Definition of Planning

A plan is a blueprint for action. It specifies :

 resource allocations

 schedules

 actions necessary for attaining goals

A goal is a desired future state that an organization

attempts to realize.

Planning is the act of determining the organization’s

goals and the means for achieving them.
Planning
Mission statement

Strategic goals/plans
(Senior management)
Whole organization

Tactical goals/plans
(middle management)
Divisions

Operational goals / plans

Lower management
(departments, individuals)
 Planning Premises

The forecast or the assumptions about

future which provide a base for planning in
present are known as planning premises.
 VISION

 Vision is the long-term goal where the organization

wants to see itself.

 Vision represents the imagination of the future events

and prepares the organization for the same.

 Vision of the company helps in defining the mission and

the objectives, so it has to be set clearly and has to be

focused
Organizational Mission
Mission – the organization’s reason for existence.

The mission describes as well the organizations values

and aspirations.

Mission statement is a broad statement defining the

organization’s basic business scope and operations that
distinguishes it from its competition.
 GOST
G – Goal- Goals are dreams that you want to become reality. Goals
can be short term or long term and are not necessarily tangible.
O – Objective- Objectives will help you gain what must be
accomplished to achieve the goals. Objectives are always targeted
and number focused, unlike goals which talk about the bigger
picture.
S – Strategy- The strategy is basically the plans that will help to
achieve goals. You have to decide which plans can cope up with
the goals. The strategy can also be the solution to a problem.
T – Tactics- Tactics are tricks and patterns developed to drive and
support the strategy and to get closer to the objective.
 TYPES OF PLANS / COMPONENTS
OF PLANNING

Plans can be broadly classified as

a) Strategic plans
b) Tactical plans
c) Operational plans
d) Long Term And Short Term Plans
e) Proactive Plans And Reactive Plans
f) Formal And Informal Plans
g) Contingency Plans
Strategic plans
A strategic plan is an outline of steps designed with the
goals of the entire organization as a whole in mind, rather
than with the goals of specific divisions or departments. It is
further classified as:
Mission:
Objectives or goals:
Strategies:
Tactical plans
A tactical plan is concerned with what the lower level
units within each division.
Tactical plans are concerned with shorter time frames
and narrower scopes than are strategic plans. These plans
usually span one year or less because they are considered short-
term goals.
Operational plans
The specific results expected from departments, work
groups, and individuals are the operational goals. Operational plans
can be a single-use plan or a standing plan.
 Single-use plans: Plans for attaining a one-time organizational goal.
Programme:- Programme consists of an ordered list of events to be
followed to execute a project.
Budget:- A budget predicts sources and amounts of income and Exp
 Standing plans:- ongoing plans that are used to provide guidance for
tasks performed repeatedly
Policy:- Policies are general statements that explain how a manager
should attempt to handle routine management responsibilities.
Procedure: a set of step-by-step directions that explains how
activities or tasks are to be carried out.
Rule: Rules are “do” and “don't” statements
 PROACTIVE AND REACTIVE PLANS

 Proactive planning involves designing suitable

courses of action in anticipation of likely changes in

the relevant environment.

 In reactive planning, organizations responses

come after the environmental changes have taken

place. In such situation the org lose opportunities to
those org which adopt proactive approach.
 FORMAL AND INFORMAL PLANNING
 Formal planning is in the form of well-structured process

involving different steps.

 In large organizations they undertake planning in formal way

in which they create corporate planning cell placed at

sufficiently high level in the organizations.

 Informal planning is undertaken by the smaller

organizations, the planning process is based on managers
memory of events, rather than based on systematic
evaluation of the environment.
Contingency plans
Contingency planning involves identifying
alternative courses of action that can be
implemented if and when the original plan proves
inadequate because of changing circumstances.
 Differences between strategicand tactical plans
Strategic
 Ensure long-term
effectiveness and growth
 Length: Usually two or more
years
 Plans are done every one to
three years
 Primarily done by top
management
Tactical
 It is used as a means to
implement strategic plans.
 Length: Short-term
 Plans are done every six
months to a year
 Primarily done by employees
up to middle management
 Barriers to effective Planning
 (a) Influence of external factors:

 (b) Non-availability of data:

 (c) People’s resistance: Resistance to change hinders

planning. Planners often feel frustrated in instituting new

plans, because of the inability of people to accept them.

 (d) Time and Cost: Collection of data and revision of

plans involves considerable time, effort and money.

 (e) Inflexibility:
 Requirements of a Good Plan
 An effective and sound plan should have the following features:
(a)Clear objective: The statement on objectives should be clear, concise, definite
and accurate. It should not be colored by bias resulting from emphasis on personal
objectives.
(b)Proper understanding: A good plan is one which is well understood by
those who have to execute it. It must be based on sound assumptions and sound
reasoning.
(c) Flexible: The principle of flexibility states that management should be able to
change an existing plan because of change in environment without undue extra
cost or delay so that activities keep moving towards the established goals.
(d)Stable: The principle of stability states that the basic feature of the plan should
not be discarded or modified because of changes in external factors such as
population trends, technological developments, or unemployment.
(e)Comprehensive: A plan is said to be comprehensive when it covers each and
every aspect of business. It should integrate the various administrative plans so
that the whole organization operates at peak efficiency.
(f)Economical: A plan is said to be good, if it is as economical as
possible, depending upon the resources available with the organization.
PLANNING PROCESS
 OBJECTIVES
Objectives may be defined as the goals
which an organisation tries to achieve. Objectives
are described as the end- points of planning.
 Objectives form a hierarchy
Organizational
Objectives

Divisional
Objectives

Departmental
Objectives

Individual
Objectives
Features of Objectives
The objectives must be predetermined.
A clearly defined objective provides the clear direction for
managerial effort.
Objectives must be realistic.
Objectives must be measurable.
Objectives must have social sanction.
All objectives are interconnected and mutually supportive.
Objectives may be short-range, medium-range and long-range.
Objectives may be constructed into a hierarchy
Management by
Objectives
(MBO)
 Definition
Management By Objectives (MBO) can be defined as a
process whereby the employees and the superiors come
together to identify common goals, the employees set
their goals to be achieved, the standards to be taken as
the criteria for measurement of their performance and
contribution and deciding the course of action to be
followed.
 Management by Objectives
Principles-
MBO Described by Peter Drucker

• Cascading of organizational vision, goals and objectives

• Specific objectives for each member

• Participative decision making

• Explicit time period

• Performance evaluation and feedback

The MBO Process
Define
Organization
al Goals

Define
Perfor mance
Employee
Appraisals
Objectives

Continuous
Monitoring
Providing
Of Employee
Feedback
Perfor mance
And Progress

Perfor mance
Evaluation/
R eviews
 SMART Goal Setting
•Described by Paul J. Meyer
• Guides people and organisations to set objectives
•Helps in setting Key Performance Indicators like performance management
and personal development

Specific • Clear and Unambiguous

• Concrete criteria for measuring

Measurable progress

Attainable • Realistic and within reach

Relevant • Aligned with other goals

Time Bound • With a time frame

 Advantages of MBO
• 1) Means of planning and control

• 2) Superior and subordinate both set the goals together

• 3) The means to achieve the goal is discussed

• 4) MBO aids in structural changes wherever it seems

necessary and transforms the structure for good
 Disadvantages of MBO
• 1) Subordinate feels uncomfortable

• 2) Lacks Objective clarity (quantity enhancement or

quality enhancement? If for organisation or for individual
?)

• 3) Too much multi-tasking !!!

• 4) Low initial goal set by subordinates

Strategy is a plan of action that prescribes resource allocation
and activit STRATEGIES ge, and attaining
organizational goals.

According to Koontz and O' Donnell,

"Strategies must often denote a general programme
of action and deployment of emphasis and resources
to attain comprehensive objectives".
 Strategic Planning Process
Scan external
environment

Evaluate current S
Set new
• Mission W Formulate Implement
mission, goals,
•Goals O strategy strategy
•Strategies grand strategy
T

Scan internal
environment

Strategic planning
Types of strategies
Grand strategy
 Growth strategy
 Stability strategy
 Retrenchment strategy
 Global strategy
 Multidomestic strategy
 Transnational strategy
Grand Strategy
The general plan of major action by which an organization
intends to achieve its long-term goals.
Internal growth
Development of new products
Expansion of new products or services into new
markets
Diversification
Acquisition
Mergers
Stability strategy
Maintaining the same size of the organization or grow

slowly in a controlled fashion.

Retrenchment strategy
The organization is force to reduce its size by selling off
business units or liquidating entire business
 Liquidation – terminating a business unit by selling the

business unit for cash value of its assets.

 Divestiture – selling business unit that is no longer

considered as central to the organization

Global strategy

•Standardization of
product design and
advertising strategies
throughout the world
•Treats world as a single
market
Multinational
Modification of
products design and
advert sizing strategies
to suit the specific needs
of individual countries
Transnational strategy

A transnational strategy seeks to achieve global

integration and national responsiveness.

The objective : to attain efficiency and flexibility to

meet specific needs in various countries
• Corporate-level strategy
• Business-level strategy
• Functional-level strategy
Levels of strategy
Corporate-level strategy
What business are we in?

Business-level strategy
How do we compete?

Functional-level strategy
How do we support the business-level
strategy?
What is Policy
Policies are general statements or understandings
that guide managers’ thinking in decision making. They
usually do not require action but are intended to guide
managers in their commitment to the decision they
ultimately make.
 Types of Policies
 Substantive Policy:

The first is concerned with the legislation, programs

and practices that govern the substantive aspects of
community work. This dimension of policy includes, for
example, income security, employment initiatives,
child care services and social exclusion.
Types of Policies
 The second type of policy focuses largely upon
administrative procedures.
Types of Policies
 Horizontal Policy

Horizontal policy-making is developed by two or more

organizations, each of which has the ability or
mandate to deal with only one dimension of a given
situation.
Types of Policies
 Vertical Policy

Vertical policy is what we think of as the normal or

traditional way in which policy decisions are made. It
is developed within a single organizational structure
and generally starts with broad overarching policy,
Types of Policies
 Reactive and Proactive Policy
Reactive policy emerges in response to a concern or
crisis that must be addressed – health emergencies
and environmental disasters are two examples.
Proactive policies, by contrast, are introduced and
pursued through deliberate choice.
Types of Policies
 Current and Future Policy
Those that are currently on the public agenda and
those that are not. Issues already on the public policy
agenda (e.g., health care) often have high profile. A
formal process to amend or improve the existing
arrangement generally is in place.
 Decision Making

1. What is
Decision Making? 2. Barriers to Good
Decision Making

3. Decision
Making Process
4. Decision Making
Tools
 What is Decision Making

• The word decision has been derived from the Latin word
"decidere" which means "cutting off". Thus, decision involves
cutting off of alternatives between those that are desirable
and those that are not desirable.

• In the words of George R. Terry, "Decision-making is the

selection based on some criteria from two or more possible
alternatives".
1.Programmed Decisions: routine, almost automatic
process.
 Managers have made decision many times before.
 There are rules or guidelines to follow.
 Example: Deciding to reorder office supplies.
2.Non-programmed Decisions: unusual situations
that have not been often addressed.
 No rules to follow since the decision is new.
 These decisions are made based on information, and a
manger’s intuition, and judgment.
 Example: Should the firm invest in a new technology?
3. Strategic Decisions:
• Strategic decisions a major choice of actions concerning allocation
of resources and contribution to the achievement of organizational
objectives.

• Decisions like plant location, product diversification, entering into

new markets

4. Tactical Decisions:- Routine decisions or tactical decisions are

decisions which are routine and repetitive.
• Tactical decision relates to day-to-day operation of the organization and
has to be taken very frequently.
DECISION MAKING PROCESS
 Characteristics of Effective Decisions

• Action Orientation:

• Goal Direction:

• Effective in Implementation:
RATIONAL DECISION MAKING MODEL

• The Rational Decision Making Model is a model which

emerges from Organizational Behavior.

• The process is one that is logical and follows the orderly

path from problem identification through solution.

• It provides a structured and sequenced approach to

decision making.
The Six-Step Rational Decision-Making
Model

1. Define the problem.

2. Identify decision criteria

3. Weight the criteria

4. Generate alternatives

5. Rate each alternative on each criterion

6. Compute the optimal decision

 DECISION MAKING UNDER VARIOUS
CONDITIONS
a) Certainty:
• In a situation involving certainty, people are reasonably
sure about what will happen when they make a decision.
The information is available and is considered to be
reliable, and the cause and effect relationships are
known.
 DECISION MAKING UNDER VARIOUS
CONDITIONS
b) Uncertainty:
• In a situation of uncertainty, on the other hand, people have only a
insufficient database, they do not know whether or not the data are
reliable, and they are very unsure about whether or not the situation
may change.

• Moreover, they cannot evaluate the interactions of the different

variables. For example, a corporation that decides to expand its
Operation to an unfamiliar country may know little about the country,
culture, laws, economic environment, and politics. The political
situation may be

• volatile that even experts cannot predict a possible change in

government.
 DECISION MAKING UNDER VARIOUS
CONDITIONS
c) Risk:

• In a situation with risks, factual information may exist, but it may be

incomplete.

• Improve decision making One may estimate the objective probability of

an outcome by using, for example, mathematical models on the other
hand, subjective probability, based on judgment and experience may be
used

• All intelligent decision makers dealing with uncertainty like to know the
degree and nature of the risk they are taking in choosing a course of
action. One of the deficiencies in using the traditional approaches of
operations research for problem solving is that many of the data used in
model are merely estimates and others are based on probabilities.
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