LESSON 4:
CONCEPT OF PLANNING FUNCTION
Overview:
Planning is one of the major functions of
management. It is a process that involves the
setting of the organization's goals, establishing
strategies for accomplishing those goals and
developing plans of actions that managers
intend to use to achieve said organizational
goals.
It is a process that involves the setting of the
organization's goals, establishing strategies for
accomplishing those goals and developing plans
of actions that managers intend to use to
achieve said organizational goals.
It is the primary function of management; it
provides the foundation from which all future
management function arises.
It is goal oriented, since plans arise from
objectives, and objectives provide guidelines for
planning. It is a Continuous Process of adapting
the organization with the changes in business.
Planning is Flexible, it selects the best
alternative based on assumptions, there is a
possibility that there is a dead log in the
function of management, It has one more
alternative suit for future situation
It is a Managerial Function; it is found in all
levels and all departments of an organization. It
involves choosing the future course of action
from among alternatives.
Learning Outcomes:
After successful completion of this lesson, you
should be able to:
Discuss the nature of planning
Compare and contrast the different types of
plans
Describe planning at different levels in the firm
Apply appropriate planning techniques and
tools
Formulate a decision from several alternatives
Course Materials:
The first managerial function involves planning.
The function is about creating a detailed plan
towards achieving a specific organizational
objective. When you are planning, you are
identifying the tasks, which are required to
achieve the desired goals, outlining how the
tasks should be performed, and identifying
when and by whom they must be performed.
The focus of planning is about achieving the
objectives and it does require knowledge of the
organization's objectives and vision. You will
need to look both at the short- and long-term
success of the organization as part of the plan.
CONCEPT OF PLANNING FUNCTION
Definition and Nature of Planning
Planning is one of the major functions of
management. It is a process that involves the
setting of the organization's goals, establishing
strategies for accomplishing those goals and
developing plans of actions that managers
intend to use to achieve said organizational
goals.
It is a process that involves the setting of the
organization's goals, establishing strategies for
accomplishing those goals and developing plans
of actions that managers intend to use to
achieve said organizational goals.
It is the primary function of management; it
provides the foundation from which all future
management function arises.
It is goal oriented, since plans arise from
objectives, and objectives provide guidelines for
planning. It is a Continuous Process of adapting
the organization with the changes in business.
Planning is Flexible, it selects the best
alternative based on assumptions, there is a
possibility that there is a dead log in the
function of management, It has one more
alternative suit for future situation.
It is a Managerial Function; it is found in all
levels and all departments of an organization. It
involves choosing the future course of action
from among alternatives.
TYPES OF PLANNING
1. Operational Planning- This type of planning
typically describes the day-to-day running of the
company. It is often described as single use
plans or ongoing plans. Single use plans are
created for events and activities with a single
occurrence (such as a single marketing
campaign). Ongoing plans include policies for
approaching problems, rules for specific
regulations and procedures for a step-by-step
process for accomplishing objectives.
2. Strategic Planning- Includes a high-level
overview of the entire business. It is the
foundational basis of the organization and will
dictate long-term decisions. The scope of
strategic planning can be anywhere from the
next two years to the next 10 years. Important
components of a strategic plan are vision,
mission, and values.
3. Tactical Planning -It supports strategic
planning. It includes tactics that the
organization plans to use to achieve what is
outlined in the strategic plan. Often, the scope
is less than one year and breaks down the
strategic plan into actionable chunks. Tactical
planning is different from operational planning
in that tactical plans ask specific questions
about what needs to happen to accomplish a
strategic goal; operational plans ask how the
organization will generally do something to
accomplish the company's mission.
4. Contingency Planning -are made when
something unexpected happens or when
something needs to be changed. Contingency
planning can be helpful in circumstances that
call for a change. Although managers should
anticipate changes when engaged in any of the
primary types of planning, contingency planning
is essential in moments when changes cannot
be foreseen. As the business world becomes
more complicated, contingency planning
becomes more important to engage in and
understand.
IMPORTANCE OF PLANNING
1. Efficient Use of Resources- All organizations,
large and small, have limited resources. The
planning process provides the information top
management needs to make effective decisions
about how to allocate the resources in a way
that will enable the organization to reach its
objectives. Productivity is maximized and
resources are not wasted on projects with little
chance of success
2. Establishing Organizational Goal- It is one of
the key aspects of the planning process. Goals
must be aggressive, but realistic. Organizations
cannot allow themselves to become too
satisfied with how they are currently doing – or
they are likely to lose ground to competitors.
3. Managing Risk and Uncertainty- is essential
to an organization’s success. Even the largest
corporations cannot control the economic and
competitive environment around them.
Unforeseen events occur that must be dealt
with quickly before negative financial
consequences from these events become
severe. Planning encourages the development
of “what-if” scenarios, where managers attempt
to envision possible risk factors and develop
contingency plans to deal with them. The pace
of change in business is rapid, and organizations
must be able to rapidly adjust their strategies to
these changing conditions.
4. Team Building and Cooperation-When the
plan is completed and communicated to
members of the organization, everyone knows
what their responsibilities are, and how other
areas of the organization need their assistance
and expertise in order to complete assigned
tasks. They see how their work contributes to
the success of the organization as a whole and
can take pride in their contributions. Potential
conflict can be reduced when top management
solicits department or division managers’ input
during the goal setting process. Individuals are
less likely to resent budgetary targets when
they had a say in their creation.
5. Creating Competitive Advantages-
organizations get a realistic view of their
current strengths and weaknesses relative to
major competitors. The management team sees
areas where competitors may be vulnerable
and then crafts marketing strategies to take
advantage of these weaknesses. Observing
competitors’ actions can also help organizations
identify opportunities they may have
overlooked, such as emerging international
markets or opportunities to market products to
completely different customer groups.
GOAL SETTING
Goal is an idea of the future or desired result
that a person or agroup of people envision,
plan, and commit to achieve.
The definition of goal setting is the process of
identifying something that you want to
accomplish and establishing measurable goals
and time frames.
TYPES OF GOALS
Short Term Goals – a short term goal is
something you want to do soon. The near
future can mean today, this week, this month or
even this year. A short-term goal is something
you want to accomplish soon.
Long Term Goals – a long term goal is the goal
that takes time to achieve.
IMPORTANCE OF GOALS
O It gives you short term vision and long-term
motivation.
O It focuses your acquisition of knowledge and
helps you to organize your time and your
resources, so that you can make the very most
of your life.
O It allows to measure your progress because
you always have a fixed endpoint or benchmark
to compare with.
THREE (3) LEVELS OF ORGANIZATIONAL
PRIORITIES
a) Purpose-a broad,general statement that tells
why your organization exists; it usually does not
change from year to year and is often the first
statement in your constitution.
b) Goals-statements describing what your
organization wishes to accomplish, stemming
from your purpose. Goals are the ends toward
which your efforts will be directed and often
change from term to term or year to year,
depending on the nature of the group.
c) Objectives-descriptions of exactly what is to
be done, derived from the goals. They are clear,
specific statements of measurable tasks that
will be accomplished as steps toward reaching
your goals. They are short term and have
deadlines.
STEPS FOR SETTING GOALS
1. Brainstorm goals as a group. (People support
what they create and will accept responsibility
more easily.)
2. Choose from the brainstormed list those you
want to attend to.
3. Prioritize as a group.
4. Determine objectives and plans of action for
each goal. Be specific and include deadlines.
5. Move into action. Follow through.
6. Continually evaluate your progress.
7. Be flexible;allow your objectives to change to
meet your new circumstances.
THREE (3) DIFFERENT LEVELS OF PLANNING IIN
THE FIRM
FIRM – A commercial organization that operates
on a for-profit basis and participates inselling
goods or services to consumers.
1. CORPORATE LEVEL-Most corporation of
even moderate size have a corporate
headquarters. The heads of these
groups are typically part of the group of
senior executives at the corporate
headquarters. Executives at the
corporate level in large firms include
both those in the headquarters and
those heading up the large corporate
groups such as finance, human
resources, marketing etc.
These corporate-level executives primarily focus
on the questions such as:
a) What industries should we get into?
b) What markets should the firm be in?
c) In which business should the corporation
invest money?
d) What resources should be allocated to each
business?
2. BUSINESS LEVEL- At this level managers focus
on determining how they are going to compete
effectively in market.
At this level,managers attempt to address
questions such as:
a) Who are our direct competitors?
b) What are their strengths and weaknesses?
c) What are our strengths and weaknesses?
d) What advantages do we have over
competitors?
3. FUNCTIONAL LEVEL-At this level managers
focus on how they can facilitate the
achievement of the competitive plan of the
business. These managers are often the heads
of departments such as finance, marketing,
human resources, or product development. This
can include managers responsible for business
within a specific geographic region or managers
responsible for specific retail stores.
Functional managers attempt to answer
questions such as:
a) What activities does my unit need to
perform well to meet customer
expectations?
PLANNING TECHNIQUES AND TOOLS
BRAINSTORMING the Basic brainstorming is not
complex-though there are important
techniques for ensuring success. Here, is how
basic brainstorming works.
1. Get a group of people together to address a
problem, challenge, or opportunity.
2. Ask your group to generate as many ideas as
possible-no matter how “off the wall”
3. Review the ideas, select the most interesting,
and then lead a discussion about how to
combine, improve, and/or implement the ideas.
While this process may be simple in theory,
however, it is not always easy to generate new
ideas out of nowhere. And that is why so many
interesting and inspirational brainstorming
techniques have been developed.
Brainstorming is a terrific technique for idea
generation,coming up with alternatives and
possibilities, discovering fatal flaws, and
developing creative approaches. But it is only as
good as its participants and facilitator. The
better you are at selecting participants, setting
the stage, and encouraging discussion, the
better your outcomes are likely to be.
TYPES OF BRAINSTORMING
Analytic Brainstorming- it focuses on problem
solving, it can be useful to analyze the problem
with tools that lead to creative solutions.
Analytic brainstorming is relatively easy for
most people because it draws on idea
generation skills they have already built in
school and in the workplace. No one gets
embarrassed when asked to analyze a situation.
Quiet Brainstorming- In some situations,
individuals are so cramped for time that a
brainstorming session would be impossible to
schedule. In other situations, team members
are unwilling to speak up in a group or to
express ideas that others might not approve of.
When that is the case, you might be well served
with brainstorming techniques that allow
participants to generate ideas without meeting
or without the need for public participation.
Role Play Brainstorming- it allows your team to
“become” their own clients, which often
provides surprisingly potent insights into
challenges and solutions. Another plus of role
play is that, in some cases, it lowers
participants’ inhibitions.
Brainstorming with Support- For groups that are
not intrinsically creative or communicative or
are likely to get stuck once the most obvious
ideas have been suggested, help is in order. You
can provide that help up front by setting up the
brainstorming process to include everyone in a
structured, supportive manner.
Radically Creative Brainstorming – If your team
seems to be stuck on conventional answers
to brainstorming challenges, you may need to
stir the pot to help them generate creative
ideas by using techniques that require out-of-
the-box thinking. These may include the
Charrette approach and "what if" challenges. It
is one of the best-known techniques available
for creative problem solving. It can be used for
tasks including internal procedures,company
structure and written articles. Its primary
objective is to get your mind out of the box by
producing as many solutions (or ideas), or
marketing campaigns as possible.
1. Problem Statement Guidelines- it is a
statement about an area of concern,a condition
to be improved upon, a difficulty to be
eliminated, or a troubling question that exists in
theory or in practice that points to the need for
meaningful understanding and deliberate
investigation.
Key elements of an effective problem statement
include:
a) Gap: Identify the gap (problem) that exists
today.
b)Timeframe, location, and trend: Describe
when and where the problem was first
observed and what kind of trend it is following.
c) Impact: Quantify the gap (cost, time, quality,
environmental, personal, etc.)
d) Importance: Tothe organization, the
individual, etc. to better understand the
urgency.
2. Strengths,Weaknesses, Opportunities &
Threat Analysis (SWOT Analysis)-requires you
to be candid and provide an honest assessment
of the state of things. Eventually, you focus on
the key issues. Strengths is the resource or
capacity the organization can use effectively to
achieve its objectives. Weakness Is the
limitation, fault, or defect in the organization
that will keep it from achieving its objectives.
Opportunities is any favorable situation in the
organization's environment. It is usually a trend
or change of some kind or an overlooked need
that increases demand for a product or service
and permits the firm to enhance its position by
supplying it. While Threats is any unfavorable
situation in the organization's environment that
is potentially damaging to its strategy. The
threat may be a barrier, a constraint, or
anything external that might cause problems,
damage, or injury.
3. Problem Tree- is a pictorial representation of
a problem, its causes, and its consequences.
This analysis tool helps the project teamget a
quick glance of how a range of complex issues
contribute toward a problem and how this
problem branches out into a set of
consequences. Both causes and consequences
are fitted into the diagram on a hierarchical
preference basis.
STEPS TO PERFORM THE PROBLEM TREE
ANALYSIS
3.1 Begin with a brainstorming session to
identify the major problems affecting the
project. For each problem you will have to carry
out a separate problem tree analysis.
3.2 Divide your board or the paper you are
using to record the analysis into three vertical
sections and write the problem in the middle
section. The left side can be reserved for the
causes and the right side for the consequences.
3.3 Discuss with the team the possible causes
that can be held responsible for the problem
situation. From this, list and identify the ones
which have a direct relationship with the
problem. These direct causes can be listed on
the extreme right-hand side of the section
reserved for the causes. The causes which lead
to these direct causes can be listed to the left of
this list. Relational arrows can also be used to
demonstrate the cause and effect relationship
among the causes
3.4 When you are done with the causes, move
on to the consequences.When listing the
consequences, list the direct ones on the
extreme left of the consequences section. The
consequences that result from these causes can
be listed to right of this list.
3.5 Finally, when a comprehensive list of causes
and consequences have been developed and
the related causes and consequences have been
linked respectively, you are ready to display the
information pictorially.
4. Logical Framework- or log frame is a
document that gives an overview of the
objectives, activities and resources of a project.
It also provides information about external
elements that may influence the project, called
assumptions. Finally, it tells you how the project
will be monitored, through the use
of/content/indicators. All this information is
presented in a table with four columns and four
rows – although variations on this basic scheme
do exist. It has two types the vertical and
horizontal logic.
5. Forcefield Analysis- was created by Kurt
Lewin in the 1940s. Lewin originally used itin his
work as a social psychologist. Today, however, it
is also used in business, for making and
communicating go/no-go decisions. The idea
behind Force Field Analysis is that situations are
maintained by an equilibrium between forces
that drive change and others that resist change,
as shown in figure 1, below. For change to
happen, the driving forces must be
strengthened, or the resisting forces weakened.
CONCEPT OF DECISION MAKING
DECISION MAKING
According to the Oxford Advanced Learner’s
Dictionary, the term decision making means the
process of deciding about something important,
especially in a group of people or in an
organization.
Trewartha & Newport defines decision making
process as follows:“Decision-making involves
the selection of a course of action from among
two or more possible alternatives in order to
arrive at a solution for a given problem”.
Further, decision making process can be
regarded as check and balance system that
keeps the organization growing both in vertical
and linear directions.
It means that decision making process seeks a
goal. The goals are pre-set business objectives,
company missions and its vision.
To achieve these goals, company may face lot of
obstacles in administrative, operational,
marketing wings and operational domains.
Some types of decision making are routine and
basic decision making, personal and
organizational decision making, individual and
group decision making, programmed and non-
programmed decision making and tactical and
strategic decision making.
DECISION-MAKING is an integral part of modern
management. Essentially, rational, or sound
decision making is taken as primary function of
management. Every manager takes hundreds
and hundreds of decisions subconsciously or
consciously making it as the key component in
the role of a manager. Decisions play important
roles as they determine both organizational and
managerial activities.
1. Decision-Making is Goal-Oriented: Each
decision of management major or
minor must make, at least, some
contribution towards the attainment of
organizational objectives.
2. Decision-Making is Pervasive: There are
three dimensions of the pervasiveness
of decision-making.
2.1 All managers in the management
hierarchy take decisions, within the
limits of their authority, pertaining to
their areas of functioning.
2.2 Decision-making is done in all
functional areas of management e.g.
production, marketing,finance,
personnel, research, and development
etc.
2.3 Decision-making is inherent in all
functions of management i.e. planning,
organizing, staffing, directing, and
controlling.
3.Decision-Making is an Intellectual
Exercise: Decision-making calls for
creativity and imagination on the part
of managers; in that decision-making
forces managers to think in terms of
developing best objectives and best
alternatives for attaining those
objectives.
4. Decision-Making Involves a Problem
of Choice: Decision-making is
fundamentally a choosing problem i.e. a
problem of choosing the best
alternative, from out of a few
alternatives, in a rational and scientific
manner.
5. Decision-Making is a Continuous
Process: Decision-making process
commences since the inception of
business and continues throughout the
organizational life. All managers take
decisions for organizational purposes;
so long as the enterprise is in existence.
6. Decision-Making is the Basis of
Action: All actions of people operating
the enterprise are based on the
decisions taken by management vis-à-
vis organizational issues.
7.Decision-Making Implies a
Commitment of Organizational
Resources:Commitment of
organizational resources time, efforts,
energies, physical resources etc. is
implied both during the process of
taking decisions and more particularly,
at time of implementation of decisions.
8.Decision-Making is Situational:
Decision-making much depends on the
situation facing the management; at the
time when a decision-making problem
crops up.
PROCESS OF DECISION MAKING
1. Identify the decision- To decide, you
must first identify the problem you
need to solve or the question you need
to answer. If you misidentify the
problem to solve, or if the problem you
have chosen is too broad, you will
knock the decision train off the track
before it even leaves the station.
2. Gather relevant information- Once
you have identified your decision, it is
time to gather the information relevant
to that choice. Do an internal
assessment, seeing where your
organization has succeeded and failed
in areas related to your decision. Also,
seek information from external sources,
including studies, market research, and,
in some cases, evaluation from paid
consultants.
3. Identify the alternatives-With
relevant information now at your
fingertips, identify possible solutions to
your problem. There is usually more
than one option to consider when
trying to meet a goal-for example, if
your company is trying to gain more
engagement on social media, your
alternatives could include paid social
advertisements, a change in your
organic social media strategy, or a
combination of the two.
4. Weigh the evidence- Once you have
identified multiple alternatives, weigh
the evidence for or against said
alternatives. See what companies have
done in the past to succeed in these
areas and take a good hard look at your
own organization’s wins and losses.
5. Choose among alternatives- Here is
the part of the decision-making process
where you, you know, make the
decision. Hopefully, you have identified
and clarified what decision needs to be
made, gathered all relevant
information, and developed and
considered the potential paths to take.
You are perfectly prepared to choose.
6. Take action- Once you’ve made your
decision, act on it! Develop a plan to
make your decision tangible and
achievable. Develop a project plan
related to your decision, and then set
the team loose on their tasks once the
plan is in place.
7. Review your decision- After a
predetermined amount of time, which
you defined in step one of the decision-
making process, take an honest look
back at your decision. Did you solve the
problem? Did you answer the question?
Did you meet your goals? If so, take
note of what worked for future
reference. If not, learn from your
mistakes as you begin the decision-
making process again.
Activities/Assessments:
A. ESSAY.ANSWER THE FOLLOWING
QUESTIONS.
1. What is the nature of planning and
why it is important in the success of any
business and organization?
2. Describe the different types of plans
and explain how it can be used to
accomplished results in any
organization?
3.What are the different planning
techniques and tools and how can a
manager make effective planning?
4. Formulate an effective plan for a
specific business endeavor during this
pandemic crisis of the Covid-19.
B.CASE PROBLEM
In 1997 Michael O’Dell, the chief
scientist at WorldCom, which owned
the largest network of “Internet
backbone” fiber optic cable in the
world, stated that data traffic over the
Internet was doubling every hundred
days. This implied a growth rate of over
1,000 percent a year. O’Dell went on to
say that there was not enough fiber
optic capacity to go around, and that
“demand will far outstrip supply for the
foreseeable future.”
Electrified by this potential opportunity,
a number of companies rushed intothe
business.These firms included Level 3
Communications,360 Networks, Global
Crossing,Qwest
Communications,WorldCom,Williams
Communications Group, Genuity
Inc.,and XO Communications. In all
cases the strategic plans were
remarkably similar: Raise lots of capital,
build massive fiber optic networks that
straddled the nation (or even the
globe), cut prices, and get ready for the
rush of business. Managers at these
companies believed that surging
demand would soon catch up with
capacity, resulting in a profit bonanza
for those that had the foresight to build
out their networks. It was a gold rush,
and the first into the field would stake
the best claims.
However, there were dissenting voices.
As early as October 1998 an Inter net
researcher at AT&T Labs named
Andrew Odlyzko published a paper that
debunked the assumption that demand
for Internet traffic was growing at 1,000
percent a year. Odlyzko's careful
analysis concluded that growth was
much slower-only 100 percent a year!
Although still large, that growth rate
was not nearly large enough to fill the
massive flood of fiber optic capacity
that was entering the market.
Moreover, Odlyzko noted that new
technologies were increasing the
amount of data that could be sent
down existing fibers, reducing the need
for new fiber. But with investment
money flooding into the market, few
paid any attention to him. WorldCom
was still using the 1,000 percent figure
as late as September 2000.
As it turned out, Odlyzko was right.
Capacity rapidly outstripped
demand,and by late 2002 less than 3
percent of the fiber that had been laid
in the ground was actually being used!
While prices slumped, the surge in
volume that managers had bet on did
not materialize. Unable to service the
debt they had taken on to build out
their networks, company after company
tumbled into bankruptcy- including
WorldCom,360 Networks, XO
Communications,and Global Crossing.
Level 3 and Qwest survived, but their
stock prices had fallen by 90 percent,
and both companies were saddled with
massive debts.
C. CASE DISCUSSION QUESTIONS
1.Why did the strategic plans adopted
by companies like Level 3,Global
Crossing, and 360 Networks fail?
2. The managers who ran these
companies were smart, successful
individuals, as were many of the
investors who put money into these
businesses. How could so many smart
people have been so wrong?
3. What specific decision-making biases
do you think were at work in this
industry during the late 1990s and early
2000s?
4. What could the managers running
these companies have done differently
that might have led to a different
outcome?