Planning

Definition:
Planning might be defined as deciding about the
objectives to be pursued by the enterprise; the
selection of best alternative course of action to
reach those objectives and a specification of
activities-technical, financial, personnel etc.
Required for the implementation of the preselected course of action.

 Analysis above definition

Initial plan: determination of objective
Subsequent planning: selection best
alternative course
of action
Final planning: planner would analyse
technical, financial,
personnel aspects

Meaning
Planning is the process of thinking about and
organizing the activities required to achieve a
desired goal.
Generally speaking, planning is deciding in
advance what is to de done

Types of Planning

Strategic Plans
Tactical Plans
Operational Plans
Contingency Plans

Strategic Plans
Strategic plans are designed with the entire
organization in mind and begin with an
organization's mission. Top-level managers,
such as CEOs or presidents, will design and
execute strategic plans to paint a picture of
the desired future and long-term goals of the
organization.
CEOs design strategic plans, which serve as
the framework for lower-level planning.

Tactical Plans
Tactical plans are concerned with the
responsibility and functionality of lower-level
departments to fulfil their parts of the
strategic plan.

Operational Plans
Operational plans :they are the plans that are
made by frontline, or low-level, managers. All
operational plans are focused on the specific
procedures and processes that occur within
the lowest levels of the organization.
Managers must plan the routine tasks of the
department using a high level of detail.
Operational plans can be either single-use or
on-going plans

Contingency Plans
Even the best plans can fail, especially in
today's
fast-paced,
chaotic
business
environment, and as such, it is important for
managers at all levels to engage in
contingency planning. Contingency plans
allow a manager to be flexible and changeover by providing an alternative course of
action, which can be implemented if and
when an original plan fails to produce the
anticipated result

Characteristics of good Plan

Simple to understand and operate

Based on rational factors
Consistent with environment
Realistic and non idealistic
Flexible
Efficient
Imply best utilization of the resources of the enterprise
Must provide scope for initiative
Must win employees favour and confidence
Must contribute the fundamental mission of the
enterprise.

Features/nature of planning
Constitutional features
Planning is goal-oriented
Planning has a reference to future
Planning is the primary function of mgmt.
Planning involves choice
Planning is an intellectual exercise
Operational features
Planning is all pervasive
Planning is both long range and short range
Planning is continuous.

 Desirable features
Planning is flexible
Planning is continuous
Planning is actionable
Planning is an integrated system
Planning is efficient

Planning Process
Step
1. Being watchful
2. Setting objectives
3. Establishment of planning premises
4. Development of alternatives
5. Critical evaluation of the alternative
6. Selection of the best alternative
7. Making derivative Plan
8. Implementation of the plan
9. Follow-up action
10. Restarting the planning cycle

Limitations of planning
1. Costly process:
2. Time consuming:
3. Unsuitable in emergency situation
4. Lack of reliable data and problem of accurate
premises:
5. Problem of rapid change
6. Internal rigidity
7. Encourage false sense of security

MANAGEMENT BY OBJECTIVES
MBO

What is MBO?
A management model that aims to improve
performance of an organization by clearly
defining objectives that are agreed to by both
management and employees. According to the
theory, having a say in goal setting and action
plans should ensure better participation and
commitment among employees, as well as
alignment of objectives across the organization.
The term was first outlined by management guru
Peter Drucker in 1954 in his book "The Practice of
Management.

Core Concepts of MBO

According to Drucker managers should "avoid the
activity trap", getting so involved in their day to day
activities that they forget their main purpose or
objective. Instead of just a few top-managers, all
managers should
participate in the strategic planning process, in order to
improve the implementability of the plan.
implement a range of performance systems, designed
to help the organization stay on the right track.

Managerial Focus
MBO managers focus on the result, not the
activity. They delegate tasks by "negotiating a
contract of goals" with their subordinates
without dictating a detailed roadmap for
implementation. Management by Objectives
(MBO) is about setting yourself objectives and
then breaking these down into more specific
goals or key results.

Main Principle of MBO

The principle behind Management by Objectives
(MBO) is to make sure that everybody within the
organization has a clear understanding of the aims, or
objectives, of that organization, as well as awareness of
their own roles and responsibilities in achieving those
aims. The complete MBO system is to get managers
and empowered employees acting to implement and
achieve their plans, which automatically achieve those
of the organization.

Where to Use MBO

The MBO style is appropriate for knowledge-based
enterprises when your staff is competent. It is
appropriate in situations where you wish to build
employees' management and self-leadership skills and
tap their creativity, tacit knowledge and initiative.
Management by Objectives (MBO) is also used by chief
executives of multinational corporations (MNCs) for
their country managers abroad.

Setting Objectives
In Management by Objectives (MBO) systems, objectives are written down
for each level of the organization, and individuals are given specific aims
and targets. "The principle behind this is to ensure that people know what
the organization is trying to achieve, what their part of the organization
must do to meet those aims, and how, as individuals, they are expected to
help. This presupposes that organization's programs and methods have
been fully considered. If they have not, start by constructing team
objectives and ask team members to share in the process."
"The one thing an MBO system should provide is focus", says Andy Grove
who ardently practiced MBO at Intel. So, have your objectives precise and
keep their number small. Most people disobey this rule, try to focus on
everything, and end up with no focus at all.

Setting Objectives
For Management by Objectives (MBO) to be effective, individual
managers must understand the specific objectives of their job and how
those objectives fit in with the overall company objectives set by the
board of directors. "A manager's job should be based on a task to be
performed in order to attain the company's objectives... the manager
should be directed and controlled by the objectives of performance
rather than by his boss."
The review mechanism enables leaders to measure the performance of
their managers, especially in the key result areas: marketing; innovation;
human organization; financial resources; physical resources;
productivity; social responsibility; and profit requirements.

Balance Between Management and

Employee Empowerment
The balance between management and employee
empowerment has to be struck, not by thinkers, but by
practicing managers. Turning their aims into successful
actions, forces managers to master five basic operations:
setting objectives,
organizing the group,
motivating and communicating,
measuring performance, and
developing people, including yourself.

Individual Responsibility
Management by Objectives (MBO) creates a link between top
management's strategic thinking and the strategy's implementation
lower down. Responsibility for objectives is passed from the
organization to its individual members. It is especially important for
knowledge-based organizations where all members have to be able to
control their own work by feeding back from their results to their
objectives.
Management by objectives is achieved through self-control, the tool of
effectiveness. Today the worker is a self-manager, whose decisions are
of decisive importance for results.
In such an organization, management has to ask each employee three
questions:
What should we hold you accountable for?
What information do you need?
What information do you owe the rest of us?

The Five-Step MBO Process

MBO Principles

Cascading of organizational goals and objectives

Specific objectives for each member
Participative decision making
Explicit time period
Performance evaluation and feedback

Types of Objectives

Routine objectives
Innovation objectives
Improvement objectives
The objectives must be:

focused on a result, not an activity

consistent
specific
measurable
related to time
attainable

MBO Strategy : Three Basic Parts

All individuals within an organization are assigned a

special set of objectives that they try to reach during a
normal operating period. These objectives are mutually
set and agreed upon by individuals and their managers.
Performance reviews are conducted periodically to
determine how close individuals are to attaining their
objectives.
Rewards are given to individuals on the basis of how
close they come to reaching their goals.

Six MBO Stages

Define corporate objectives at board level

Analyze management tasks and devise formal job
specifications, which allocate responsibilities and
decisions to individual managers
Set performance standards
Agree and set specific objectives
Align individual targets with corporate objectives
Establish a management information system to monitor
achievements against objectives

8 Key Result Areas Where Managers Must Pursue

Clear Objectives

Marketing
Innovation
Human organization
Financial resources
Physical resources
Productivity
Social responsibility
Profit requirements

MBO Advantages & Disadvantages

Advantages
MBO programs continually emphasize what should be
done in an organization to achieve organizational goals.
MBO process secures employee commitment to attaining
organizational goals.
Disadvantages
The development of objectives can be time consuming,
leaving both managers and employees less time in which
to do their actual work.
The elaborate written goals, careful communication of
goals, and detailed performance evaluation required in an
MBO program increase the volume of paperwork in an
organization.

Policy
A policy is a general guideline for decision
Making. It sets up boundaries around decisions,
including those that can be made and shutting
out those that cannot.
Definition:
Policy is a verbal or written or Implied overall
guide, setting up boundaries that supply the
general limits and direction in which
managerial action will be taken- George R
Terry

Types of Policies
1. Classification on the basis of sources
originated Polices
Appealed Policies
Implied Policies
externally Imposed Policies
2. Classification on the basis of function
Production
Sales
Finance
Personnel
3.Classification on the basis of organizational level

Other types

Distributive policies
Regulatory policies
Constituent policies
Miscellaneous policies

Policy Information

Purpose statement-why,
Applicability and scope
Effective date
Responsibilities
Policy statements
Background
Definitions

Stages of Policy Process

Agenda
Setting/Identification of
Issues or Problems

Policy
Assessment/Evaluation

Policy Implementation

Policy Formulation

Policy
Adoption/Legitimization

Stages in the Policy Process

Issue Identification
Publicized demands for government action can lead
to identification of policy problems.
Attention that prompts the need for government
action.
Agenda Setting
Government begins to give serious consideration

Stages in the Policy Process

Policy Formulation
Policy proposals can be formulated through
political channels by policy-planning
organizations, interest groups, government
bureaucracies, state legislatures, and the
president and Congress.
Development of possible solutions;
consideration of several alternatives

Stages in the Policy Process

Policy Adoption/Legitimization
Policy is legitimized as a result of the public
statements or actions of government officials;
both elected and appointedthe president,
Congress, state legislators, agency officials, and
the courts. This includes executive orders,
budgets, laws and appropriations, rules and
regulations, and administrative and court
decisions that set policy directions.

Stages in the Policy Process

Policy Implementation
Policy implementation includes all the
activities that result from the official
adoption of a policy. Policy implementation
is what happens after a law is passed. We
should never assume that the passage of a
law is the end of the policymaking process.
Sometimes laws are passed and nothing
happens!

Decision Making
Definition:
Decision making is the process of
selecting the best alternative course of action;
from among the number of alternatives given
to management or developed by it.

Relationship between decision and

decision making

Process of decision
making

Decision

Features of Decision making

Goal oriented -attainment of
organizational objective
Pervasive- All manager in management
hierarchy take decision, functional areas,
function of mgt.
Intellectual exercise -creativity and
imagination
A problem of choice - no. of. alternatives

Features of Decision making

Continuous process-organizational life
Basis of action- all people action based
on the decision of management
Implies commitment of organizational
resources-time, effort, energies, physical
evidence
Situational Boom/recession

Process of Decision making

Identification of problem

Search for alternative

Evaluation of alternative

Selecting an alternatives

Implementation and follow up

Feed Back

Diagnosis and analysis the

problem

Identification of Problem:
What is and what should be
Present and desired state of affairs
Problem Reason: Business environment
changes
Diagnosis and analysis of the problem:
Diagnosis: identifying a problem and symptoms
Analysing all facts
Analysis of the problem: classifying the problem
and gathering information

Search for alternatives:

problem can be solved in many ways
way of solving the problem
limitation factor-time, money, resources
Evaluation of alternatives:
measuring +ve and ve consequence of
each alternative
Criteria :
Risk
Economy of effort
timing/situation
limitation of resources

Selection of alternative
optimum alternative---max result
compared with organizational objective
selection is based upon-experience,
experiment, R&A
Implementation and follow up:
put into action
steps:
communicated- whom responsible
obtained acceptance
procedure and time sequence
required resources & task-individual