Lecture Three

Functions of Management (1)

3.1. Planning
Planning is a primary management function that is essential if organizations are to achieve effective
levels of performance. Since managerial operations in organizing, staffing, leading and controlling are
designed to support the accomplishment of enterprise objectives, planning logically precedes the
execution of all other managerial functions. A manager must plan to know what kind of organization
relationships and personal qualifications are needed, along which course subordinates must be led, and
what kind of control is to be applied. Figure (1.4.) illustrates how plans are the foundation for management
operations.

Fig (3.1.) Plans as the Foundation of Management

What kind of
organization structure
to have?

Helps to
know

What kind of people is

needed and when?
PLANS:
Objective Necessary for
s and how Deciding Affects type
to achieve of leadership
needed
them
How most effectively to
lead People?

To ensure plan
Success

Setting
standards of
Control

Source: Koontz, H. and Weihrich, H (1989:59), Management.

Planning and control are inseparable since any attempt to control without a plan is meaningless.

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Planning focuses on the future: what is to be accomplished and how. It includes all managerial
activities that determine objectives for the future and the appropriate means for achieving those objectives.
The outcome of planning is a plan; which is a written document that specifies the courses of action the
enterprise will take.

3.2. Definition:

Planning is defined as “a set of related steps by which management determines what is to be

done, when, where, and how is it going to be done”. (Donnelly et al: 1992)

3.3. The Purpose and Importance of Planning:

Organizational planning has two major purposes:
1. A protective purpose which involves minimizing risk by reducing uncertainties surrounding
business conditions and clarifying the consequences of related management actions.
2. An Affirmative Purpose: which is to increase the degree of organizational success and to
establish a coordinated effort within the organization.

3.4. The Elements of Planning:

Planning requires managers to make decisions about four basic elements that are related to each other
which are: objectives, actions, resources and implementation.

 Objectives: Specifies future conditions that a manager wants to achieve.

 Actions: are the means or specific activities planned to achieve the objectives. Determining the
actions requires forecasting the future.
 Resources: the kind and amount of resources required, as well as the potential resources and
allocation of those resources.
 Implementation: involves the assignment and direction of human resources to carry out the plan.

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3.5. Steps in Planning :

1. Setting Objectives or Goals: This is the first step in planning which determines what is to be
accomplished, where and when. Goals setting must be SMART i.e. the goals must be Specific,
Meaningful and Accepted to those who are going to achieve them, Realistic that they are
achievable , and Time – framed in the sense that they can be achieved within the time specified in
the plan.

2. Developing Premises (i.e. grounds): It is concerned with establishing, circulating and obtaining
agreement to utilize critical planning premises such as forecasts, applicable basic policies and
existing enterprise plans. These constitute the assumptions about the environment in which the
plan is to be carried out. Since future is so complex, it will be realistic to limit premises to
assumptions that are strategic to a plan or those which most influence its operation.

3. Determining Alternative Actions: analyzing other alternatives and limiting their number by
determining the most promising ones. Alternative courses of actions can be examined through the
use of mathematical or computer techniques (e.g. decision-making tree).

4. Evaluating Alternative courses: Having determined the alternative courses and examined their
strong and weak points, they are to be weighed in the light of the premises and goals.

5. Selecting a Course of Action: This is the point at which a plan is adopted i.e. The real point of
decision making. Occasionally an analysis and evaluation of alternative courses will disclose that
two or more are advisable, from which the manager must decide which to follow.

6. Formulating Derivative Plans: At this point, derivable plans are required to support the basic
plan. This goes for deciding about operational details such as hiring and training of needed
human resource, acquisition and positioning of equipment, development of maintenance facilities,
scheduling of activities, advertising, financing, insurance …etc.

7. Enumerating Plans by Budgeting: Budgeting involves giving meaning to the plan. It represents
the sum total of income and expenses, cash and capital expenditures, the resultant surplus...ets.
The budget set important standards against which planning progress can be measured.

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 3.6. Qualifications of Planners:

The planner or the planning team is the most important input in the planning function. For the
output to be effective, the planner’s role is not limited to setting the plan, but extends to advising
management what actions to be taken to implement the plan and assist in follow up and control.
Accordingly, planners should have:

a. The practical experience within the organization. This assists in setting a practical and
realistic plan.
b. The knowledge of how all subsystems of the organization are interrelated and function.
c. The skill of identifying and ability of defining social, political, technical and economic
trends that might affect the success of the plan.
d. The ability to work with others and clearly communicate. This is important since planners
work closely with various key persons in an organization which necessitate effective
collaboration and advisory skills.

4.7. AN EXAMPLE FOR PLANNING:

> Developing A Plan For an Organization Logistics Improvement

Logistics: refers to the activities of procuring, maintaining and transporting supplies.

Logistics Cycle: is the repeated sequence of functions which are required for the steady supply of
goods, including selection, procurement, distribution and use.

The Plan can be Set Through the Following Basic Steps:

1. Establishing a logistics planning team work.
- Knowledgeable individuals about current logistics system, problems and environment.
- Individuals with good advisory and planning capabilities.
2. Defining goals and objectives for the specified sector the organizational logistics of which requires
improvement.
3. Establishing priorities for program development.
4. Describing logistics situation and the resources available {i.e. Premises}.
5. Identifying deficiencies in the current logistics process;
- Establish operational targets
- Problem Analysis
6. Designing strategy for improvement and proposed changes.
- Grouping Deficiencies and proposing changes.
- Mini – Maxi study according to situation analysis.

{i.e. set courses of actions, analyze and select the most promising one}.

7. Developing an implementation strategy:

- Catering for implementation issues
- Prepare detailed implementation schedule
-
{i.e. formulating derivative and supporting plans}.
- Prepare a budget [i.e. enumerating the plan}
- Design control system; follow up and evaluation.
-

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4.8. Decision Making:

Decision making is the core of planning. It is defined as “a choice made between two or more
available alternatives’, or that “it is the selection of a course of action from among alternatives’.

The selection from alternatives is traditionally based on;

Experience, Experimentation and Research and analysis.

Fig (4.2.): Bases for Selecting From Alternative Courses of Actions.

Experimentation

Reliance How to
on the Past Select from Choice
Alternatives Made
?

Research &
Analysis

Source: Koontz, H. and Weihrich, H (1989:141), Management.

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This is the normal way managers used to follow in making decisions. However, despite relying on the
experience for example might be useful, it might be entirely inapplicable to new problems. The reason is
that good decisions must be evaluated against future events, while experience belongs to the past.
Experimentation, on the other hand, can not be applied in all situations to make a decision. It might
be used in deciding about a product, a market, a candidate applying for a job {to be tested on the job} and
so on. Yet, it is an expensive technique.
Research and analysis involves a search for relationships among variables, constraints, and
premises that belongs to the goal sought. Therefore to solve a problem it must be broken down into its
components and study its qualitative and quantitative factors to reach a decision. Thus this technique is
more effective and cheap.

All above mentioned techniques are used under certainty. Yet, in a risk situation and under
uncertainty, a number of modern techniques can be used to improve the quality of decision making.
Among the most important of these are; the Risk Analysis and the Decision Tree which is a graphic
decision-making tool typically used to evaluate decisions involving a series of steps. Modern techniques
mostly rely on computer programs, computations and the like.

A Decision could be programmed or non-programmed. The first type is applied to structured or

routine problems, while the later is applied in ill-defined situations of a non-recurring nature.

In all conditions, decision-making process is carried out through specific steps;

1. Identifying an existing problem.

2. Listing possible alternatives for solving the problem.
3. Selecting the most beneficial alternative.
4. Implementing the selected alternative.
5. Getting feedback whether the implemented alternative solved the problem.

Fig (4.3): A Model of the Decision Making Process:

Identify List Select Implement

Existing Alternative Most Selected
Problem Problem Beneficial Alternative
Solutions Alternative

Get Problem-related
Feedback

Source: Certo, (2000: 150), Modern Management.