Planning

• Planning
– Identifying and selecting appropriate goals
and courses of action for an organization.
• The organizational plan that results from
the planning process details the goals
and specifies how managers will attain
those goals.
 Meaning of planning :-

• Planning is looking ahead and chalking

out future course of action to be
followed. It is a preparatory step. It is a
systematic activity which determines
when, how and who is going to perform
a specific job.
• Planning is a detailed programme
regarding future courses of action.
• It is rightly said “Well plan is half
done”.
 Definition

• According to Koontz & O’Donell,

“Planning is deciding in advance what to
do, how to do and who is to do it.
Planning bridges the gap between where
we are to, where we want to go. It makes
possible things to occur which would not
otherwise occur”.

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 Nature of Planning

• Planning is goal-oriented.
• Planning is looking ahead. 
• Planning is an intellectual process.
• Planning involves choice & decision making. 
• Planning is the primary function of management /
Primacy of Planning. 
• Planning is a Continuous Process.
• Planning is all Pervasive.
• Planning is designed for efficiency.
• Planning is Flexible.

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 Purpose of Planning : -

• Planning Provides Direction

• Planning Provides opportunity to analyze alternative
courses of action
• Planning Reduces uncertainties
• Planning Minimizes impulsive and arbitrary decisions
• Planning makes King-pin function
• Planning needs for efficient use of resources. 
• Planning needs for adaptive responses 
• Planning needs for Anticipative action 
• Planning helps to Integration

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 Planning and Strategy

• Strategy
– The cluster of decisions and actions that
managers take to help an organization
reach its goals.

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 Planning and Strategy

• Mission Statement
– A broad declaration of an organization’s
overriding purpose
– Identifies what is unique or important about
its products
– Seeks to distinguish or differentiate the
organization from its competitors

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 Three Steps in Planning

Figure 8.1
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 Planning Process Stages

• Determining the Organization’s Mission and

Goals
– Defining the organization’s overriding purpose and
its goals.
• Formulating strategy
– Managers analyze current situation and develop the
strategies needed to achieve the mission.
• Implementing strategy
– Managers must decide how to allocate resources
between groups to ensure the strategy is achieved.

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The Nature of the Planning Process

To perform the planning task, managers:

1. Establish where an organization is at
the present time
2. Determine its desired future state
3. Decide how to move it forward to reach
that future state

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 Why Planning is Important

1. Necessary to give the organization a

sense of direction and purpose
2. Useful way of getting managers to
participate in decision making
3. Helps coordinate managers of the
different functions and divisions of an
organization
4. Can be used as a device for controlling
managers
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 Why Planning is Important

• Unity - at any one time only one central,

guiding plan is put into operation
• Continuity – planning is an ongoing
process in which managers build and
refine previous plans and continually
modify plans at all levels

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 Why Planning is Important

• Accuracy – managers need to make

every attempt to collect and utilize all
available information at their disposal
• Flexibility – plans can be altered and
changed if the situation changes

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Levels of Planning at General Electric

Figure 8.3
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 Levels and Types of Planning

Figure 8.2
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 Levels of Planning

• Division – business unit that has its own

set of managers and departments and
competes in a distinct industry
• Divisional managers –
Managers who control
the various
divisions of an
organization

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 Levels of Planning

• Corporate-Level Plan
– Top management’s decisions pertaining to
the organization’s mission, overall strategy,
and structure.
– Provides a framework for all other planning.
• Corporate-Level Strategy
– A plan that indicates in which industries and
national markets an organization intends to
compete.

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 Levels of Planning

• Business-Level Plan:
– Long-term divisional goals that will allow the
division to meet corporate goals
– Division’s business-level and structure to
achieve divisional goals

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 Levels of Planning

• Business-Level Strategy
– Outlines the specific methods a division,
business unit, or organization will use to
compete effectively against its rivals in an
industry

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 Levels of Planning

• Functional-Level Plan
– Goals that the managers of each function
will pursue to help their division attain its
business-level goals
• Functional Strategy
– A plan of action that managers of individual
functions can take to add value to an
organization’s goods and services

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 Time Horizons of Plans

Time Horizon
– Period of time over which they are intended
to apply or endure.
• Long-term plans are usually 5 years or
more.
• Intermediate-term plans are 1 to 5 years.
• Short-term plans are less than 1 year.

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 Types of Plans

• Standing Plans
– Use in programmed decision situations
• Policies are general guides to action.
• Rules are formal written specific guides to
action.
• Standard operating procedures (SOP) specify an
exact series of actions to follow.

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 Types of Plans

• Single-Use Plans
– Developed for a one-time, nonprogrammed
issue.
• Programs: integrated plans achieving
specific goals.
• Project: specific action plans to complete
programs.

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 Scenario Planning

• Scenario Planning
(Contingency Planning)
– The generation of multiple forecasts of
future conditions followed by an analysis of
how to effectively respond to those
conditions.

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Three Mission Statements

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Determining the Organization’s
Mission and Goals

• Defining the Business

– Who are our customers?
– What customer needs are being satisfied?
– How are we satisfying customer needs

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 Determining the Organization’s
Mission and Goals

• Establishing Major Goals

– Provides the organization with a sense of
direction
– Stretches the organization to higher levels
of performance.
– Goals must be challenging but realistic with
a definite period in which they are to be
achieved.

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 Determining the Organization’s
Mission and Goals

• Strategic leadership – the ability of the

CEO and top managers to convey a
compelling vision of what they want to
achieve to their subordinates

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 Formulating Strategy

• Strategic Formulation
– Managers work to develop the set of
strategies (corporate, divisional, and
functional) that will allow an organization to
accomplish its mission and achieve its
goals.

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STRATEGIC MANAGEMENT
why we need to know strategic
management
STRATEGIC PLANNING TOOLS AND
TECHNIQUES
1. Critical Question Analysis : -
2. SWOT Analysis
3. Boston Consulting Group Matrix : -
 4. PESTLE Analysis
I

It’s a way of working out what is going on ‘out there’ so you can then
respond to it. PESTLE stands for Political, Economic, Social,
Technological, Legal and Environment.
• 1. Political Environment : Advertising standards, Competition
regulation, Government’s attitude, Consumer protection,
Environmental protection/legislation .
• 2. Economic Environment : Minimum wage, Inflation , Health and
Safety law , Employment law, Exchange Rate, Taxation international
trade, Economic growth.
• 3. Social Environment: Health, Education, Lifestyle changes,
Demographics, Income distribution , Living conditions , Welfare.
•
• 4. Technological Environment : Government
spending on research, Government and Industry focus
on technology , Rates of technological obsolescence ,
Energy use and costs, Internet, Changes in physical
sciences .
• 5. Legal Environment : Strength of the rule of law,
International trade barriers Other regulations,
Taxation both corporate and consumer , Health and
Safety Employment law.
• 6. Environment: How people’s perception and
reaction to environmental issues can affect a
business.
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 5. Balanced Scorecard
• Balanced Scorecard Developed by Robert S.
Kaplan and David P. Norton. Used by organization
to measure its performance.
• It includes both financial and non-financial metrics
of the organization’s performance.
• The balanced scorecard suggests viewing the
organization from four perspectives, and to
• develop metrics,
• collect data and
• analyze it relative to each of these perspectives.
6. P o r t e r ’ s F i v e F o r c e s Mo d e l
Porter’s Five Forces Model Developed by Michael E. Porter.
 It is an important tool for assessing the potential for profitability in
an industry.
 It is also useful as a way of assessing the balance of power in
more general situations.
 It works by looking at the strength of five important forces that
affect competition.
 1. Supplier Power- The power of suppliers to drive up the prices
of your inputs.
2. Buyer Power - The power of your customers to drive down
your prices.
 3. Competitive Rivalry - The strength of competition in the
industry.
 4. The Threat of Substitution - The extent to which different
products and services can be used in place of your own.
 5. The Threat of New Entry - The ease with which new
competitors can enter the market if they see that you are making
good profits.