 CHAPTER 4

Management Functions

Leading

Planning Decision Making

Organizing

Controlling

• Planning plays an important role in any business venture-

large or small.
• It can make the difference between the success or failure of an
organization.
What is Planning?
•Primary managerial activity that invovles:
 defining the organization’s goals
 establishing an overall strategy for achieving those goals
 developing plan for organizational work activities

Definition of Planning according to Amos and Sarchet

Deciding in advance what to do, how to do it, when to do it, and
who is to do it
What to do in Planning
•What is the Problem/Purpose?
•Establish Goal/Objectives
•What Client Need is Being Satisfied by the
Project?
•Identify Success Criteria

Foundation of planning
•Mission
•Purpose or Goal
•Objectives
•Strategies
All Customer Driven
Importance/purpose of planning
 To provide direction
 Reduce Uncertainty
 Minimizes waste and redundancy
 Sets the standards for controlling
Foundation for planning
Strategic planning | management objectives

 Strategic Planning is the organized process for selecting

strategies for a successful enterprise to achieve its
mission.
 It suggests ways to identify and to move toward desired
future states.
 Consists of the process of developing and implementing
plans to reach goals and objectives
 It is a disciplined effort to produce fundamental decisions
and actions that shape and guide what an organization is,
what is does, and why it does it, with a focus on the future,
both internally and externally.
 It determines where an organization is going over the next
year or more, how it is going to get there, and how it will
know if it got there or not.
 VISION STATEMENT
 Describes in graphic terms where the goal setters
want to position themselves in the future

MISSION STATEMENT
 Resembles a vision statement
 Has a more immediate business focus with a time
horizon
 Sets forth what the company is attempting to do,
and is usually what the public sees
 First step in planning process, what do we want to
do
 SWOT ANALYSIS

 Strengths,
Weaknesses,
Opportunities and
Threats Analysis
 Tool used to analyse
the current status and
success of an
organization
 STRENGTHS AND WEAKNESSES
 Management
 Marketing
 Technology
 Research
 Finances
 Systems
 OPPORTUNITIES AND THREATS
 Customers
 Competition
 New Technologies
 Government Policies
  Build on Strengths
 Resolve Weaknesses
 Exploit Opportunities
 Avoid Threats
 Mission

Internal External
Strengths Opportunities

ANALYSIS

Internal External
Weaknesses Threats

Strategy
 GOALS
 Give purpose and direction to accomplish the mission of
an organization
- Answers the questions: “What do we do; why do we do it;
and for whom do we do it?”
- Used as a continual point of reference regarding the scope
or purpose

 OBJECTIVES
 Further clarify the goal and answer the question how to we
go about it?

 STRATEGIES
 Statements about the ways the objectives are to be
achieved
 Specific
 Measurable
 Attainable
 Realistic
 Time-limited
  KEY RESULT AREAS:
1. Market Share
 Ratio of dollar sales of an enterprise in a particular market to the
total sales of all competitive products and services in that market

2. Innovation
 Most successful companies, especially in the areas of technology
were most engineers will work, are continually searching for new
products and services

3. Productivity and Quality

 Productivity measures an organization’s ability to produce more
goods and services per unit of input.
 Quality is a related and essential area for setting objectives.
 KEY RESULT AREAS:
 4. Physical and Financial Resources
 An enterprise needs to establish goals for the resources it
needs to perform effectively.

5. Manager Performance and Attitude

 Since good management is the key to enterprise success,
effective firms plan carefully to assure that managers will
be available in the years ahead in the quality and quantity
needed for the organization to prosper.

6. Worker Performance and Attitude

 Today’s more educated workforce has much to offer the
company that knows how to motivate and challenge them
effectively.
 7. Profitability
 Essential to its continuation, and the desired
level should be set explicitly as an objective
against which to measure enterprise success.

8.Social Responsibility
 Every enterprise has responsibilities as a
corporate citizen that extend beyond the legal
and economic requirements.
1. Both superior and subordinate should have an
understanding of the goals and objectives of the
overall organization and those of the superior’s
group.
2. The superior and subordinate then meet to
establish objectives for the subordinate’s
attention over the next six months or year that
are consistent with group objectives.
3. The subordinate then proceeds, over the ensuing
period to carry out his or her job with an
emphasis on achieving these objectives.
4. At the end of the period, the superior and
subordinate meet again to evaluate the
subordinate’s success in meeting assigned goals.
ADVANTAGES:
 Greater commitment and satisfaction on the part of
the subordinates
 Enforced planning and prioritizing of future activities
on the part of both superiors and subordinates
 More rational method of performance evaluation
based on contribution to organizational objectives

DISADVANTAGES:
 Time and paperwork involved
 Misuse when superiors simply align rather than
negotiate objectives
 Gamesmanship of subordinates who try to negotiate
easy goals
• In Management by Objectives systems at Intel,
objectives are written down for each level of the
organization, and individuals are given specific
aims and targets.
• The principle behind this is to ensure that people
know what the organization is trying to achieve,
what they must do to meet those aims, and how,
as individuals, they are expected to help.
• This presupposes that organization’s programs
and methods have been fully considered.
• If they have not, start by constructing team
objectives and ask team members to share in the
process.
 Planning is a continuing
responsibility of every manager.

 Line management must establish

the objectives for the enterprise,
devise the overall strategy,
provide planning guidelines, and
periodically review and redirect
the planning effort.

 To have purpose, plans must

lead to action.
 Assumptions about future economic
conditions, government decisions, nature of
competition and future markets.
 In managing technology, it is essential to
establish planning premises about the future
of technology and competition.

CONTINGENCY PLANS
 Implemented if indicators show a change in
the environment conditions from those on
which mainstream planning is based.
 Planning Horizon
asks how far into the
future one should
plan
 High technology
products may have
short effective lives,
therefore, short
planning horizon
 Complex programs will require not just a
single plan, but a system of plans, each
describing a related activity.
 POLICIES
 Guides for decision making that permit
implementation of upper-management objectives
with room for interpretation and discretion by
subordinates

PROCEDURES
 Prescribed sequence of activities to accomplish a
desired purpose

StandardOperating Procedures (SOP)

 Procedures used at the operating level
 Qualitative |
quantitative |
technological
 JURY OF EXECUTIVE OPINION
 Simplest method
 Executives of the organization each provide an
estimate of future volume, and the president provides
a considered average of these estimates

DELPHI METHOD
 Begins with the present state of technology and
extrapolates into the future, assuming some expected
rate of technological progress

SALES FORCE COMPOSITE

 Members of the sales force estimate sales in their own
territory
 USER’S EXPECTATION
 When a company sells most of its product to a
few customers, the simplest method for
forecasting budgets is to ask the customers to
project their needs for the future period.

CHOICE OF METHOD
 Combine a variety of methods to arrive at the best
sales forecast.
 Qualitative estimates from the sales force and
customer surveys may be compared against
quantitative estimates
 SIMPLE MOVING AVERAGE
 Where the values of a parameter show no
clear trend with time, a forecast 𝐹𝑛+1 for the
next period can be taken as the simple
average of some number n of the most recent
actual values of 𝐴𝑡:
 WEIGHTED MOVING AVERAGE
 The preceding method has the disadvantage
that an earlier value (2008, for example) has
no influence at all, but a value n years in the
past (2009) is weighted as heavily as the
most recent value (2012). We can improve on
our model by assigning a set of weight wt
that a total unity (1.0) to the previous n
values:
 EXPONENTIAL SMOOTHING
 In this technique, the forecasted value for the
next period 𝐹𝑛+1 is taken as the sum of the
forecasted value Fn for the current period,
plus some fraction α of the difference
between the actual (An ) and forecasted (Fn )
values for the current period.
 REGRESSION MODEL
 Major class of Explanatory Forecasting Models ,
which attempt to develop logical relationships
that not only provide useful forecasts, but also
identify the causes and factors leading to the
forecast values.

 Regression models assume that a linear

relationship exists between a variable designated
the dependent (unknown) variable and one or
more other independent (known) variables.
 REGRESSION
MODEL

 The regression
problem is to
identify a line

 D= a + bI

 REGRESSION MODEL
 REGRESSION MODEL
 REGRESSION MODEL
 MULTIPLE REGRESSION
 The dependent variable D is assumed to be a
function of more than one independent
variable Ij , such that
 NORMATIVE TECHNOLOGICAL FORECASTING
 One works backward from the future to the
present
 A desired future goal is selected, and a
process designed to achieve this goal is
developed.

 EXPLORATORY TECHNOLOGICAL
FORECASTING
 Delphi Method
 S- CURVE
 Invention and
innovation | managing
technological change
TECHNOLOGICAL INNOVATION
 Introduction into the marketplace of new
products, processes, and services based on
new technology
 Reduction of ideas to successful products and
processes is a difficult task
 Producing the first successful product is often
not enough; innovation must continue to keep
the product line competitive
 Product innovation and improvement must be
a continuing part of technology strategy.
 Top Management in technological enterprises must
constantly be aware of the technologies underlying
their business and the potential for change.
 One of the most compelling examples of how the
advent of new technology can quickly alter the way
we do business is the birth of the Internet.
 To remain competitive, every company experience a
need to establish an entire new group within their
structure and maintain a website, and to provide an
interface between the organization and the rest of the
world.
 Many companies also recognized the Internet as an
inexpensive and timely method for keeping their
customers informed.