Foundations of Planning

PLANNING
Definition:
Planning encompasses defining the
organizations objectives or goals,
establishing an overall strategy for
achieving those goals and developing a
comprehensive hierarchy of plans to
integrate and coordinate activities .

PLANNING
The Purpose of Planning:

Gives direction
Establishes coordination
Reduces uncertainty
Reduces overlapping / wasteful action
Establishes objectives or standards

Criticisms of Formal
Planning
Planning may create rigidity.
Plans cannot be developed for a
dynamic environment.
Formal plans cannot replace
intuition and creativity.
Planning focuses managers
attention on todays competition,
not on tomorrows survival
Formal planning reinforces success,
which may lead to failure
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Planning Increases
Performance
Generally produces positive financial
results
Quality of the planning process and
the implementation efforts are
more important than the extent of
planning
Environmental change can strongly
affect the impact of planning
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Types of Plans
FREQUENCY
BREADTH TIME FRAME SPECIFICITY

OF USE

Strategic

Long-term

Directional Single use

Tactical

Short-term

Specific

Standing

Types of Plans
Strategic -- organization wide,

overall objectives, position firm in

environment

Tactical -- specify the details of

how overall objectives are to be
met

Short term -- less than a year

long term -- beyond five years
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Types of Plans
Specific -- clearly defined
objectives

Directional -- flexible plans

setting out general guidelines

Single use -- meets the needs of

a unique situation

Standing -- provides guidance

for repeatedly performed actions

BIMTECH FOUNDATION COURSE : PPM
JUNE 2010

Clear

Specific Plans

Low

Objectives

Flexibility

General

Directional Plans

High
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Managerial Levels and

Plans
Strategic
Planning
Top
Executives
Middle-level
Managers

Operational
Planning

First-level
Managers

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Management By Objectives
(MBO)

What is MBO ?

A system in which specific performance

objectives are jointly determined by
subordinates and their superiors,
progress
toward
objectives
is
periodically reviewed and rewards are
allocated on the basis of that progress.

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Management By Objectives
Common MBO elements

Identify key job tasks

Set specific and challenging goals
Encourage active participation
Prioritize goals
Build in feedback
Link rewards to goal attainment
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Management By Objectives
Overall
Overall
Organizational
OrganizationalObjectives
Objectives

Divisional
Divisional
Objectives
Objectives

Departmental
Departmental
Objectives
Objectives
Individual
Individual
Objectives
Objectives
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MBO Downside
Overly focussed on what is being
measured rather than final result
(quantity over quality)
Individual rather than team focus
Objectives become ceilings rather
than floors -- decreases further
motivation
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1.
1.

Identify
IdentifyCurrent
Current Mission
Mission

4.
4.

5.
5.

2.
2.
Analyze
Analyze
Resources
Resources

Analyze
Analyzethe
the
Environment
Environment

Strengths
Strengths&&
Weaknesses
Weaknesses

Opportunities
Opportunities
&&Threats
Threats

3.
3.

6.
6.
Reassess
ReassessOrganizations
OrganizationsMission
Mission
7.
7.
8.
8.
9.
9.

Formulate
FormulateStrategies
Strategies
Implement
Implement Strategies
Strategies
Evaluate
EvaluateResults
Results

The
Strategic
Management
Process
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The Strategic
Management Process

Identify the current mission and goals

Analyze the Environment
Environmental Opportunities Threats
Analyze the firms Resources and Skills
Firms Strengths and weaknesses
Reassess the mission and objectives
Strategy Formulation
Implement strategies
Evaluation
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Mission
The fundamental purpose of
an
organization
-the
definition of success

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SWOT: Identifying
Organizational Opportunities
Organizations
Resources

Opportunities
in the
Environment

Organizations
Opportunities
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Competitive
Strategies
Cost-leadership
Differentiation
Focus

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Comparison: Entrepreneurs and

Traditional Managers
Traditional
Manager

Entrepreneur

Primary motivation

Corporate rewards

Independence

Time orientation

Short-term goals

5-10 year growth of

business

Activity

Delegation

Direct involvement

Risk tendency

Low

Moderate

View toward
mistakes

Avoidance

Acceptance

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Project Management and

Process
Contemporary planning tool
Is a process of quality control to ensure a
projects activities are done on time,
within budget, and according to
specification
Project is a one-time-only set of activities
that has a definite beginning and ending
point in time

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