CHAPTER THREE

PLANNING
 LECTURE CONTENTS
After the completion of the chapter, we will be able to
understand:

Nature & purpose of planning

The planning Process

Skills Required In Planning

Types of Plans
 PLANNING
 Planning is deciding in advance what to do,
how to do it, when to do it, and who is to do
it.

 Planning is determining in advance what is

to be accomplished and how it is to be
accomplished.
 Planning …Cont’d
Planning is the process of setting objectives and
determining the steps needed to attain them.

 It is systematic preparation for tomorrow, today, the

time aftermath of this

It is all about placing an organization on the right track

 it is an orderly process that allows managers to

determine what they want and how they get it

It deals with ends (what is to be done)

 Planning …Cont’d

In planning managers:

assess the future

Determine objectives of the organization

and develop the overall strategies.

determine resources needed to achieve

the objectives
 NATURES OF PLANNING
 The Primacy of planning

 It is the primary mgt function

 Pervasiveness of planning

 At all levels in all organizations

 Contribution to purpose & objective

 to facilitate the accomplishment and the achievement of the purposes and

the objectives of the organization.

 Planning is directed towards efficiency

 Plans are efficient if they achieve their purpose at reasonable costs

 It concerns future activity

 It is all about the future

 It has dynamic aspects (it is flexible & continuous)

 flexible as it is based on future conditions, which are always dynamic.

 IMPORTANCE OF PLANNING
Planning serves a number of significant purposes ( irrespective of its size,
objectives, and location).

 Planning gives direction to managers and non managers

 Planning establishes goals or standards used in controlling

 It reduces risk and uncertainty of the future

 It allows organizational members to concentrate on common objective

 It provides criteria for decision making

 It provides basis for control or it facilitates control

 Generally, decisions without planning would become random this may lead
to failure of entire organization
 IMPORTANCE OF PLANNING…CONT’D

 To Minimize risks

 To focus attention on objectives

 To gain economical operation

 To facilitate control
THE PLANNING PROCESS
Identifying and defining the real problem

Establish clear-cut objectives

Establishing the planning premises:- assumptions…

Identify alternative courses of action:- seeing other options

Evaluating alternative courses based on cost, time,

resources…

Selecting a course of action/best alternative among many

Formulating derivative plans

Numbering plans by budgeting: eg. Set target plan.

SKILLS REQUIRED IN PLANNING

 Skills required in planning are :

1. Forecasting

&

2. Decision Making
 FORECASTING
Forecasting: is the attempt to predict outcomes and
future trends that can serve as basis for planning, by
inferences from known facts.

In developing premises, the kind of markets, volume of

sales, prices, products, technical developments, costs, tax
rates, policies, policies related to dividends, the social and
political environment, long-term trends, etc. of the future
should be predicated with the help of forecasting.
DECISION MAKING
Decision Making: is defined as the process
of selecting or choosing, based on some
criteria, the best course of action from a
number alternatives.
THE DECISION MAKING PROCESS
The steps in decision-making process include the following:

1. Ascertain the need for a decision

2. Establish decision criteria

3. Allocate weights to criteria

4. Develop alternatives

5. Evaluate alternatives

6. Select the best alternative

7. Putting decision into action

8. Following up decisions
TYPES OF DECISION
1. Programmed decisions

 are the kinds of decision that manager’s made again and again

 Once a standard procedure has been established, it can be used to

treat all like situations

2. Nonprogrammer Decisions

 are used to solve nonrecurring problem.

 no well-established procedure for handling them, primarily because

managers don not have experience to draw upon.

 DECISION MAKING SITUATIONS

1. Decisions under certainty

 Ready made information

2.Decisions under risk

 Decisions in which probabilities can be assigned to the expected

outcomes of each alternative

3. Decisions under uncertainty

 Neither there is complete data nor probabilities can be assigned to

the surrounding conditions.
 TYPES OF PLANS
Planning can be classified in different ways:

A. Based on duration /time dimension

1) Short range plans: a plan for a year or less than one year

2) Intermediate range plans: plan between a year and five

years

3) Long range plans: Plan for five or more years

TYPES OF PLAN…CONT’D

B. Based on scope/breadth dimensions

 A planning can be classified in to based on the scope or breadth of

activates they represent.

1. Strategic Plans

 These plans are comprehensive in scope & reflect long-term needs

and direction of the organization.

 Strategic plans include:

 Mission/purpose

 Objectives

 Strategies
TYPES OF PLAN…CONT’D

Mission: explains the reason for existence

Objectives/Goals: the ends toward which activity
is directed

Strategies: general programs of action and

deployment of resources to attain objectives.

 It is concerned with the direction in which human

and material resources will be applied in order to
increase the chance of achieving objectives.
TYPES OF PLAN…CONT’D

2. Tactical plans
 These are plans used to implement strategic plans

 performed by middle level managers

 Have shorter time frame, more detail and narrower

scope than strategic plans

 These plans are more limited in scope, and address

those activities & resource required to implement
strategic plans.
 TYPES OF PLAN…CONT’D
3. Operational plans
 Operational planning is the process of setting short-range
objectives and determining in advance how they will be
accomplished.

Operational plans:

 are first line managers' tools for exciting daily,

weekly, and monthly activities.

 performed by operational level managers.

 are specific and more detail than others.

TYPES OF PLAN…CONT’D

C. Based on use dimension

1.Single Use Plans: are plans that are used once,

and then discarded.

2. Standing plans – are used to guide activities that occur

over a period of time. These are plans that are designed to
be used again and again.
TYPES OF PLAN…CONT’D

TYPES OF STANDING PLANS

 Policies

 Procedures/Standard operating
procedures

 Rules & Regulations

TYPES OF PLAN…CONT’D
 Policies

 are standing plans in that they are general statements or

understandings which guide or channel thinking in decision-making.

 Procedures

 are standing plans that establish a required method of handling

future activities.

 Rules and Regulations

 are plans that describe exactly how one particular situation is to be

handled.

 Are statements of actions that must be taken or not taken

TYPES OF PLAN…CONT’D
TYPES OF SINGLE USE PLANS

1. Program (project)
 Programs are a complex of goals, polices,
procedures, rules, task assignments, steps to be
taken, resources to be employed and other
elements necessary to carryout a given course of
action
TYPES OF PLAN…CONT’D

Program is a comprehensive plan that includes

future use of different resource in an integrated
pattern and establishes a sequence of require
actions, time schedules for each in order to
achieve stated objectives.

2.Budgets: are statements of expected results or

resources set aside for specific activities expressed
in numerical or quantitative terms.
 REVIEW QUESTIONS 3

1) Explain what does planning means?

2) What are the steps in the planning process?

3) Discuss the why/importance of planning.

4) What is decision making?

5) What are the steps in decision making process?

6) What are types and situations of decision
making?

7) What are the different types of planning?

CHAPTER 4

ORGANIZING
 Chapter One Contents
Overview of
organizing

Nature/ characteristic
of organizing

The process of
Organizing

Organizational
Relationships

Organizational Structure
&Charts
 What is organizing? 01 02 What are the steps in
organizing?

04 What are the bases of

What are the elements in 03
organizing?
Think departmentation?

05

Nature of organizing?

30
 1. OVERVIEW OF ORGANIZING

In planning, objectives that are going to be achieved are

identified and courses of action have been determined.

Then, the manager continues his/her activities by:

 giving practical shape to activities/works to be performed,

 identifying roles that workers are supposed to play, and

 making groups know their duties and responsibilities

OVERVIEW OF ORGANIZING…CONT’D

Therefore, designing and maintaining such systems of

roles is the managerial function of organizing.

 It is one of the functions of management, concerned with

choosing what tasks are to be done, who is to do them,
how the tasks are to be grouped, who is to report to whom
and where decisions are to be made.

Organizing is part of managing that involves

establishing an intentional structure of roles for
people to fill in an organization
OVERVIEW OF ORGANIZING…CONT’D

o In summary, it is:

(i) identification and classification of required activities

necessary to attain objectives.

(ii) grouping of activities necessary to attain objectives.

(vi) provision for co-ordination horizontally and vertically in

the organizational structure.
1.Division of labor 01 02 Accomplishment of
/specialization objectives

04 Formal
Authority and 03
organization
responsibility
relationship 05

Communication
NATURES OF ORGANIZING…CONT’D

1.Division of labor /specialization

 involves breaking down of a task into its most

basic elements, training workers in performing
specific duties, and sequencing activities so that
one person’s effort build on another’s.
NATURES OF ORGANIZING…CONT’D

Advantages
It enables one person performing a task to
become highly proficient- efficiency in productivity

It saves time

There is less waste of materials in the learning

process when division of labor is used
NATURES OF ORGANIZING…CONT’D

Disadvantage
This helps managers and subordinates to approach
and decide in common about the objectives to be
achieved and the actions to be taken

Failure to establish such relationships may result in

different persons (or departments) pursuing different
paths, thus making difficult for the enterprise to
achieve its goals.
 NATURES OF ORGANIZING…CONT’D

2. Accomplishment of Objectives
o The organization structure, the result of organizing, is bound
together by the pursuit of specific and well-defined objectives

3. Authority & Responsibility Relationships

o The result of organizing, should consist of various

positions arranged in a hierarchy with a clear
definition of authority and responsibility
NATURES OF ORGANIZING…CONT’D

4. Formal Organization
 The organization results in an intentional formal
organization structure of roles in a legally and formally
organized enterprise.

5. Communication

 It is the transfer of information among people to

achieve organizational goals
 3. PROCESS OF ORGANIZING

Organizing functions follow the following steps:

(1) Reviewing of objectives to be accomplished

(2) Determine tasks/activities necessary to attain objectives

(3) Group jobs into practical units/departments based on

similarities, importance, who will do the work

(4) Assigning work and delegate authority

(5) Creating reporting relationships

ORGANIZATIONAL STRUCTURE AND CHART
What is organization's structure?

 An organizational structure is the formal framework by

which job tasks are divided, grouped, and coordinated.

 The challenge for managers is to design an organizational

structure that allows employees to effectively and
efficiently do their work.

What is organizational chart?

 It is graphic illustration of the organization’s management

hierarchy and departments and their relationships.
ORGANIZATIONAL STRUCTURE AND CHART…CONT’D

Organ. Chart provides important information regarding:

 who reports to whom- chain of command

 span of control

 channels of formal communication- shown by solid lines that

connect each job(box)

 activities in each position- the labels in boxes describe each

individual ‘s activities

 hierarchy of decision making- where decision maker is located.

 authority relationships

42
 4. Elements of Organizing

Departmentation

Formalization Delegation
01

Elements
Span of Centralization-
Control Decentralization

Chain of Work
Command Specialization
 A) DEPARTMENTATION
Dividing and grouping the activities and employees of an
enterprise into various department.

All organizations divide their overall operations in to sub

activities and combine them into working groups

 This grouping process of specialized activities in logical

manner is called Departmentation.

The work units so formed may be called departments,

divisions, units, or any other name.
 RESULTS OF DEPARTMENTATION

 Divisionalization of work

 Obtain organizational units of manageable size

 Utilize managerial ability based on specialization to

secure maximum results.

 The basic need of departmentation arise from the

limitation on the number of subordinates that can be

directly managed by a superior.

BASES OF DEPARTMENTATION

 Functional departmentation

 Product departmentation

 Geographic /territorial departmentation

 Customer departmentation
FUNCTIONAL DEPARTMENTATION
 Grouping activities based on similarity of functions of the
organization.
Advantages:-
 It is logical, scientific and time rested method
 It makes supervision easier, since each manager must be expert in
only a narrow range of skills.
 Tight control of all functional units is assured.
 It simplifies training
Disadvantage:
 People in a functional department may lose sight of the overall
operations of the business;
 Workers may develop highly specialized skills, but no general
managerial abilities.
 Responsibility for profit is at the top
FUNCTIONAL DEPARTMENTATION…CONT’D

Head Quarter

Marketing manufacturing Finance personnel

plant2 plant3 plant4

plant1
PRODUCT DEPARTMENTATION
 It is the grouping of activities on the basis of product
or product line.

Advantage

1. It enables the enterprise to focus attention & effort on

product lines

2. It improves co-ordination among functions relating to a

particular product.

3. Furnishes measurable training ground for general

managers
PRODUCT DEPARTMENTATION…CONT’D

Disadvantages

1. Requires more persons with general manager abilities.

2. There is an ever-present danger of duplication of

activities (resources and costs)
PRODUCT DEPARTMENTATION…CONT’D

CEO
Corporation

Corporate
Managers

Washing Machine Lighting Television

Division Division Division
GEOGRAPHICAL DEPARTMENTATION
 Grouping business activities on the basis of
geographic region or territory.
Advantages

1. Results in great saving in time and money

2. Places responsibility at lower level (quick decision.)

3. Places measurable training ground for general managers.

4. Better face-to-face communication with local interests.

TERRITORY (GEOGRAPHIC) DEPARTMENTATION…CONT’D

CEO
Corporation

Corporate
Managers

Northern Western Southern Eastern

Region Region Region Region
 CUSTOMER DEPARTMENTATION

 Grouping of enterprise activities based on customers’

interests.

Advantages

1. Encourages concentration on customer needs

2. Giving customers the feeling that they have been

understood

3. Develops expertness in customer area

CUSTOMER DEPARTMENTATION…CONT’D

Disadvantage

1. May be difficult to coordinate operations between

competing customer demands.

2. Requires managers and staff expert in customer’s

problems
CUSTOMER DEPARTMENTATION…CONT’D

CEO
Corporation

Corporate
Managers

Large Business Small Business Educational Individual

Customers Customers Institutions Customers
 MATRIX DEPARTMENTATION
 It combines the functional and product structures.

 With matrix departmentation, the employee works for a functional

department and is also assigned to one or more products or
projects.

 Advantage
 Flexibility

 Efficiency

 Disadvantage
 Two bosses a functional boss and a project boss

 Conflict can result when two people give orders

MATRIX DEPARTMENTATION…CONT’D
 B. DELEGATION
 It is the assignment of authority and responsibilities to
lower level managers.

 is the down ward transfer of formal authority from one

person to another

 Importance

-It frees a manager from some time consuming duties that

can be adequately handled by subordinates
- Improve motivation, confidence and personal development
- Ensure timely and realistic decision
 Obstacles of Delegation
A. Management Obstacle B. Employee Obstacle
Feeling that
the need to be in 1 make decision
total control of 1 is boss’s job
every aspect

Lack of
confidence in
subordinates
2 ? 2
Fear of criticism
for making
decisions

Fear of
consequences 3 3 Lack of enough
of subordinates factual
decision information on
which to base a
decision
C. CENTRALIZATION-DECENTRALIZATION

 Centralization is a philosophy of management that

focuses on systematically retaining of authority in the
hand of higher level managers.

 Decentralization is a philosophy of management that

focuses on systematically delegating of authority
through out the organization to middle and lower level.

 Both results in different types of org. structure, i.e.

 Tall organization structures are result of centralization.
 Flat organization structures are result of decentralization.
 D. CHAIN OF COMMAND
 Chain of command is continuous line of authority that
extends from upper organizational levels to lowest level.

 It is system in which authority passes down from the

top through a series of executive positions or ranks in
which each is accountable to the direct superior.

 It helps employees answer questions such as "Who do I

go to if I have a problem?" or "To whom am I
responsible?"

 Clarifies, who reports to whom.

 E. SPAN OF MANAGEMENT (CONTROL)

 It is number of subordinates a manager has control over.

 It tells number of levels and managers of an organization.

 It can be wide or narrow span

 No fixed number of subordinates are there to be supervised by a

single manger, it depends on different factors which include:
complexity and variety of subordinates job
ability and competence of mangers
ability and competence (experience and confidence) of superiors
willingness to delegate authority
geographic location of organizational departments.
Communication required
 F. FORMALIZATION

 The degree to which jobs within the organization are

standardized and the extent to which employee
behavior is guided by rules and procedures.

 Highly formalized jobs offer little power over what is to be

done.

 Low formalization means fewer restriction on how

employees do their work.
 ORGANIZATIONAL RELATIONSHIPS
1.Formal relationship:- it is a relationship where people are
organized because of specific goal.

2. Informal relationship:- is created when people are

grouped in the organization without any clear purpose or
documentation. Usually, based on status, religious, sex…
THE DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANIZATIONS

formal organization informal organization

Arises due to delegation of authority Arises due to social interaction of people

Attached to a position Attached to a person.

Gives importance to terms of authority and Gives importance to people and

functions their relationships.
Created deliberately Spontaneous and natural
Rules, duties and responsibilities are written No such written rules and duties

Authority flows from upwards to downwards flows upwards to downwards or horiz.

May grow to maximum size tends to remain smaller.

 REVIEW QUESTIONS 4
1) Explain organizing and discuss its natures.

2) What are the steps in the organizing process?

3) Discuss importance of organizational chart and its

limitation.

4) What are the different elements of organizing?-discuss!

5) What are the different bases of departmentation? Discuss

each!
6) What are the benefits and obstacles of delegation?

7) What does span of management and its factors?

 END OF
CHAPTER FOUR