Management Theory

and Practice

Planning function
 1. Meaning of Planning
 What is Planning?
 Planning
 The dynamic process of making decisions
today about future action
 Preparing today for tomorrow (future focus)
 The activity that allows managers to determine
what they want & how to get it
 A process of deciding what to do & how to do
it before action is required

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Cont’d…
 Generally, planning is a selection or choice
among alternative as to:
 What is to be accomplished/achieved? (mission, goals or
objectives)
 What action should be taken? (the necessary measures to
be taken)
 What resources employed? (resources necessary to reach
the goals)
 How the end can be achieved/accomplished? (the specific
steps/methods to reach the goals)

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Cont’d…
 Generally, planning is a selection or
choice among alternative as to:
 When to achieve it? (the time frame in which it
will be accomplished)
 Who is to do it? (the people who will perform the
task)
 Where to do it? (the place where the plans or
planning will be implemented)

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Cont’d…
 Thus, planning bridges the gap b/n where we are
now & where we want to be
 The outcome of the planning function is a plan, a
written document that specifies the course of action
a firm will take
 Planning is the systematic process of establishing a
need & then working out the best way to meet the
need, within a strategic framework that enables to
identify priority & determine operational principles
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Cont’d…
 Planning means thinking about the future so
that you can do something about it now
 This doesn’t necessary mean that everything
will go according to plan
 However, the main perquisites are plan
properly & adjust as required without
compromising the overall purpose

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2. Nature of Planning

 The contribution of planning

 Organizations exist to accomplish
specific purpose or objective
 Hence, any plan has to facilitate the
accomplishment of organizational
objectives

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Cont’d…
 The primacy of planning
 Planning precedes the execution of all other
managerial function
 Because all other managerial functions must be
planned if they are to be effective
 Example: controlling would be unthinkable
without a planning
 Because any attempt to control without a plan is
meaningless
 Plans thus furnish the standards of control
 Actually, planning & controlling are inseparable
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Cont’d…
 The pervasiveness/universality
of planning
 All managers at all levels participate in
planning
 However, the character & breadth of
planning varies with each managers
authority
 Each & every aspects of human
endeavor has to be planned
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Cont’d…
 Planning & information
 Basically, no plan exists without
information
 To plan managers have to gather
relevant information
 Therefore, information is vital for
proper planning

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Cont’d…
 Planning is a continuous
process
 Planning deals with the future & the
future is full of uncertainties
 Hence, planning needs frequent
revision in response to changes in the
internal & external environments of the
organization

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Cont’d…
 Planning is a means to an end
 Planning is not an end by itself but
it is a means to an end
 Planning is an instrument that
pushes people towards the
achievement of objectives

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Cont’d…

 Plans are arranged in a

hierarchy
 Plans are first set for the entire
organization
 The corporate plan then provides
the framework for the formulation
of divisional & departmental plans

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 3. Importance of Planning
 The combination of a good strategic
framework (arrived at through strategic
planning) & a good operational/action
plan
 Provides a clear understanding of what you
need to do in order to achieve your
development goals
 Guides you in prioritizing & making decision
 Allows you to focus limited resources on the
actions that will benefit your work the most
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Cont’d…
 Keeps you in touch with your context-
global, national & local
 Provides a tool to help you communicate
your intentions to others
 Provides a coherent guide for day-to-day
implementation
 Generally, it is important to think about the
benefit of planning
 However, there are many excuses for not doing
it & just getting on the work

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Cont’d…
 Sometimes it seems easier not to
plan, because:
 Good planning takes time & money, However,
if it is done well, it is worth the investment
 It is true that sometimes you can be successful
– if you are lucky, But that can be costly &
confusing, as well as inefficient (poor use of
resources)& ineffectual (no achieving desired
results)

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Cont’d…
 Planning is only useful if people are
committed to implementation-that is true.
But, don’t use this an excuse for not planning,
along the lines of: “no-one ever follows the
plan, so why bother?
 It is the role of the leadership in the
organization to make sure that planning is
useful & gets implemented
 People implement the plan if they participate
in the planning, as long as it makes sense & is
possible
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 Cont’d…
 Provide direction & sense of
purpose
 It is trough planning that we can
establish our objective
 Plans focus attention on specific targets
 It provides direction & a common sense
of purpose
 This shared purpose enables both
managers & employees to coordinate,
unite, & guide their actions
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 Cont’d…
 Reduces uncertainty by anticipating
the future & preparing for change
 Planning is based on systematic & careful
forecasts of future states of the economy,
markets, technology, etc. to reduce
uncertainties
 Anticipating & preparing for possible future
changes enables managers to control their
environment to some extent
 Thus, planning answers “what if” questions in
order to reduce the risk of unpredictable future
through developing alternatives
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 Cont’d…
 Provides basis for controlling
 Standards/controlling mechanisms/ are
developed during planning
 It specifies what is to be accomplish &
provides a standard for measuring progress
 Forces managers to see the organization
as a system
 Planning for one part affects the operations
of the other & the whole organization so far
as parts of an organization are
interdependent
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Cont’d…
Promotes efficiency
 Planning provides the opportunity
for a greater utilization of the
available organizational resources-
determination of:
 How much resources are necessary to
reach the goals?
 How to use these resources?

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Cont’d…
 Provides the basis for cooperative
& coordinated effort
 Management exists because the
work of individuals & and groups in
organization must be coordinated
 This can be done through planning
by defining the objectives of the
organization & the means for their
achievement
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Cont’d…
 Develops the ability of managers
 The act of planning involves high level of
intellectual activity- deal abstract
&uncertain ideas
 Planning makes managers proactive
rather than reactive (make things
happen rather than let things happen)
 Planning develops managers ability to
think futuristically & sharpens managers
ability to think critically

23
Cont’d…
 Provides guideline for decision
making
 Decisions in an organization will be
made in alignment with the plan & in
accordance with desired outcomes
 Planning serves as a framework for
decision making- managers think
analytically & evaluate alternatives to
make decisions
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4. Limitation of Planning
 It is a difficult & complicated
task
 Involves interdependent decisions
 Requires patience & commitment
from those who are involved in the
planning process
 Affected by rapid changes in
technology, customers, tastes &
preferences
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Cont’d…
 It is expensive & time consuming
 Requires much financial, physical, human &
time resources
 Thus, collecting of the necessary data,
organizing, analysis & interpreting consumes
much time & other resources
 It is affected by external factors
 External factors can put strain on the success of
planning
 Government intervention- investment, taxation
& labor laws, etc.
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5. Planning Process
 As a managerial activity planning
has its own process/series of
steps
 These steps are interrelated &
there is no rigid boundary among
these steps

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Cont’d…
1. Establishing objectives
 Objective setting is an important first
step in the planning process
 Objectives specify the expected results &
indicate what is to be done
 Objective can be set after:
 Assessing the present situation &
anticipating future conditions
 Assessing organizational strengths &
available opportunities
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Cont’d…
 Organizational objectives are
arranged in hierarchy:
 Objectives for the entire
organization
 Objectives for different divisions
 Objectives for departments &
units, etc.
 However, there must be coherence
& consistency b/n the objectives
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 Cont’d…
2. Developing premises
 Planning premises are assumptions about
the environment within which the plan is to
be carried out
 Thus, managers have to investigate the
firm’s environment to know factors that
facilitate or impede the attainment of the
objectives
 Examining external & internal factors which
affect the performance of the organization
(i.e., SWOT)
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Cont’d…
 The key element of planning at this
stage is forecasting
 Because the future is so complex, it
would not be realistic to make detailed
assumption about the future
environment of the plan
 Therefore, premises are limited to
assumptions that are critical to plan
(i.e., those that most influence its
operation)
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Cont’d…
3. Determining alternative
actions
 There are several alternative
courses of actions that are available
to a manager to reach a goal
 Usually the most common problem
is not finding alternative but
reducing number of alternatives so
that the most promising may be
identified
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 Cont’d…
4. Evaluating alternative courses of action
 Having sought out alternative courses,
managers evaluate the benefits &
disadvantages of alternative courses in light of
their weight to goals & premises
 Because there are so money alternative
courses in most situations & evaluation can be
extremely difficult
 This is a step in planning process that
operation research & computing techniques
have their primary application to the field of
management 33
Cont’d…
5. Selecting a course of action
 This is the point at which the plan to
be adopted is chosen or selected
real point of decision-making
 The analysis of each alternatives
benefits & disadvantages should
result in determining one course of
action that appears better than the
others
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Cont’d…
6. Converting plans in to
budgeting
 Plans will have meaning when they
are changed into numbers
 Budgeting is setting important
standards against which plans can
be measured

35
 Cont’d…
7. Implementing the plan
 After the optimum alternative has been selected,
the manager needs to develop an action plan to
implement it
 This is a step where by the entire organization
will be in motion or real operation
 Implementation involves determining:
 Who will be involved (employee)
 What resource will be assigned (other resources
excluding people)
 How the plan will be evaluated (procedures)
 What look like the reporting procedures
(hierarchy of r/n ships)
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Cont’d…
8. Controlling & Evaluating the
results
 Controlling & evaluating refers to:
 Monitoring the progress that is bring
made, evaluating the reported results,
making any necessary modification
 The plan may have to be modified since:
the environment constantly change and
the plan itself may not quite “perfect”
during its development

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6. Types of Plan
 Plans can be classified on different
bases or dimensions:
 Scope/breadth,
 time
 use (i.e., repetitiveness)

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Cont’d…
1. Scope / breadth dimension
refers to the :
 Comprehensiveness of the plan
 Level of management where the
plan is formulated
 Based on scope/ breadth, plan can be
classified into: strategic, tactical &
operational – hierarchy of plan

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Cont’d…
 Strategic plan-
is organization wide plan that is
formulated by top-level management
in consultation with the board of
directors & middle level managers

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 Cont’d…
 Characteristics of strategic plan:
 It require looking outside the organization for
threat & opportunities
 It require looking inside the organization for
strength & weakness
 It takes/ covers a relatively long time horizon
(>= 5 years)
 It tends to be top management responsibility
 It is expected in a relatively general (non-
specific) terms
 It serves as a premise for tactical plans
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Cont’d…
 Tactical plan –
 Refers to the implementation of
activities & the allocation of
resources necessary for the
achievement of the organization’s
objectives
 Example
 What is the best pricing policy?
 Which market is suitable for marketing
our products?

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Cont’d…
 Characteristics of tactical plan:
 It is an intermediate plan
 It is specific & goal oriented than strategic
plan
 It is developed by middle level management
in consultation with lower level management
 It supports the implementation of the
strategic plans
 It is concerned with shorter time frame (1-5
years)
 It serves as a premise for operational plans
 It is narrower in scope but more detailed
than strategic plan

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Cont’d…

 Operational plan –
 is concerned with the day to day
activities of the organization and
formulated by the lower level
management in consultation with
middle level management

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 Cont’d…
 Characteristics of operational plan:
 It spells out specifically what must be
accomplished to achieve specific goals
 It is concerned with the efficient day to
day use of resources allocated to a
department manager’s area of
responsibility
 It has relatively short time frame
(<=1year)
 It is the most detailed (specific) &
narrowest plan
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 Cont’d…
 Operational plan –
 Example
 What production technique is best?
 What material are needed for
operation?
 Unless operational goals are achieved,
tactical & strategic plans will not be
successful- goals will not be achieved

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Cont’d…
2. Time dimension
 refers to the periods for which the
planning is intended. Based on the length
of time a plan covers, three type of plans
are identified:
 Long range (five years or more)
 Medium range (b/n one & five years)
 Short-range (one year or less)

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Cont’d…
 Note:
 All strategic plans are long range
plans
 All tactical plans are medium-
range plans
 All operational plans are short
term- range plans

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Cont’d…
3. Use dimension
 refers to the extent to which plans will
be used on a recurring basis, i.e.,
frequently
 Based on this dimension, there are two
types of plans:
 Standing plan
 Single use plans
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Cont’d…
 Standing plans:–
 provide an ongoing guidance for performance
recurring activities
 They are formulated to be used again &
again for the day to day operations of the
organizations –for repetitive actions
 They are valuable under relatively stable
situations
 Once established, they allow managers to
conserve time used decision-making of
similar activities
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Cont’d…
 Example
 A bank can easily approve or reject
loan if criteria are established in
advance to evaluate credit ratings,
collateral assets, etc.
 The major types of standing plans
are policies, rules, & procedures

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Exercise

Briefly discuss standing

plans such as policy, rule &
procedure

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Cont’d…
Policy
 Is a general guide that specifies the
broad parameters within which
organizational members is expected to
operate in pursuit of organizational
goals
 Is a general statement or
understanding which guide or channels
thinking & actions in decision- making
to achieve organizational goals
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Cont’d…
Rules
 Spells out specific required actions or
non-action, i.e., action that must be or
must not be taken
 Involves allowing no discretion, in a
given situation

 Example – no smoking, photographing

prohibited, etc.
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Cont’d…
 Procedures
 Are statements that detail the exact manner
in which certain activities must be
accomplished
 Put the presses order of activities to be
carried out to do a task
 Are chronological sequences of required
actions
 Provide detailed step by step instructions as
to what should be done
 Example: material procurement, university
admission, bidding etc.
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 Cont’d…
 Single use plans:–
 are aimed at achieving a specific goals & will
dissolve when the goal has been accomplished
 They are designed to accomplish a specific
objectives usually in a relatively shorter period of
time & non repetitive
 They are detailed courses of action that probably
will not be repeated in the same form in the future
 Example- a plan to build a new warehouse-location,
placing a man on the moon, etc.
 The major types of single use plans are programs,
projects, & budgets

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 Cont’d…
Program:
 Is a comprehensive plan that coordinates a
complex set of activities related to a major
non-recurring goals
 Is a complex of goals, policies, procedures,
rules, task assignments, resources to be
employed & other elements necessary to
carryout a given course of action
 Note: single use plan may use standing
plans & other single use plans to be effective
 Single use plan = standing plans + single
use plan
 A program may be repeated with
modification but not as it is 57
Cont’d…
Project:
 Is a plan that coordinates a set of limited
scope activities that are non-recurring goals
 Project are the smaller & separate portion of a
program
 Each project has limited scope & distinct
directives concerning assignment & time
 Each project will become the responsibility of
designed personnel who will be given specific
resources & deadlines
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Cont’d…
 Example: building a warehouse can be taken
as a program
 Typical projects might include:
 The preparation of layout drawings
 A report on labor drawings
 Transferring stock from existing facilities to
the new installation

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Cont’d…
Budget:
 Is statement of expected results expressed in
numerical terms
 Is a statement of financial resources set
aside for specific activities in a given period
of time
 Is a single use plan that commits resources
to an activity over a given period
 May be expressed in monetary units, labor
hours, unit of products. Machine hours, etc.
 Is also used as a control device
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Reading Assignment

Management By Objective

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Any Questions

?
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