Forms of Planning

•Strategic Planning
- what business shud the org. be in a
decade from now?
- what policies will be guide the organization
in pursuit of its goals?
•Tactical planning
- involves deciding how resources will be
used to achieve strategic goals
- Involves day 2 day operations
management
 Hierarchy of organizational plans
Objectives

Strategies

Single-use Plans Standing Plans

(Programmes & (Policies, procedures,

budgets) methods & rules)

 Objectives
Characteristics:
• Are multiple in number
• Are either tangible or intangible
• Have a priority
• Arranged in a hierarchy
• Clash with each other
Requirements of sound objectives:
• Must be clear and acceptable
• Must support one another
• Must be precise and measurable
• Must remain valid
 Strategies
• Strategy is a plan which takes into account and
provides an optimal match between the firm and the
environment.
- Environmental appraisal
 Political & legal factors
 Economic factors
 Competitive factors
 Social & cultural factors

- Corporate Appraisal
 Company’s strengths and weaknesses like leadership,
product design, low-cost manufacturing skills, logistics, sales
promotion, inventories etc.
 Standing Plans
• Policies – general guideline for decision-making.
It sets up the boundaries around decisions.
- Provide just a framework
- “How to do work?”
• Types of policies:
o On the basis of sources
-originated policies
- appealed policies
- implied policies
- externally imposed policies
o On the basis of functions
• Procedures- detailed set of instructions for
performing a sequence of actions. A way
to implement policies.

• Methods – A prescribed way.

• Rules – detailed and recorded instructions

that a specific action must or must not be
performed.
 Single-use Plan
• Programme – are precise plans. Are
drawn in conformity with the objectives
and are made up of policies, procedures,
budgets etc.

• Budgets
 Steps in Planning Process
• Establishing objectives
• Collecting and forecasting information
• Development of planning premises
(Assumptions about the future)
• Search of alternatives
• Evaluation of alternatives
• Selection of Plan and development of
derivative plans
 SWOT Analysis
Strengths
• Latest technology
• Large financial resources
• Competent HR
Weaknesses
• Obsolete technology
• Poor financial position
• Lack of trained HR
Opportunities
- expanding markets
- international customers
- Govt. orders
Threats
- increased competition
- availability of cheaper
substitutes
- risks in international markets
 Portfolio Analysis: BCG Matrix
• Management evaluates each of the Co’s
business units in terms of the market-place and
internal structure.
• After evaluation, an appropriate strategic role is
developed for each unit to improve the
performance.
• BCG Matrix; focuses on 3 aspects of a business
unit (i) its sales, (ii) growth of its market, (iii)
whether it absorbs or produces cash in its
operations
• It tries to balance among business units that use
up cash and those that generate cash
 BCG Matrix
High Star Question Mark
(moderate +ve ( large –ve cash flow)
or –ve cash flow)

Cash Cow Dog

(large +ve cash (modest +ve or –ve
flow) cash flow)
Low
Market High Low
Growth
rate Relative Market Share
• The Star – indicates extra investment in order to
keep up with the market’s rapid growth. May
consume more cash than is currently being earned
by it.

• Cash cow – does not require large investment

• Question mark – uncertain and expensive venture,

very large investment

• Dog – moderate supplier of cash, if such unit

incurs losses for a no. of years, it could be sold off.
 MBO
• Superior goals Subordinate goals

• Steps:
 Setting of organizational objectives
 Formulation of departmental objectives
 Establishing goals and targets of subordinates
 Establishing key result areas or check points
 Follow-up and periodic review of progress
 Appraisal of performance and counseling
 Difficulties in MBO
• Difficulty in setting objectives
• Emphasis on short term goals
• Resistance to change
• Lack of training
• Lack of follow-up
• Rigidity
• Limited application
• Costly process
 Strategic planning
• Robert Anthony – strategic planning is the
process of deciding on the objectives of
the organization, on changes in these
objectives, on the resources used to attain
objectives and on the policies that will
govern the acquisition, use and disposition
of these resources.
 Process of developing a Strategic plan
• Determination of mission or purpose
• Environmental scanning (ETOP)
• Organizational Analysis
• Developing Strategic Alternatives- types of strategies:
(a) stability strategy
(b) growth strategy – intensive growth strategy
(expanding the scale of operations), market penetration,
market development, product dev’t, diversification strategy
(c) retrenchment strategy
(d) combination strategy
• Evaluation of strategic alternatives (SWOT)
• Formulation of strategy
• Execution of strategic plan