Management

Chapter-03

Planning and Decision Making

(Basic Elements of Planning)
 Slide-01
Chapter Outline:
1. Meaning of planning
2. Nature of planning
3. Organizational planning – steps in planning, kinds
of plans, time frames of planning and the
responsibilities associated with different kinds of
plan.
4. Organizational goals or objectives – meaning,
types and purposes
5. Planning process: Interlink with various types of
goals and plans, consideration of external
environment within which it takes place.
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 Slide-01 (Contd.)
6. Managing goal setting and planning process.
a. Identifying the barriers to goal setting and
recommending ways and means to overcome
those.
b. Using management by objective (MBO) to
implement plan
7. Tools of planning

Source: Management by Griffin (Chapter 6)

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 Slide-02
Meaning of Planning
1. Planning is deciding in advance.
2. Planning is a projected course of action.
3. Planning is the process of setting goals
and choosing the means to achieve those
goals.

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 Slide-03
Nature of Planning
1. Its primacy among the manager’s task.
2. Its pervasiveness.
3. Its significant contribution to achieve
purposes and objectives of the
organization.
4. It needs to be both efficient and effective.

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 Slide-04
Steps in Planning
Being aware of opportunity

Setting objectives or goals

Considering planning premises

Identifying alternatives in light of goals sought

Choosing an alternative

Formulating supporting plans

Numberzing plans by making budgets

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 Slide-05
Kinds of Organizational Plans
1. Strategic or long-term plan.
2. Tactical or intermediate plan.
3. Operational or short term plan.

* Contingency plan

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 Slide-06
Strategic Plan
A strategic plan is set by the board of directors
and top management, generally have a long –
term focus and address questions of scope,
resource deployment, competitive advantage and
synergy.
Strategic plan is generally a long term plan that
covers many years even decades; however,
common strategic plans are five years or more.

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 Slide-07
Tactical Plan
Tactical plans typically involve upper and middle
management and compared with strategic plans,
have a somewhat short horizon, and more
specific and concrete focus.
Tactical plan is also called intermediate plan.
Intermediate plans usually covers period from
one year to five years and are especially
important for middle and first line managers.

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 Slide-08
Operational Plan
Operational plan is also called a short – range plan
which has a time frame of one year or less. Short
– range plans greatly affect manager's day to day
activities. There are two basic kinds of short –
range plan;
(a) An action plan which operationalize any other
kind of plan
(b) A reaction plan which is developed to an un
fore seen circumstances.
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 Slide-09
Meaning, Types and Purposes of Goal/Objective/Aim
Meaning:
Goals are objectives or aims of organization. Goals are critical for
organizational effectiveness.
Types:
1. Strategic goals.
2. Tactical goals.
3. Operational goals.
Major purposes :
1. Providing guidance and unified direction for people in the
organization.
2. Goals can serve as a source of motivation to employees.
3. It provides an effective mechanism for evaluation and
control.

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 Slide-10
Meaning of Planning Process
In popular sense process of planning means the
various steps in planning, as described in slide 4.
The process of planning may also be described as a
course of action which sets an interlink between
various types of goals and plans, and the
environmental context within which it takes place,
as may be seen in Ricky. W. Griffin’s book page
159 and has been shown in slide 11.

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 Slide-11
The Planning Process
The Environmental Context

*The organization’s mission

*Purpose *Premises *Values *Directions

Strategic goals Strategic Plans

Tactical goals Tactical plans

Operational goals Operational plans

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 Slide-11 (Contd.)
Mission: Mission is a statement of an organization’s
fundamental purpose (Becoming No. 1 in the industry,
for example)
Purpose: The goals/ objectives/aims
Premises: Planning premises are defined as the anticipated
environment in which the plans are expected to operate.
Values: Values refers to the concept of ‘right’ and
‘wrong’.
Directions: The general way in which certain thing (in this
case, plan) develops.
Source: Griffin, (Page: 169)

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 Slide-12
Managing Goal Setting and Planning
Process
1. Identifying barriers to goal setting and
formulation of planning.
2. Finding out the ways and means to
overcome the barriers.
3. Using management by objective (MBO) to
implement plan.

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 Slide-13
Barriers to Goal Setting and Planning
Process
1. Reluctance to establish goals.
2. Inappropriate goals.
3. Improper reward system.
4. Dynamic and complex environment.
5. Resistance to change.
6. Constraints – Common constraints
include a lack of resources, government
restrictions and strong competition.

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 Slide-14
The Ways and Means to Overcome the Barriers
1. Understanding the purpose of goals of
planning.
2. Proper communication and ensuring
participations.
3. Maintaining consistency, revision, and
updating.
4. Effective reward system.

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 Slide-15
Meaning of Management by Objective

Management by objective (MBO) may be

defined as the process of collaborative goal
setting by a manager and his/her subordinates;
the extent to which goals are accomplished is a
major factor in evaluating and rewarding the
subordinate's performance

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 Slide-16
Various Tools of Planning
1. Forecasting.
2. Linear programming.
3. Breakeven analysis.
4. Simulations.
5. Program/project evaluation and review
technique (PERT).
6. Artificial intelligence.

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 Slide-17
Forecasting
Forecasting is the process of developing
assumptions or premises about the future that
managers can use in planning or decision making.
The techniques of forecasting may be both
quantitative viz time series analysis, causal
modeling (regression model) and quantitative –
individual or group judgment.

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 Slide-18
Linear Programming
Linear programming is a procedure for
calculating the optimal combination of resources
and activities.
It involves computing simultaneous solutions to a
set of linear equations.
It is appropriate when an objective must be met
within a set of constraints.

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 Slide-19
Breakeven Analysis

Breakeven analysis is a procedure for

identifying the point at which revenues start
covering cost.

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 Slide-20
Simulations
The word simulation means to copy or represent. In
organizational context simulation is a representation of a
real world situation that can be manipulated to discover how
it functions.
Simulations is close to model but not strictly a type of
model. Model in general represent reality, whereas
simulations imitates.
Simulations is a descriptive rather than a prescriptive
model.
Simulation is a production of a computer model of
something.
Simulation is imitation of a situation or process.
Simulation is a computer based exercise that expand over a
period of time. 23
 Slide-21
Program Evaluation and Review Technique (PERT)
The program (or project) evaluation and review technique
(PERT) is a statistical tool, used in project management,
which is designed to analyze and represent the tasks
involved in completing a given project especially the
time needed to complete each task, and to identify the
minimum time needed to complete the total project. It
incorporates uncertainty by making it possible to
schedule a project while not knowing precisely the details
and durations of all activities. It is more an event-oriented
technique rather than start and completion – oriented
technique. It is used more in those project where time is
the major factor rather than cost.
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 Slide-22
Artificial Intelligence

Artificial intelligence (AI) refers to the use of

computer to simulate characteristics of human
thought by developing computational approaches
to intelligent behavior
The most useful form of AI is the expert system
developed by Digital Equipment corporation that
checks sales order for new computer system and
then designs preliminary layouts for those new
system.
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Thank You.

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