EBUS1624/EFBM2625

General Management
Study pack

Chapter 5
Planning

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 SECTION A
PDF slides

These slides are a summary of the chapter. It

is highly recommended to read through the
chapter in the textbook.

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EBUS1624 / EFBM2625
Chapter 5: Planning
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 Learning outcomes

• Understand the importance of planning.

• Understand the planning process.
• Identify the importance of goals and the specifications for
goal setting.
• Explain some important contemporary factors and issues
in planning.
• Realise the importance of time management and its role in
planning.

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 Introduction

• Planning is a central management task for a manager,

because the saying “fail to plan, is plan to fail” is well-
known and true.
• Important that an organisation develops some goals that it
wants to achieve in order to take the organisation a step
further.
• Managers should develop a plan (strategy) for achieving
these goals.
• The essence of planning – managers must decide on a plan
of action in order to achieve the goals of the organisation.
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 What is planning?

• The process of planning involves defining what the

organisation wants to achieve in the near future –
developing goals.
• It is important to establishing an overall strategy (plan) for
achieving these goals.
• This involves a comprehensive set of plans to integrate and
coordinate the organisational work.

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 What is planning? (cont.)

Definition

• Planning can be defined as the consideration and

visualisation of what the organisation, or departments in
the organisation, should achieve within a particular time
span, and the development of a plan (or set of plans) to
achieve these goals.

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 What is planning? (cont.)

• An important issue about planning is whether planning

should be formal or informal.

Informal planning: Formal planning:

Nothing is written down The specific goals

and there is little or no covering a specific
sharing of goals with time period, are
others in the defined and written
organisation. down.

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 What is planning? (cont.)

• Important to know what the situation in the organisation is,

then:
• Develop the goals (long term) and objectives (short term) in
each area of the organisation where performance and results
are expected.
• Draft a feasible plan of action that indicates the activities,
resources, policies, schedules, procedures, and other
methods that are necessary to achieve the stated goals and
objectives.

• Planning is a thought process (reflects on what should happen)

as well as an action process (implements the plans).
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 What is planning? (cont.)

Figure 5.1: Relationship between the past, present and future in planning

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 Why do managers plan?

• The most important reason to plan is to take the organisation to a next

and better level and to obtain a competitive advantage.
– Competitive advantage is if the organisation has or do something
better than its competitors.

• There are especially four good reasons why planning is an important

management task.
• Planning gives direction in the organisation.
• Planning reduces the impact of uncertainty during changes.
• Planning minimises wasted time and resources and redundancy.
• You can only control what you have planned.

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 Why do managers plan? (cont.)

• Another rationale why planning is important, is the

relationship between planning and organisational
performance.
• Formal planning is associated with higher profits and other
positive financial results.
• It makes financial sense to plan.
• The relationship between planning and performance is
influenced by environmental issues.

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 Why do managers plan? (cont.)

• There are some points of critique (dysfunctional aspects)

against planning:
– plans can’t be developed for a dynamic environment;
– formal plans can’t replace intuition and creativity;
– planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival; and
– formal planning reinforces success and this success
groove thereby ultimately may lead to failure.

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 Why do managers plan? (cont.)

Management in action 5.1

• Why planning is important:

– Increases efficiency
– Reduces business-related risks
– Facilitates proper coordination
– Assists with organising
– Gives direction
– Keeps control
– Helps to achieve objectives
– Motivates personnel
– Encourages creativity and innovation
– Helps in decision-making
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 Why do managers plan? (cont.)

• Planning can be divided into practical steps, irrespective of

the level of management, and irrespective of the
complexity of the situation. These steps in the planning
process are:
– Identify the purpose of planning
– Establish goals
– Develop commitment
– Develop alternative plans
– Evaluate the different alternative plans
– Implement the plan
– Control and evaluating the results of the plan
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 Why do managers plan? (cont.)

Step 1: Identify the purpose of planning

• If the organisation does not identify the purpose of planning, it

will not really understand the need for planning.

• The first step in the planning process is thus to make a realistic

diagnosis of why planning is necessary.

• If this is not clear, the focus of planning will be blurred.

• There must be agreement on the assumptions and purpose of

planning to ensure that all levels of the management plan are in
line with the goal of the end result.
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 Why do managers plan? (cont.)

Step 2: Establish goals

• If a problem or purpose is clear, an organisation must determine

the goals.

• Goal setting gives direction to the organisation and is

fundamental to planning.

• It is important to set goals to give direction to what should be

included in plans.

• A goal is defined as a future desirable state of an organisation

and is usually long term oriented.
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 Why do managers plan? (cont.)

Step 2: Establish goals (cont.)

• The first step in goal setting is to determine what the organisation

wants to achieve in the long term.
• To achieve the long-term goal, a number of short-term goals or
objectives are determined.
• Goals are called the foundation of planning.

Stated goals are official
statements of what an
organisation says, and what it
wants its various stakeholders
to believe, its goals are.
An example of a stated goal is
the mission statement of an
organisation.
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Real goals are those goals that an
organisation actually pursues, as
defined and visible by the actions
of its members. A real goal can be
to improve the profitability of the
organisation with 5% in the next
financial year.
 Why do managers plan? (cont.)

Step 2: Establish goals (cont.)

• Approaches to establishing goals

– Traditional goal setting is an approach in which goals
are set at the top organisational level and then broken
down into sub-goals for each management level of the
organisation. At each level, managers define the goals,
applying their own interpretations and biases as they
translate them into more specific objectives.

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 Traditional goal setting

Figure 5.2: Hierarchy of goals 20

 STRATEGIC PLANS

TACTICAL PLANS

OPERATIONAL
PLANS

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 How do managers plan?
Step 2: Establish goals (cont.)

• Approaches to establishing goals

– Management by objectives (MBO) is a management system in
which specific performance goals are jointly determined by
employees and their managers.
– The steps in the MBO program highlight also the essential
features of it:
• Identify the employee’s tasks and job.
• Establish challenging objectives for each task.
• Employee must participate in this process.
• Prioritise these objectives.
• Build in a feedback mechanism to assess the progress
towards achieving the objectives.
• Link rewards to achieving
22 the objectives.
 How do managers plan? (cont.)
Step 2: Establish goals (cont.)

• Criteria for goals and objectives – SMART principle.

• Specificity
• Measurability
• Achievability (Acceptable)
• Realistic
• Time

• One important requirement is that goals and objectives must be

congruent with one another – the attainment of one objective must
not eliminate the possibility of achieving another objective.

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 How do managers plan? (cont.)

Step 2: Establish goals (cont.)

Types of goals

• Top management are responsible for determining the strategic

goals for the organisation as a whole, in terms of the following:
– Profitability
– Productivity
– Market share
– Human resources
– Technology
– Social responsibility

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 How do managers plan? (cont.)

Step 3: Develop commitment

• Everyone in the organisation must be committed to the planning

process.

• This step in the planning process to get commitment has a

strong link with the management functions of leadership and
motivation.

• Approaches to get commitment:

– Employees need to understand the necessity of the goals and
therefore they will be determined to achieve it.
– Let employees participate in goal-setting.
– Make some of the goals public.
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 How do managers plan? (cont.)

Step 4: Develop alternative plans

• Different alternative options should be developed so that the best alternative

can be implemented.
• Answers to questions such as who, where, when, and how are now important
in developing the specific plans:
– programming will provide the answers to who, what and where;
– scheduling answers the question when; and
– budgeting provides an answer to what resources are necessary, that is, how
the plan will be implemented.
• There are also different levels of plans:
– Strategic Plans Standing Plans
– Operational Plans Single-use plan A rule
– Tactical Plans A policy
A Procedure
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 How do managers plan? (cont.)

Step 5: Evaluating the various alternative plans

• The various alternative plans must now be evaluated in light of

the assumptions and goals.

• One possible plan may appear to increase profitability, but the

cost of machinery replacement may be too high.

• Evaluation can be a difficult task, but there are qualitative and

quantitative techniques available to help with evaluation.

• The important thing is that the different alternatives or options

must be evaluated and the manager must select that alternative
which will best achieve the stated goals and objectives.
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 How do managers plan? (cont.)

Step 6: Implementation of the plan

• The implementation of the plan demonstrates the action

process – time to work the plan.
• The other management tasks now take over from planning.
The work must be organised and the employees must get
active through leadership, motivation, and communication
to work with the plan.
• This is the most important step, because a plan means
nothing if it is not implemented.

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 How do managers plan? (cont.)

Step 7: Control and evaluating the results of the plan

• The implementation of the plan and the results achieved

must be evaluated continuously and corrective actions
should be taken if something is not correct.
• If the plans do not achieve the desired results, the
managers must have a look at the plans and perhaps revise
some of the plans to achieve the desired results.

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 Important factors in planning

• Contemporary issues and factors that managers must

consider during planning:
– Significance
– Increasing demand
– Technology
– Legal issues
– Financing
– Marketing

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 Time management
• Time is the most important resource to deal with in
management in general – “time is money”.
• Time is one of the most important aspects in terms of
competitive advantage.
• The fast and quick response from an organisation in terms of the
delivery of products and services can create a competitive
advantage.
• If managers are not successful in time management, they will
experience difficulty in achieving the goals and objectives of the
organisation.
• Managers must identify their discretionary time and must plan
how they are using this discretionary time effectively and
efficiently.
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 Time management (cont.)

• Time management refers to the techniques that a manager can apply

to get more done in less time with better results.

• Table 5.1 provides a guideline on how to rate activities with regard to

its urgency and importance.

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 Time management (cont.)
• Using this rating, the following process can be applied in time
management:
– Be clear about the objectives that must be achieved.
– Rank the objectives in terms of their importance and urgency.
– List the activities that are necessary to achieve these
objectives.
– Assign priorities to the activities in terms of its importance
and urgency.
– Schedule the activities that must be done according to the
priorities determined in the previous step.

• By following this process, managers can be successful in applying

the 80-20 principle – can produce 80% of results in 20% of the
time.
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 Summary

• Although planning is the fundamental management

function, managers are sometimes reluctant to plan. The
reason for this can be a lack of knowledge about the
importance of planning.

• It is important that mangers realise why planning is

important for any organisation that is serious about
improving its competitive position in the market place.

• Planning is a systematic procedure and therefore the steps

in the planning process are helpful.

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 What planning is
-Determining org goals -Developing org strategy
-Ends & means -Formal & informal
-Goals (Long term) objectives (Short Term)
 Why Managers Plan
-Direction -Reduces uncertainty impact
-Minimizes lost time -Control
 How to Plan
-Purpose -Goals
-Commitment -Alt plans
-Implement -Control & Evaluate
 Important Factors in Planning
-Significance of the plan -Increasing demand
-Technology -Legal issues
-Finances -Marketing
 Time Management
-Time is money -Time can be a competitive adv
-Personal Planning -Discretionary time

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THANK YOU

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 SECTION B
Work activities

These activities will assist you when you work

through the chapter and to make your own
summary of the content

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Chapter Synopsis and Activities

Chapter 5: PLANNING

OUTCOMES
After studying this chapter, you should be able to:

 understand the importance of planning

 understand the planning process
 identify the importance of goals and the specifications for goal setting
 explain some important contemporary factors and issues in planning
 realise the importance of time management and its role in planning

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5.1 What is planning?

1. Using your own words define planning.

2. Refer to your textbook to see if you are correct with your
definition

In most cases, we have a formal and informal approach to do things. Planning is no different.
Differentiate between formal and informal planning.

Formal planning involves three different phases. Discuss them with your friend and write
your short answers below.

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5.2 Why do managers plan?

Answer the questions below and share with your friend to compare the differences between your
answers. Agree on what the answers should be.

Courier company A is able to deliver goods quicker than company B. What word is used to
define this?
Your answer: The agreed answer:

What is meant by “planning minimizes the importance of uncertainty?

Your answer: The agreed answer:

What is the relationship between planning and organisational performance?

Your answer: The agreed answer:

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Management in action 5.1 provides various reasons why planning is important. After reading
that section, indicate the reasons in the blocks below.

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5.3 How do managers plan?

Planning has practical steps that managers can follow. Imagine you and your friend would like to
establish a reading club. Write down each step in the planning process and the possible ideas
that fit the steps.

Step in the planning process Idea

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Establish goals
Goal setting is very important, because this assists an organisation in the planning process.
Indicate what the different approaches to the establishment of goals are.

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Criteria for goals and objectives
The SMART principle is used to create goals. Watch the video about SMART objectives and
indicate what the different letters mean as well as a short definition.

S M A R T

Read the following statements about Pick n Pay and indicate which criteria of the SMART
principle are displayed.

1. Pick n Pay would like to lower operational costs.

___________________________________________________________________________

2. Pick n Pay reduces administration cost, because of the online environment.

___________________________________________________________________________

3. Pick n Pay has been showing steady growth in market share and they would like to maintain
growth.
___________________________________________________________________________

4. Pick n Pay want to lower operational costs by 1%.

___________________________________________________________________________

5. Pick n Pay wants lower operational costs every two years.

___________________________________________________________________________

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Types of goals
Identify the different types of goals in the planning process.

Now that you have identified the different types of goals you will be able to indicate which goal
is displayed when reading the following statements.

Statement Type of goal

A farmer aims to have consistent profits over
time.
A furniture store that plans to expand
consistently to increase their market share.
Edgars stores send their personnel to training
every year.
A college that aims to offer lessons purely
through online teaching.
When a company makes the most of limited
resources.
A company in the local town pays for the
education of youth.

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When a business has developed a commitment to the planning process alternative plans can be
developed to obtain the set goals and objectives. Make a summary of the different types of plans.

Strategic plans

Tactical plans

Operational plans

Single-use plans

Standing plans

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Go back to the different steps in the planning process and make summaries of the different steps
not discussed in detail yet.

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5.4 Important factors in planning

Effective and efficient planning in a dynamic environment means developing plans that are
specific but flexible. Elaborate on the contemporary issues and factors displayed below that
managers must consider during planning.

Significance Increasing demand Technology

Legal issues Financing Marketing

5.5 Time management

A day consists of 24 hours and a week consists of 7 days. Managers need to make sure that they
use their time wisely for an organisation to be successful.

Define time management

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Complete the following table with regards to prioritising activities according to importance and
urgency:

Importance Urgency

Give an example where an organisation uses time as a competitive advantage.

--We hope you use your time wisely and make a success of EBUS1624/EFBM2625--

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 SECTION C

Practice questions and answers

These questions and answers were taken

from previous tests and exams. Sometimes
special exercise questions are also included
to help you reflect and master the content.

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Practise Questions

Multiple choice questions

1. The following are main reasons why planning is important, except:

a. Planning gives direction
b. Planning reduces the impact of uncertainty
c. Planning increase the income of the organisation
d. Planning minimizes lost time and wasted resources
e. Planning is necessary for control

2. The SMART principle with regard to goals, refers to

a. Specific, measurable, actionable, realistic, time-bounded
b. Specific, measurable, achievable, realistic, time-bounded
c. Specific, monitoring, achievable, realistic, time-bounded
d. Special, measurable, achievable, realistic, time-bounded
e. Specific, measurable, actionable, realistic, temporary

3. A policy can be described as_________.

a. A general guideline
b. A specific action to perform
c. A precise series of steps to follow
d. A guideline for a unique situation
e. The actual “doing” part

4. A rule can be described as_________.

a. A general guideline
b. A specific action to perform
c. A precise series of steps to follow
d. A guideline for a unique situation
e. The actual “doing” part

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Application questions

Scenario 1

The Ulstein Group is a company with activities in offshore ship design & equipment and
shipbuilding. Although the company has its headquarters in Norway, it operates two subsidiary
companies in the Netherlands: Ulstein Design & Solutions BV - a ship design company based in
Vlaardingen; and Ulstein Equipment BV – a company that develops and delivers offshore and
marine mission equipment from their offices in Almere.

Recently, the company released a press release stating that naming and organizational changes
within the company was underway. The press release stated that from 1 August 2015, the ship
design company: Ulstein Sea of Solutions will be renamed Ulstein Design & Solutions BV (UDS
BV), while the equipment company - Ulstein Idea Equipment Solutions will be renamed Ulstein
Equipment BV (UE BV). The company also stated that it will be acquiring additional equipment
and machinery in an attempt to boost their efficiency and competitiveness.

Edwin van Leeuwen and Gilbert Rezette will be managing directors of the respective companies.
Both companies in the Netherlands will operate under an umbrella company called Ulstein
Netherlands. To streamline the innovation and technical developments between the Ulstein
companies in Norway and the Netherlands, Ulstein appointed Arjan Boezeman as head of
innovation and development. He will coordinate the activities in the Netherlands by working
closely with Frode Sollid from Ulstein Norway.

1 Apart from the fact that goals and objectives should comply with the SMART principle,
there are also two [2] other criteria that can be applied for goal-setting. Name and briefly
explain these two criteria to Arjan Boezeman.
(2 x 2 = 4)

Scenario 2

Azola Masiza is the owner and the manager of Atlehang, the shoe manufacturer based in
Phuthaditjhaba. The company manufactures handcrafted leather shoes, belts, bags, wallets,
purses for males and females. Over the past two years, the profit margins of this company have
grown significantly. Based on the growth in the profit margins, Azola decided to add clothes and
accessories in the product line of the company to grow the customer base. Furthermore, he is
planning to expand his company to Bethlehem to enable it to grow its market share by 5% in the
next two years. Also, Azola is aware that the expansion to Bethlehem will bring either positive

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or negative change in the business. However, he acknowledges that change is inevitable and it
has to be managed.

2.1 Identify the SMART goal mentioned in the scenario.

(1)
2.2 Explaining the SMART principle in relation to the goal referred to in 2.1.
(5)

Answers:

Multiple choice
1. C
2. B
3. A
4. B

Scenario 1

Congruent with one another  -Attainment of one objective should not eliminate the possibility
of reaching another. 

Flexible  - Because the external environment constantly changes, organisational goals need to
be adaptable to suit

2.1 To grow the market share by 5% in the next two years

Scenario 2

2.2
 S – Specific = Increase the market share
 M – Measurable = increase by 5%
 A – Achievable = the goal is achievable or actionable
 R – Realistic = the goal is realistic
 T – Time frame = in the next two years

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 SECTION D
Questions to ask your academic
partner*

These questions will either be discussed in

the collaboration session or were included to
stretch your mind. Feel free to ask your
academic partner if you have trouble
answering them.

* “Academic partner” could be anyone who is part of the teaching team.

This includes lecturers, facilitators, tutors, etc.

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Tutorial discussion questions

For this chapter’s tutorial discussion, we will refer to a video and a few other questions.

Video: Planning

The following video is uploaded on Blackboard to help you to assist with understanding the
content.

Question 1
After watching the video, provide the following:
1.1 A definition of planning.
1.2 The three managerial levels of an organisation where plans are developed and what
type of plans are formed on each level.

Other questions to broaden your knowledge:

Question 1
Your friend has approached you for advice regarding planning for the upcoming year-end
examinations. Explain to your friend why planning is important so that s/he passes her/his
exams?

Question 2

Look at the picture below and answer the questions that follow:

2.1 Managers plan work activities. Would you say there was proper planning in the picture
above? Motivate your answer.

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2.2 The working teams only receive the following information: “The railway line is intended to
connect two towns.” How would you score the project in terms of the SMART goals principle?
a. Was the goal specific?
b. Was it measurable?
c. Was it achievable?
d. Was it realistic?
e. Was the goal time related?

2.3 What will your SMART goal be if you had to inform working teams about the construction of
a railway line?

*We will discuss these answers in your online tutorial discussion session for Chapter 5.

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 SECTION E
Videos

Videos are uploaded separately on

Blackboard. Have a look at these videos to
enrich your understanding of the work.

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Two videos are available on Blackboard for chapter 5 to assist in the understanding of the
content

Video 1: Planning
Video 2: SMART goals

We hope you enjoy watching the videos!

Reference list:

Video 1: Planning
GreggU (2018). Planning and Goal Setting in Management. Available at:
https://www.youtube.com/watch?v=29qE4FSxc1w (Accessed: 13 August 2021)

Video 2: SMART goals

DecisionSkills (2014). SMART Goals – Quick Overview. Available at:
https://www.youtube.com/watch?v=1-SvuFIQjK8 (Accessed 10 September 2020)

End of the study pack ☺

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