subsequent activates

Helps to achieve objectives: Every organization has certain objectives

or targets. It keeps working hard to fulfill these goals. ... It brings satisfaction to the
managers and eventually success to the organization. Helps in decision-making: A
manager makes many different plans

Types of plans

*Many different types of plans are adopted by managers to conduct operations, and
monitor and control organizational activities
*There such most commonly used plans are
*1) Hierarchical
*2) Frequency-of-use (Repetitiveness)
*3) and contingency plans,
*1) Hierarchical

Definition

A planning hierarchy represents the organizational levels and units in your

company for which you want to plan. A planning hierarchy is a combination of
characteristic values based on the characteristics of one information structure .
Planning hierarchies provide a framework for your planning activities in consistent
planning and level-by-level planning. With these planning methods, a planning
hierarchy must exist for the information structure before you can plan its key
figures. You can create only one planning hierarchy for an information structure.
However, a hierarchy can have as many different branches as you like. See also
Planning Hierarchies Containing Product Groups .

When using consistent planning, you can create the planning hierarchies
automatically using the Master Data Generator . For Standard SOP (info structure
SO76), you can generate the planning hierarchy using report RMCPSOP or
RMCPSOPP, based on the existing planning data in the info structure. The report
functions are documented in the comments of the source coding for each report.
You can also create a planning hierarchy manually (see Creating a Planning
Hierarchy ). It consists of one or more planning levels to which you assign
characteristic values.

You maintain planning hierarchies in much the same way as you maintain product
groups, on a level-by-level basis, and define the aggregation factor and the
proportional factor of each characteristic value just as you define them for the
members of a product group. For more information, see Planning Hierarchy
Maintenance Functions .

These plans are drawn at three major hierarchical levels, namely, the institutional,
the managerial and the technical core
Example of a Planning Hierarchy

Strategic plans

Strategic planning is an organization's process of defining its

strategy, or direction, and making decisions on allocating its resources to pursue
this strategy. It may also extend to control mechanisms for guiding the
implementation of the strategy. Strategic planning became prominent in
corporations during the 1960s and remains an important aspect of strategic
management. It is executed by strategic planners or strategists, who involve many
parties and research sources in their analysis of the organization and its
relationship to the environment in which it competes.

Strategy has many definitions, but generally involves setting goals, determining
actions to achieve the goals, and mobilizing resources to execute the actions. A
strategy describes how the ends (goals) will be achieved by the means (resources).
The senior leadership of an organization is generally tasked with determining
strategy. Strategy can be planned (intended) or can be observed as a pattern of
activity (emergent) as the organization adapts to its environment or competes.
Strategy includes processes of formulation and implementation; strategic planning
helps coordinate both. However, strategic planning is analytical in nature (i.e., it
involves "finding the dots"); strategy formation itself involves synthesis (i.e.,
"connecting the dots") via strategic thinking. As such, strategic planning occurs
around the strategy formation activity

*Generally involves planning of the top institutional level of originations .Strategic

plans define the origination’s long-term vision and how the organization intends to
make its vision a reality .In short, strategic planning is the determination of the
basic long-term objectives of an enterprise and the adoption of courses of action
and allocation of resources necessary to achieve these goals, strategies do not
attempt to outline exactly how the enterprise is to accomplish its objectives ,since
this is the task of countless major and minor supporting programs. But they
framework for guiding thinking and action

Intermediate or administrative planning

Administrative or intermediate planning is done at the level of
middle management. It is cone to allocate organizational resources and coordinate
internal subdivisions of the organization. It is also a process of determining the
contributions that sub-units can make with allocated resources.
Intermediate planning is generally seen as plans that fall under the
next one to five years. These plans help business owners and managers assess
certain aspects of their company and make decision to increase production output
or operational profits.
Planning is a business function managers use to outline specific
goals, objectives and business operations for future years. Intermediate planning is
generally seen as plans that fall under the next one to five years. These plans help
business owners and managers assess certain aspects of their company and make
decision to increase production output or operational profits. Intermediate plans
also allow owners and managers to forecast future changes in the economic
market.
Economy
Economic changes occur because of government policies and
regulations, consumer preference, availability of economic resources and number
of competitors in the marketplace. Businesses use intermediate planning as an
attempt to forecast these upcoming changes and adjust operations accordingly.
Government regulation is a common factor that drives intermediate planning.
Owners and managers must plan for tax liabilities and the addition of new
regulation on their industry, which can force the business to change its business
practices.
Finances
Financing is the external funds a company uses to pay for
business operations. Companies typically use external financing to save
operational capital for daily expenditures. Companies can use short-term or long-
term financing, such as credit lines and assets loans, respectively. Owners and
managers obtain financing using intermediate plans to ensure they have sufficient
funds for future years. These financing plans act as a hedge against the possibility
of tight credit or unfavorable economic conditions that can decrease financial
opportunities.
Operations
Manufacturing and production companies often use intermediate
plans for re-tooling because they typically have large production processes. For
example, automotive manufacturers commonly re-tool operations to produce new
vehicles. A company producing SUVs may need a three to five year plan for
changing operations to produce sedan-style automobiles. Because these changes
can be an arduous process, an intermediate plan is needed.
Considerations
Intermediate planning is often unique or specific to each
company. These plans focus on different aspects of the company depending on the
need for a plan. Owners and manager may also work with outside companies to
create relationships to help them accomplish their intermediate plans. This can also
create a competitive advantage if the company gets exclusive use of economic
resources in the business environment.
Misconceptions
Business planning is not typically something that is set in stone.
Owners and managers should be ready to make changes depending on other factors
in the business environment. Intermediate plans can also focus on the wrong type
of changes, leading to potential problems in future business operations. Different
perceptions by operational managers can also create difficulties for intermediate
planning because this can delay the implementation of the plan.

Is done at the level of middle management. It is done to allocate

organizational resources and co-ordinate internal subdivisions of the organisation
.It is also a process of determining the contributions that sub-units can make with
allocated resources
 OPERATIONAL PLANNING

Operational planning is the process of planning strategic goals and objectives to tactical goals
and objectives. It describes milestones, conditions for success and explains how, or what portion
of, a strategic plan will be put into operation during a given operational period, in the case of
commercial application, a fiscal year or another given budgetary term. An operational plan is the
basis for, and justification of an annual operating budget request. Therefore, a five-year strategic
plan would typically require five operational plans funded by five operating budgets.

Operational plans should establish the activities and budgets for each part of the organization for
the next 1 – 3 years. They link the strategic plan with the activities the organization will deliver
and the resources required to deliver them.

An operational plan draws directly from agency and program strategic plans to describe agency
and program missions and goals, program objectives, and program activities. Like a strategic
plan, an operational plan addresses four questions:

 Where are we now?

 Where do we want to be?
 How do we get there?
 How do we measure our progress?

The operations plan is both the first and the last step in preparing an operating budget request. As
the first step, the operations plan provides a plan for resource allocation; as the last step, the OP
may be modified to reflect policy decisions or financial changes made during the budget
development process.

Operational plans should be prepared by the people who will be involved in implementation.
There is often a need for significant cross-departmental dialogue as plans created by one part of
the organization inevitably have implications for other parts.

 Operational plans should contain:

 clear objectives
 activities to be delivered
 quality standards
 desired outcomes
 staffing and resource requirements
 implementation timetables
 a process for monitoring progress
 Is the process of determining how specific tasks can best be accomplished
on time with available resources? This is also done to cover the day-to-day operations of an
organisation. As such, many operating plans are designed to govern the workings of the
organization’s technical core

FREQUENCY OF USE PLANS

Frequency of use : Single-use versus standing plans. A single-use plan is

a one-time plan specifically designed to meet the needs of a unique situation. Standing plans are
ongoing plans that provide guidance for activities performed repeatedly.

Plans can also be categorized according to frequency or repetitiveness of

use .They are broadly classified as standing plans and single-use plans.

Standing plans are drawn to cover issues that managers face repeatedly.
For example, managers may be facing the problem of late-coming quite often. Managers may,
therefore, design a standing plan to be implemented automatically each time an employee is late
for work. Such a standing (SOP).Policies, procedures, rules are some of the most common
standing plans
POLICIES

A policy is a deliberate system of principles to guide decisions and achieve

rational outcomes. A policy is a statement of intent, and is implemented as a procedure or
protocol. Policies are generally adopted by a governance body within an organization. Policies
can assist in both subjective and objective decision making. Policies to assist in subjective
decision making usually assist senior management with decisions that must be based on the
relative merits of a number of factors, and as a result are often hard to test objectively, e.g. work-
life balance policy. In contrast policies to assist in objective decision making are usually
operational in nature and can be objectively tested, e.g. password policy.

The term may apply to government, private sector organizations and

groups, as well as individuals. Presidential executive orders, corporate privacy policies, and
parliamentary rules of order are all examples of policy. Policy differs from rules or law. While
law can compel or prohibit behaviors (e.g. a law requiring the payment of taxes on income),
policy merely guides actions toward those that are most likely to achieve a desired outcome.

Policy or policy study may also refer to the process of making important
organizational decisions, including the identification of different alternatives such as programs or
spending priorities, and choosing among them on the basis of the impact they will have. Policies
can be understood as political, managerial, financial, and administrative mechanisms arranged to
reach explicit goals. In public corporate finance, a critical accounting policy is a policy for a
firm/company or an industry that is considered to have a notably high subjective element, and
that has a material impact on the financial statements

Policies are standing plans .These are broad-based statements of

understanding or general statement of intent. Policies define an area or provide limits within
which decisions are to be made and ensure that the decision will be consistent with, and
contribute to, an objective. Policies are types of plans that allow decision-makers some discretion
to carry out a plan. Otherwise, there will be no difference between policies and rules. Policies
must allow for some discretion.

RULES

1. Authoritative statement of what to do or not to do in a specific

situation, issued by an appropriate person or body. It clarifies, demarcates, or interprets a law or
policy.
2. Statement that establishes a principle or standard, and serves
as a norm for guiding or mandating action or conduct. Rules may be divided into four general
categories:
(1) Folklore: Unpublished rules that are conveyed by behavior
and are implicitly understood.
(2)Guidelines: Commonly published and recommended
practices that allow some discretion with their interpretation and use.
(3) Mandates: Published commands that may not be ignored in any
circumstance and whose violation is punished.
(4) Policies: Published rules that imply a predicted behavior and
whose violation may be permitted or tolerated under certain circumstances.
Like policies, rules, tools are standing plans that guide action;
Rules spell out specifically what employees are supposed to be or not to be .for example, the
nonsmoking campaign launched by some organizations is supported by some organizational
rules. As opposed to polices to policies, rules do not permit exercise of individual creations
.Instead rules specify what action will be take (or not taken)and what behaviors is permitted
Or not politicizes, on the other hand, tell people how to think about decisions to be made about
actions
PROCEDURES

A fixed, step-by-step sequence of activities or course of action (with definite start and end
points) that must be followed in the same order to correctly perform a task. Repetitive procedures
are called routines. See also method.

Like rules, procedures are standing plans that provide guidance for action rather than
speculation. They are plans that establish a required method of handling future activities.
Procedures establish customary ways for handling certain activites: hiring a clerk, participating
in a co-operative housing socity, obtaining a lone from a bank. The major characteristic of a
procedure is that it represents a chorological sequencing of event. It specifies a series of steps
that be taken to accomplish a task. Specified series of steps one required to take for admission in
the MBA program of Bangladesh Open University is an example of procedures
 SINGLE USE PLANS

A set of activities aimed at achieving a

specific goal within a particular budget and time period that is unlikely to be repeated in future.
Examples of a single use plan that could be employed by a business might be an advertising
campaign for a new product launch or an integration plan for a recent acquisition.
Are prepared for single or unique
situations or problems and are normally discarded or replaced after one use. Generally three
types of single-use plans are used .There are programmers, Projects and budget.
 PROGRAMMES:

Programmes are plans of action followed in proper sequence according to objectives,

policies and procedures. Thus a program lays down the major steps to be taken to achieve an
objective and sets an approximate time frame for its fulfillment. Programmes are usually
supported by budgets. A program may be a major or a minor one or long, Medium or short term
one. Since it is not used in the same from once its task is over it belongs to single –use plan
category

Programme
 a written or printed list of pieces, items, or musical numbers to be performed at an
entertainment; hence, the items themselves collectively—Wilkes.
programme– program
A programme is a plan which has been developed for a particular purpose.
*The company has begun a major new research programme.
*This word is spelled program in American English.
*There has been a lot of criticism of the nuclear power program.
*A television or radio programme is a single broadcast, for example a play, discussion, or show.
*I watched a programme on education.
*This word, too, is spelled program in American English.
*This is mom's favorite TV program.
*A computer program is a set of instructions that a computer uses to perform a particular
operation. This word is spelled program in both British and American English.
*It's important to have an anti-virus program on your computer.
*There must be a bug in the program.
PROJECTS:

Contemporary business and science treat as a project (or program) any

undertaking, carried out individually or collaboratively and possibly involving research or
design, that is carefully planned (usually by a project team to achieve a particular aim.
An alternative view sees a project managerially as a sequence of events: a "set
of interrelated tasks to be executed over a fixed period and within certain cost and other
limitations".
A project may be a temporary (rather than permanent) social system (work
system), possibly constituted by teams (within or across organizations) to accomplish particular
tasks under time constraints.
A project may be a part of wider programme management or an ad hoc structure.
Note that open-source software "projects" (for example) may lack defined team-membership,
precise planning and time-limited durations.

A project is a particular job that needs to be done in connection with a general

programme. So a single step in a programme is set up as a project. A project has a distinct object
and clear cut termination.”Projects have the same characteristics as programs but are generally
narrower in scope and less complex. Projects are frequently created to support or complement a
program.”
 BUDGETS

A budget is a financial plan for a defined period of time, usually a

year. It may also include planned sales volumes and revenues, resource quantities, costs and
expenses, assets, liabilities and cash flows. Companies, governments, families and other
organizations use it to express strategic plans of activities or events in measurable terms.

A budget is the sum of money allocated for a particular purpose and

the summary of intended expenditures along with proposals for how to meet them. It may
include a budget surplus, providing money for use at a future time, or a deficit in which expenses
exceed income.

“A budget is a statement of expected results expressed in numerical terms” For it is sometimes

called numerated programme and most commonly expressed in terms of money i.e. taka, dollar
etc. They may also be expressed in terms of any measurable units like hours, metric tons etc. It
covers a particular period of time, and once the period is over, a new budget comes into being
CONTINGENCY PLANS

A contingency plan is a plan devised for an outcome other than in the

usual (expected) plan.
It is often used for risk management for an exceptional risk that, though
unlikely, would have catastrophic consequences. Contingency plans are often devised by
governments or businesses. For example, suppose many employees of a company are traveling
together on an aircraft which crashes, killing all aboard. The company could be severely strained
or even ruined by such a loss. Accordingly, many companies have procedures to follow in the
event of such a disaster. The plan may also include standing policies to mitigate a disaster's
potential impact, such as requiring employees to travel separately or limiting the number of
employees on any one aircraft.
 During times of crisis, contingency plans are often developed to explore
and prepare for any eventuality. During the Cold War, many governments made contingency
plans to protect themselves and their citizens from nuclear attack. Examples of contingency plans
designed to inform citizens of how to survive a nuclear attack include the booklets Survival
Under Atomic Attack, Protect and Survive, and Fallout Protection, which were issued by the
British and American governments. Today there are still contingency plans in place to deal with
terrorist attacks or other catastrophes.
The National Institute of Standards and Technology has published a
contingency planning guide for information technology systems.
As we already know, the process of planning is based on certain
premises about what is likely to occur in the environment of an organisation. Contingency plans
are made to deal with situations that might crop up if these assumptions turn out to be taken if
events disrupt a planned course of action. A contingency plan allows management to act
immediately, If such unforeseen events as strikes, boycotts, natural disasters or major economic
changes render existing plans inoperable or unsuitable
MISSION

A mission statement is a short statement of an organization's purpose,

identifying the goal of its operations: what kind of product or service it provides, its primary
customers or market, and its geographical region of operation. It may include a short statement
of such fundamental matters as the organization's values or philosophies, a business's main
competitive advantages, or a desired future state—the "vision".

A mission is not simply a description of an organization by an external party, but an expression,

made by its leaders, of their desires and intent for the organization. The purpose of a mission
statement is to focus and direct the organization itself. It communicates primarily to the people
who make up the organization—its members or employees—giving them a shared understanding
of the organization's intended direction. Organizations normally do not change their mission
statements over time, since they define their continuous, ongoing purpose and focus.

According to Chris Bart, professor of strategy and governance at McMaster University, a

commercial mission statement consists of three essential components:

1. Key market: the target audience

2. Contribution: the product or service
3. Distinction: what makes the product unique or why the audience should buy it over
another

Bart estimates that in practice, only about ten percent of mission statements say something
meaningful. For this reason, they are widely regarded with contempt.

*The mission is the very reason and justification for the existence of a firm
*Mission is always defined in terms of the benefits the firm provides to its customers and not in
terms of any physical dimensions of the firm or its products
*Samsung’s mission statement is “Inspire the world, create the future.”
OBJECTIVES
Objective is a busy word and that's a fact. An objective is a goal, but to be
objective is to be unbiased. If you're objective about something, you have no personal feelings
about it. In grammar land, objective relates to the object of a sentence.
 *Once the mission and scope of a firm have been defined by the top
management the next logical step is to translate them into action .This can be done by breaking
down the business mission into smaller, workable objectives relate to the long-run and are
described as open ended attributes (described in terms of maximizing or optimizing or
minimizing rather than in any specific quantitative terms) which a
*Firm seeks to fulfill in pursuance of its mission.
*Objectives reflect the “action” orientation of the mission Which, in
contract, is expressed in relatively abstract terms .Objectives from the basis for work and provide
a yardstick for measuring performance
GOALS

A goal is an idea of the future or desired result that a person or a group

of people envisions, plans and commits to achieve. People endeavor to reach goals within a finite
time by setting deadlines.
A goal is roughly similar to a purpose or aim, the anticipated result which
guides reaction, or an end, which is an object, either a physical object or an abstract object, that
has intrinsic value.
*Goals are derived from the objectives and are intermediate time-bound
targets which are necessary for the achievement of objectives .Goals are expressed in vary
specific quantitative or qualitative terms .All goals have four components:
1)Derived from the objective which seeks to fulfill
2)An index or standard for measuring progress and performance,
3) A target or hurdle to be achieved. And
4) A time limit within which has to be achieved.
*Thus goals are time-bound and work –Oriented and they are important because they provide a
path for converting plans into individual tasks and action, and motivating people.
STRATEGY

Strategy (from Greek stratēgia, "art of troop leader; office of general, command,
generalship") is a high-level plan to achieve one or more goals under conditions of uncertainty.
In the sense of the "art of the general", which included several subsets of skills including
"tactics", siege craft, logistics etc., the term came into use in the 6th century AD in East Roman
terminology, and was translated into Western vernacular languages only in the 18th century.
From then until the 20th century, the word "strategy" came to denote "a comprehensive way to
try to pursue political ends, including the threat or actual use of force, in a dialectic of wills" in a
military conflict, in which both adversaries interact.

Strategy is important because the resources available to achieve these goals are
usually limited. Strategy generally involves setting goals, determining actions to achieve the
goals, and mobilizing resources to execute the actions . A strategy describes how the ends (goals)
will be achieved by the means (resources). Strategy can be intended or can emerge as a pattern of
activity as the organization adapts to its environment or competes. It involves activities such as
strategic planning and strategic thinking.

Henry Mintzberg from McGill University defined strategy as a pattern in a

stream of decisions to contrast with a view of strategy as planning, while Henrik von Scheel
defines the essence of strategy as the activities to deliver a unique mix of value – choosing to
perform activities differently or to perform different activities than rivals. While Max McKeown
(2011) argues that "strategy is about shaping the future" and is the human attempt to get to
"desirable ends with available means". Dr. Vladimir Kvint defines strategy as "a system of
finding, formulating, and developing a doctrine that will ensure long-term success if followed
faithfully." Complexity theorists define strategy as the unfolding of the internal and external
aspects of the organization those results in actions in a socio-economic context.

Having set objectives the firm now has to work to achieve them. The specific path of action
chosen by the firm to achieve its objectives is referred to as its strategy. It is the fundamental
means a firm uses to try nada chive its objectives

Any strategy, thus defined, has the following components:

1) A PRODUCT/MARKET SCOPE: The specific products and markets in which a firm operates
and which define its limits of activity.
2) GROWTH VECTOR: The changes the firm plans to make in its product/ market scope for
ensuring its future growth.
3) COMPETITIVE ADVANTAGE: Those specific properties of individual product/market that
give the firm its unique position vis-à-vis its competitors.
4) DISTINCTIVE COMPETENCE: The specific organizational strengths of a firm which help in
achieving its objectives
5) SYNERGY: The overall or joint effects that are sought from the firm’s various
product/market scopes
 STEPS IN PLANNING

8 Main Steps Involved in Planning Process

The steps are:
1. Perception of Opportunities
2. Establishing Objectives
3. Planning Premises
4. Identification of Alternatives
5. Evaluation of Alternatives
6. Choice of Alternative Plans
7. Formulation of Supporting Plan
8. Establishing Sequence of Activities.
Step # 1. Perception of Opportunities:

Perception of opportunities is not strictly a part of the planning process. But

this awareness of opportunities in the external environment as well as within the organisation is
the real starting point for planning. It is important to take a preliminary look at possible future
opportunities and see them clearly and completely.

All managers should know where they stand in the light of their strengths and
weaknesses, understand the problems they wish to solve and know what they gain. Setting
objectives depends on the awareness. Planning requires realistic diagnosis of the opportunity
situation.

Step # 2. Establishing Objectives:

This is the second step in the planning process. The major organizational and
unit objectives are set in this stage. This is to be done for the long term as well as for the short
range. Objective specify the expected results and indicate the end points of what is to be done,
where the primary emphasis is to be placed and what is to be accomplished by the various types
of plans.
Organizational objectives give direction to the major plans, which by
reflecting these objectives define the objective of every major department. Major objectives, in
turn, control the objectives of subordinate departments and so on down the line. In other words,
objectives from a hierarchy.

The objectives of lesser departments will be more accurate if subdivision

managers understand the overall enterprise objectives and the derivative goals. Managers should
also have the opportunity to contribute their ideal to setting their own goals and those of the
organisation.
Step # 3. Planning Premises:

After determination of organisational objectives, the next step is establishing

planning premises that is the conditions under which planning activities will be undertaken.
Planning premises are planning assumptions the expected environmental and internal conditions.

Thus planning premises are external and internal. External premises include
total factors in task environment like political, social, technological, competitors, plans and
actions, government policies. Internal factors include organisation’s policies, resources of
various types, and the ability of the organisation to withstand the environmental pressure. The
plans are formulated in the light of both external and internal factors.

The nature of planning premises differs at different levels of planning. At the

top level, it is mostly externally focused. As one moves down the organisational hierarchy the
composition of planning premises changes from external to internal. The major plans both old
and new will materially affect the future against which the managers at lower units must plan.
Step # 4. Identification of Alternatives:

The fourth step in planning is to identify the alternatives. Various alternatives

can be identified based on the organisational objectives and planning premises. The concept of
various alternatives suggests that a particular objective can be achieved through various actions.

For example, if an organisation has set its objectives to grow further, it can
be achieved in several ways like expanding in the same Field of business or product line
diversifying in other areas, joining hands with other organisations, or taking over another
organisation and so on. Within each category, there may be several alternatives.

The most common problem is not finding alternatives but reducing the
number of alternatives so that the most promising may be analyzed. Even with mathematical
techniques and the computer, there is a limit to the number of alternatives that can be thoroughly
examined. The planner must usually make a preliminary examination to discover the most
fruitful possibilities.

Step # 5. Evaluation of Alternatives:

The various alternative course of action should be analyzed in the light of

premises and goals. There are various techniques available to evaluate alternatives. The
evaluation is to be done in the light of various factors. Example, cash inflow and outflow, risks,
limited resources, expected pay back etc., the alternatives should give us the best chance of
meeting our goals at the lowest cost and highest profit.

Step # 6. Choice of Alternative Plans:

This is the real point of decision-making. An analysis and evaluation of

alternative courses will disclose that two or more .ire advisable and beneficial. The fit one is
selected.

Step # 7. Formulation of Supporting Plan:

After formulating the basic plan, various plan are derived so as to support
the main plan. In an organisation there can be various derivative plans like planning for buying
equipment, buying raw materials, recruiting and training personal, developing new product etc.
These derivative plans are formulated out of the basic or main plan and almost invariably
required to support the basic plan.

Step # 8. Establishing Sequence of Activities:

After formulating basic and derivative plans, the sequence of activities is

determined so those plans are put into action. After decisions are made and plans are set, budgets
for various periods and divisions can be prepared to give plans more concrete meaning for
implementation.
 The overall budgets of an enterprise represent the sum total of income and
expenses, with resultant profit or surplus, and budgets of major balance sheet items such as cash
and capital expenditures. Each department or programmer of a business or other enterprise can
have its own budgets, usually of expenses and capital expenditures, which tie into the overall
budget.

If done well, budgets become a means of adding together the various plans and
also set important standards against which planning progress can be measured.

1) Being aware of opportunity in light of: The market competition .What customers want
our strengths our weaknesses

2) Setting objectives or goals where we want to be and what we want to accomplish and
when

3) Considering planning premises in what environment –internal or external-will our plans

operate?

4) Identifying alternatives What are the most promising alternatives to accomplishing our
objectives?
 5) Comparing alternatives in light of goals sought which alternative will give us the best
chance of meeting our goals at lower cost and highest profit?

6) Choosing an alternative Selecting the course of action we will pursue

7) Formulating supporting plane

8) Numbering plans by making budgets

PLANNING PREMISES

Assumptions about the likely shape of events in the future

Planning premises means systemic and logical estimate for the future factors affecting
planning. ... According to Dr.G.R.Terry ,”planning premise are the assumptions providing a
background against which the estimated events affecting the planning will take place

5. Foreseeable and
Unforeseeable premises
PLANNING PREMISES
1. Internal and External Premises

Internal Premises come from the business itself. It includes skills of the workers, capital
investment policies, philosophy of management, sales forecasts, etc.
External Premises come from the external environment. That is, economic, social, political,
cultural and technological environment. External premises cannot be controlled by the business.

2. Controllable, Semi-controllable and Uncontrollable Premises

Controllable Premises are those which are fully controlled by the management. They include
factors like materials, machines and money.
Semi-controllable Premises are partly controllable. They include marketing strategy.
Uncontrollable Premises are those over which the management has absolutely no control. They
include weather conditions, consumers' behaviour, government policy, natural calamities, wars,
etc.

3. Tangible and Intangible Premises

Tangible Premises can be measured in quantitative terms. They include units of production and
sale, money, time, hours of work, etc.
Intangible Premises cannot be measured in quantitative terms. They include goodwill of the
business, employee's morale, employee's attitude and public relations.

4. Constant and Variable Premises

Constant Premises do not change. They remain the same, even if there is a change in the course
of action. They include men, money and machines.
Variable Premises are subject to change. They change according to the course of action. They
include union-management relations.
5. Foreseeable and Un foreseeable premises
Foreseeable and unforeseeable premises : Foreseeable premises tend to be
definite and well-known and they can be foreseen with certainty. Requirements for men, money
and machines are examples of foresee able premises. Unforeseeable premises "such as war,
strike, natural calamities are unpredictable.