TOPIC 3

PLANNING

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 OVERVIEW OF GOALS AND PLANS
• An organization needs to have a goal to achieve.
• By having a goal, then the organization can plan
how to achieve the goal.
• Planning encourages coordination of activities.
• Planning reduces uncertainty, prevents work
duplication and wastage & help to set objectives
and standards.

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 Criticism Levelled at Planning
1. Planning results in flexibility & rigidity.
2. Planning cannot be done in a dynamic environment.
3. Formal planning restricts intuition (gut feeling) &
creativity.
4. Planning makes managers focus their attention on
current competition & not future challenges.
5. Formal planning drives for fake success which may
lead to failure.
 TYPES OF PLANNING
• Strategic Planning
• Tactical Planning
• Time-Based Planning
• Specific & Directional Planning
• Single-Use Plan & Standing Plan
 Types of Plans

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 Strategic Planning
• Involve the entire organization.
• Outlines the overall objectives & determine
the position of organization.
• Encompasses a long period (5 years or more).
• Focus on general issues.
• Involves expressing organizational objectives
 Tactical Planning
• Also known as operational planning.
• Involves short-term plans (1 to 3 years).
• Focuses on details.
• Implements existing objectives & sets
methods or approaches to achieve these
objectives.
 Time-Based Planning
• Short-term – less than 1 year
Long-term – more than 5 years
• Depends on future commitments & degree of
change faced by organization.
• The faster the occurrence of change, the
shorter should be the duration of the plan.
• Allow flexibility in the face of change.
 Specific & Directional Planning
• Specific Planning
– Clearly defined objectives
– Clear & detailed information must exist
– Allow for flexibility when uncertainty is high
– E.g: Aim to reduce 10% costs & increase 8% profits within
6 months
• Directional Planning
– Identifies general guidelines
– Provide focus / attention, not detailed objectives
– E.g: Aim to increase profits by 6 to 12% within a period of
6 months
 Single-Use Plan & Standing Plan
• Single-Use Plan
– Used for specific / unique situation
– Detailed action plan which may not be repeated in the same way in
future
– Types of single-use planning: Programmes, Projects & Budgets
– E.g: A manager of tea plantation in Peninsular Malaysia is instructed to
expand the plantation into Sabah & Sarawak
• Standing Plan
– Plans that are already available, which have guidelines for repetitive
steps or processes
– Types of standing plan: Policies, Procedures & Rules
– E.g: Registration in universities, the dates may be differ, but processing
steps remain the same every semester
Planning based on standing plan
 MANAGEMENT BY OBJECTIVES
(MBO)
• MBO interprets overall objectives into specific
objectives, cascading it to the entire
organization.
– Links objectives at one level to the next level
• MBO represents a personal performance
objective
• Two-way function:
– Bottom-up
– Top-down
Top-down planning
• A planning process which is done by the top
management and passed down to lower level
management to implement the plan.

Advantages:
• a) top management are the ones who can see the
overall picture of the organization;
• b) planning done at top level is less expensive – do not
need to go through multiple levels of employees.
• c) to protect confidential information from lower level.
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Bottom-up planning
• A planning process which is done by the lower level
management.

Advantages:
• a) enhance performance of lower level
management/employees
• b) lower level employees may provide better idea as
they are the closest to the situation or customers
• c) encourage commitment from lower level employees
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 Elements in MBO
• Specific Goal – Outline expected outcome
• Participative Decision Making – Management
together with workers identify the goals &
determine the best methods
• Explicit time-frame – Each objective has its
own time duration for achievement
• Performance Feedback – Provides continuous
feedback on the achievement of goals
 STRATEGIC FRAMEWORK
• 9-step process includes planning (Step 1 – 7),
implementation (Step 8) & evaluation of
strategies (Step 9).

• Step 1: Identifying Mission, Objectives &

Current Strategies
– “what is the nature of our business?”
 ANALYSIS OF SWOT
• Step 2: Analyzing the Environment
– Aware of competitors, customers, legislation, etc.
• Step 3: Identifying Opportunities & Threats
– Positive & negative factors
• Step 4: Analyzing the Organizational
Resources
– Availability of resources & skills in organizations
• Step 5: Identifying Strengths & Weaknesses
– Competitive advantages & lack of resources
• Step 6: Re-evaluation of Mission & Objectives
of Organization
– Forecasting the outcomes of existing strategies
• Step 7: Strategy Formulation
– Growth strategy – ‘the bigger the better’
– Stability strategy – no change
– Retrenchment strategy – size reduction, sale of
less profitable products
– Combination strategy
• Step 8: Implementation of Strategy
– Relate to leadership of the organization
• Step 9: Evaluation of Strategy
– How effective is the strategy that has been
implemented?
– Is this strategy really necessary?
 QUALITY AS A STRATEGY
• Emphasis satisfying customer needs &
attempt to retain customer loyalty
– Based on quality
– Allows to differentiate from competitors
– Have the competitive edge
• Benchmarking – Identification of best
practices in doing something to enable
organization to accomplish excellence
performance levels
 ISO 9000 Series
• 1980’s – a call to improve the quality of
products & services
• 1987 – ISO 9000 developed in Switzerland
• ISO – International Organisation of
Standardisation
– Certify if achieved a certain quality management
level
• ISO 14000 – environmental preservation