UNIT -2

PLANNING AND DECISION MAKING

MS.RASHMI H
LECTURER
DEPT OF MANAGEMENT
YIASCM

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VIDEO - WHY PLANNING IS
IMPORTANT
https://
www.google.com/search?sca_esv=596495099&hl=en&tbm=vid&q=Fun
ny+planning+videos&sa=X&ved=2ahUKEwjb89mnxs2DAxVLRmwGHSxU
CHsQ1QJ6BAgMEAE&biw=1366&bih=641&dpr=1#fpstate=ive&vld=cid:
2c3918d2,vid:XyZ3Gj3xnFw,st:0

https://
www.google.com/search?sca_esv=596495099&hl=en&tbm=vid&q=Fun
ny+planning+videos&sa=X&ved=2ahUKEwjb89mnxs2DAxVLRmwGHSxU
CHsQ1QJ6BAgMEAE&biw=1366&bih=641&dpr=1#fpstate=ive&vld=cid:
e1a5d8ef,vid:WYSG2kKiX2M,st:0
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Fundamental , Primary and important function of management
A process of setting goals and choosing the means to achieve these
goals.
Deciding in advance what is to be done, when, where, how and by
whom it is to be done
Bridges the gap from where we are to where we want to go.

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 DEFINITIONS OF PLANNING
Koontz and O’Donnell defines “Planning is deciding in advance what to
do, how to do it, when to do it and who is to do it.”

James Stoner wrote “Planning is the process of establishing goals and a

suitable course of action for achieving those goals.”
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 TYPES OF PLANS
1. STANDING OR REPEATED-USE PLANS AND SINGLE-USE PLANS
(A) STANDING PLANS OR REPEATED-USE PLANS
Used repeatedly  tackling frequently recurring problems
Readymade answers
Guidelines for managerial decision-making and actions.

Objectives Procedures Rules

Methods Strategies
Policies

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B) SINGLE-USE PLANS OR AD HOC PLANS
Specific situations and for tackling specific matters.
Plans for handling non-repetitive and specific problems.
Plan for one situation cannot be used in another situation.

Schedules Budgets

Programmes Projects

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2. FINANCIAL PLANS AND NON-FINANCIAL PLANS
(A) Financial Plans or Cash Plans:
Relate to the monetary or financial resources of the concern.
Determine the sources from which finance can be secured and the
amounts which can be allocated to various purposes.

(B) Non-financial or Non-Cash Plans:

Relate to physical resources
Non-financial plans are as important as financial plans.

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3. FORMAL PLANS AND INFORMAL PLANS
(A) Formal Plans:
Systematic and rational
Put on paper

(B) Informal Plans:

Mere thinking by some individuals of a concern

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4. SPECIFIC PLANS AND ROUTINE PLANS
(A) Specific Plans:
Specified or particular purposes
Difficult task
Methods to be determined for specific purposes have to be specially
planned and formulated

(B) Routine Plans:

Routine or mechanical
Preparation of routine plans is not difficult.
Methods  will remain the same

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5. ADMINISTRATIVE PLANS AND OPERATIVE PLANS
(A) Administrative Plans:
Determines the basis of action for whole organization as well as
various segment for a particular period
Middle level mgnt
Modify according to changing conditions
Planning of new products, quantity, sales rate

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(B) Operative Plans:
Plans which are concerned with the actual execution of day-to-day
operations of the concern.
Short period
Preparation of sales programme, planning of production activities, etc.

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6. LONG TERM PLANS AND SHORT TERM PLANS
(A)Long term plans:
Three years to twenty years or even more
Period depends upon  internal and external factors

(B) short term plans:

Less than one year
Determination of short term activities to accomplish long term
objectives
Quite specific and action oriented
Preparation  lower level manager.
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7. STRATEGIC PLANS AND TACTICAL PLANS
(A) Strategic Plans:
Designed to achieve the overall objectives of the organisation.
Top level management
Serve as the basis for all other plans
Contribute to the growth, stability and public image of the enterprise.
Strength and weakness of the enterprise  strategic plans

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(B) Tactical Plans:
Plans which are concerned with the planning of detailed operations
needed to achieve the organizational goals.
Tactical plans are intended to support the implementation of strategic
plans, whenever some difficulties are faced in the execution of strategic
plans.
Middle level management.
Intended to meet any changes in internal organisation and external
environment.
o Difficulty in procuring raw materials
o Changes in prices of products
o Unexpected moves by the competitors and other unforeseen situations

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STEPS IN PLANNING PROCESS

1.Determination of the Objectives

2.SWOT Analysis
3.Development of Planning Premises
4.Framing Alternative Plans
5.Evaluation of Alternatives

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6.Selecting Best Alternative
7.Formulating Derivative Plans
8.Establishing Sequence of Activities
9.Implementation
10.Follow-up

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ENVIRONMENTAL ANALYSIS AND
DIAGNOSIS
• Internal and external environments -- assess and understand
• Helps in identifying – SWOT
• Decision-making and strategic planning

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Internal Environment Analysis
1.Organizational Structure
2.Resources
3.Capabilities and Core Competencies
4.Culture and Values
5.Leadership and Management Style

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External Environment Analysis:
1.PESTEL Analysis:
A. Political Factors: Government policies, regulations, stability, and potential
political influences on the organization.
B. Economic Factors: Economic conditions, trends, inflation rates, GDP growth,
currency fluctuations, and market dynamics.
C. Social Factors: Understanding societal trends, demographics, cultural shifts,
consumer behavior, and lifestyle changes.
D. Technological Factors: Assessing technological advancements, innovations,
R&D trends, and their impact on the industry.
E. Environmental Factors: Considering environmental concerns, sustainability
issues, climate change, and their effects on business operations.
F. Legal Factors: Reviewing laws, regulations, compliance requirements, and
legal frameworks that affect the industry or organization.
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2.Competitive Analysis
3.Market Analysis
4.Stakeholder Analysis
5.SWOT Analysis

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 DECISION MAKING
• Essential aspect of modern management
• Key part of manager's activities
• Continuous process

According to James Stoner, “Decision making is the process of identifying

and selecting a course of action to solve a specific problem.”

Trewartha and Newport defines, “Decision making involves the selection

of a course of action from among two or more possible alternatives in
order to arrive at a solution for a given problem.”
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IMPORTANCE OF DECISION-MAKING

1.Strategic Importance:
Essential for setting organizational goals and charting the course of
action to achieve them
Strategic decisions shape the long-term direction of the organization.
2.Problem-Solving:
Effective decision-making helps in addressing problems and challenges
faced by organizations.
It involves identifying issues, analyzing alternatives, and selecting the
best course of action to resolve them.

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3.Resource Allocation:
Allocating resources such as finances, human capital, time, and materials
efficiently
Proper resource allocation is crucial for maximizing productivity and
achieving goals.
4.Innovation and Growth:
Encourages innovation by fostering an environment where new ideas
and opportunities are explored.
It enables organizations to adapt to changing markets and technologies,
fostering growth and sustainability.

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5.Risk Management:
Evaluating risks and uncertainties associated with various choices.
Helps in assessing potential outcomes, minimizing risks, and making
informed decisions.

6.Enhanced Efficiency:
Streamlines processes, eliminates inefficiencies, and optimizes
operations within an organization
Helps in achieving goals in a timely manner.

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7.Empowerment and Leadership:
Empowers individuals and teams by involving them in the process
It fosters a culture of collaboration, enhances morale, and encourages
leadership development.
8.Customer Satisfaction:
Improved products, services, and customer satisfaction, which is crucial
for business success.

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9.Competitive Advantage:
Strategic and timely decisions can provide a competitive edge
10.Accountability and Responsibility:
Establishes accountability as decision-makers are responsible for the
outcomes of their decisions.

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 OF DECISION MAKING

1.Identification of Problem
2.Analysing the Problem
3.Colleting Relevant Data
4.Framing Alternative Solutions
5.Evaluation of Alternatives
6.Selecting Best Alternative
7.Implementation
8.Follow-up

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