PLANNING

“Organizations that fail to plan, plan to fail.”

“A man who does not plan long ahead will find trouble at his door”
Confucius
Learning Objectives:
• Identify different kinds of organizational plans.
• Discuss the importance of planning.
• Discuss the steps involved in planning.
• Discuss who plans, and describe contingency planning.
Planning Defined
• Planning is the process used by managers to identify and select goals
and formulate future courses of action for the organisation.
what how
why

PLAN
when

who
where
Planning Defined
• It is a primary function of manager
• It has been characterized as “the process of thinking before doing, and in similar vein, the
thinking that precedes the actual performance of work.
• Thus planning is deciding in advance what to do, how to do it, when to do it, and who is to
do it.
• It is an intellectually demanding process; it requires the conscious determination of courses
of action.
• In this sense planning is essentially decision making, although it is much more.
• In any type of organization, planning is the responsibility of management
•The organisational plan that results from the planning process details the goals to be
attained.
•The pattern of decisions managers take to reach these goals is the organisation’s strategy
Importance of Planning
• Minimizes risk and uncertainty
• To focus attention on objectives
• Participation: all relevant stakeholders are involved in setting future goals.
• Sense of direction & purpose: Planning sets goals and strategies for all
managers.
• Coordination: Plans provide all parts of the firm with understanding about
how their systems fit with the whole.
• Control: Plans specify who is in charge of accomplishing a goal.
• To offset uncertainty and change
Types of Plans
• Plans may be classified as standing plans or single-use plans.
• A standing plan is one which formulated once and is repeatedly used.
• Continuously guide the managers
• Involves modification when required
• A single-use plan is designed for the attainment of specific objectives,
problem or event
• One time use, may be discarded after use, recreated whenever
required.
Types Of Plans Cont.

Policies
Rules
Standing plans
Procedures
strategies
Types of plans
Programmes
Single use plans Budgets
schedules
Types of Plans
• Single-Use Plans
• A single-use plan is developed to carry out a course of action that is
not likely to be repeated in the future. The two most common forms
of single-use plans are programs and projects.
• A program is a single-use plan for a large set of activities. It might
consist of identifying procedures for introducing a new product line,
opening a new facility, or changing the organization’s mission.
• A project is similar to a program but is generally of less scope and
complexity. A project may be a part of a broader program, or it may
be a self-contained single-use plan.
Types of Plans
• Standing Plans- Whereas single-use plans are developed for
nonrecurring situations, a standing plan is used for activities that
recur regularly over a period of time. Standing plans can greatly
enhance efficiency by making decision making routine. Policies,
standard operating procedures, and rules and regulations are three
kinds of standing plans.
• Policies As a general guide for action, a policy is the most general
form of standing plan.
• A policy specifies the organization’s general response to a designated
problem or situation.
Types of Plans Cont.
1. Objectives- desired results that an organization wants to achieve
within a specified time period. Objectives are also known as
purpose, mission or goal. Objectives should be SMART
2. Strategies - give directional clues on how the organization will
achieve the objectives.
3. Policies- general response to a situation, guide to take decisions,
less rigid. E.g. admission policy, no credit policy. They are guidelines
in decision making. These are set boundaries around which
decisions are made.
Types of Plans Cont.

4. Rules- are state specific action for particular situations. Rules are more rigid
5. Procedures- detailed instructions necessary for the successful carrying out of
an activity. Helps in implementation of a policy
6. Programmes- it’s a combination of policies, objectives, rules and procedures.
7. Budgets – are statements in quantified terms, of future expenditures and
revenues reflecting resources allocated to specified activities within a stated
period of time
Steps in Planning
1. Being aware of opportunity-environmental scanning (SWOT analysis)
2. Establishing objectives (SMART)- once opportunities are identified, objectives
for the entire organization and then for each unit or department must be
established. Objectives specifying the results expected, indicate the end points
of what is to be done, where the
3. Establish planning premises- premises are assumptions about the market
conditions which becomes the basis for current planning process. Premises are
needed about both internal and external environmental factors. Internal factors
include expected changes in key personnel, cash flow and capital budgeting,
organizational structure, production technology, and management philosophy.
External factors include legislation, political climate, general economic conditions,
industry trends, consumer attitudes and behaviour, competition, and so on.
Steps in Planning
4. Determining alternative courses of actions- all plans have alternative
courses of action. The number of alternatives should be reduced
so that those promising the most fruitful possibilities may be
analysed.
5. Evaluating alternative courses - having sought out alternatives
courses and examined their strong and weak points, the next step is
to evaluate them by weighing the various factors in the light of
premises and goals.
6. Selecting a course of action - this is a stage at which a plan is
adopted – the real point of decision making.
Steps in Planning

7. Formulating derivative plans- management has to formulate derivative plans/

secondary plans to support the basic plan. Derivate plans are sub plans or
departmental plans.
8. Numbering plans by budgeting- after decisions are made and plans are set, the
next step is to convert them to budgets. The overall budgets of an organization
represent the sum total of income and expenses. Each department or program
of a business can have its own budgets, usually of expenses and capital
expenditures, which tie into the overall budget. It done well, budgets become
important standards against which planning progress can be measured.
9. Implementing the plan- bring the plan to fruition through the courses of actions
selected e.g. building a plant.
The Planning Process-Key issues
• Planning involves an Open-System Approach (consider the
relevant STEEPLE factors)
• Environmental Forecasting
• Economic Forecasting
• Technological Forecasting
• Social and Political Forecasting
Why People Fail in Planning
• Lack of commitment to planning
• Psychological difficulties
• Lack of meaningful objectives or goals
• Tendency to underestimate the importance of planning premises
• Failure to see the scope of plans(objectives or goals, strategies,
policies, rules, procedures, and budgets
• Failure to see planning as a rational process (clear goals, knowledge of
alternatives, ability to analyse alternatives)
• Excessive reliance on experience
Why People Fail in Planning Cont.
• Technical problems (lack of technical skills to solve problems)
• Lack of clear delegations
• Lack of top management support
• Resistance to change
Limitations to Planning
• Planning is not an easy task
• Cost
• Complexity of the planning process
• Problem of rapid change e.g. technology
• Political climate
• Labour organization
• Current crisis
• Capital Investment
Establishing a Climate
• It is critical that every manager establish a climate for planning.
• Planning must forced
• Planning should start at the top (also bottom-up)
• Planning must be organized
• Planning must be defined
• Goals, premises, strategies and policies must be communicated
• Training
• Explaining the objectives of planning
• Planning participation
Kinds of Organizational Plans
Organizations establish many different kinds of plans. At a general level, these include strategic, tactical, and
operational plans.
1. Strategic Plans - Strategic plans are the plans developed to achieve strategic goals. More precisely, a
strategic plan is a general plan outlining decisions of resource allocation, priorities, and action steps
necessary to reach strategic goals. These plans are set by the board of directors and top management,
generally have an extended time horizon, and address questions of scope, resource deployment,
competitive advantage, and synergy.
2. Tactical plan - aimed at achieving tactical goals, is developed to implement specific parts of a strategic
plan. Tactical plans typically involve upper and middle management and, compared with strategic plans,
have a somewhat shorter time horizon and a more specific and concrete focus. Thus tactical plans are
concerned more with actually getting things done than with deciding what to do. Tactical planning is
covered in detail in a later section.
3. An operational plan - focuses on carrying out tactical plans to achieve operational goals. Developed by
middle and lower-level managers, operational plans have a short-term focus and are relatively narrow in
scope. Each one deals with a fairly small set of activities. We also cover operational planning in more detail
later.
Time Frames for Planning (Planning
horizons)
• Time horizon: refers to how far in the future the plan applies.
• Long-term plans- The time span for long term plans varies from one
organization to another. For our purposes, we regard any plan that
extends beyond five years as long term. Managers of organizations in
complex, volatile environments face a special dilemma. These
organizations probably need a longer time horizon than do
organizations in less dynamic environments, yet the complexity of
their environment makes long-range planning difficult. Managers at
these companies therefore develop long-range plans but also must
constantly monitor their environment for possible changes.
Time Frames for Planning (Planning
horizons)
• Intermediate plan - is somewhat less tentative and subject to change
than is a long-range plan. Intermediate plans usually cover periods from
one to five years and are especially important for middle and first-line
managers. Thus they generally parallel tactical plans. For many
organizations, intermediate planning has become the central focus of
planning activities.
• Short-term plans, which have a time frame of one year or less. Short-
term plans greatly affect the manager’s day-to-day activities. There are
two basic kinds of short-term plans. An action plan used to
operationalize any other kind of plan. A reaction plan is a plan
developed to react to an unforeseen circumstance.
Planning Levels In Organisations
• Corporate-level: decisions by top managers.
• Considers on which businesses or markets to be in.
• Provides a framework for all other planning.
• Business-level: details divisional long-term goals and structure.
• Identifies how this business meets corporate goals.
• Shows how the business will compete in market.
• Functional-level: actions taken by managers in departments of
manufacturing, marketing, etc.
• These plans state exactly how business-level strategies are accomplished.
Who Plans?
• Corporate level planning is done by top managers.
• Also approve business and functional level plans.
• Top managers should seek input on corporate level issues from all
management levels.
• Business and functional planning is done by divisional and functional
managers.
• Both management levels should also seek information from other levels.
• Responsibility for specific planning may lie at a given level, but all managers
should be involved.
What is MBO?
• MBO is a system in which specific performance objectives are jointly
determined by subordinates and their supervisors, progress toward
objectives is periodically reviewed, and rewards are allocated on the
basis of that progress.
MBO Cycle
Benefits and Weaknesses of MBO
Benefits of MBO
• MBO blends planning and control into a
rational system of management.
• MBO forces an organization to develop
a top-to-bottom hierarchy of objectives.
• MBO emphasizes end results rather
than good intentions or personalities.
• MBO encourages self-management and
personal commitment through
employee participation in setting
objectives.
Weakness of MBO
• MBO takes too much time and effort
and generates too much paperwork.
• Failure to teach the philosophy of MBO
• Failure to give guidelines to goal setters
• Difficulty of setting goals
• Emphasis on short run goals
• MBO's emphasis on measurable
objectives can be used as a threat by
overzealous managers.
How Can Managers Plan Effectively in
Dynamic
Environments
• How can managers effectively plan when the external environment is
continually changing?
• We already discussed uncertain environments as one of the contingency
factors that affect the types of plans managers develop.
• In an uncertain environment, managers should develop plans that are
specific, but flexible.
• Managers need to recognize that planning is an ongoing process. The plans
serve as a road map although the destination may change due to dynamic
market conditions.
• They should be ready to change directions if environmental conditions
warrant. This flexibility is particularly important as plans are implemented.
How Can Managers Plan Effectively in
Dynamic
Environments
• Managers need to stay alert to environmental changes that may impact
implementation and respond as needed. Keep in mind, also, that even
when the environment is highly uncertain, it’s important to continue
formal planning in order to see any effect on organizational performance.
• Finally, make the organizational hierarchy flatter to effectively plan in
dynamic environments.
• This means allowing lower organizational levels to set goals and develop
plans because there’s little time for goals and plans to flow down from
the top. Managers should teach their employees how to set goals and to
plan and then trust them to do it.
END