Planning

Purvish Shah - NavigatorPurvish Shah - Navigator

The Nature and Purpose The Nature and Purpose of of

PlanningPlanning

Planning Definition :

Planning is the design of a desired future and of effective ways of bringing it about.

Planning is looking ahead in order to visualize and decide a future course of action to allow to achieve a desired goal.

Purposes of Planning • In business (and in life ) things are so complex that

without proper planning they can not be handled.

• It is a pre- requisite not only to achieve success but even to survive in a complex and competitive world.

• It helps in determining opportunities • It helps in identification of courses of action.• It helps in proper utilization of resources effectively.• It helps in working in an organized manner.

Nature of Planning

1. Planning is the most important function of management.

2. Planning has central role in linking all other managerial functions.

3. Planning is pervasive and oversees all other

managerial functions.

Functions of Managers

•Planning

•Staffing

•Organizing

•Leading

•Controlling

Managerial Skills•Human

•Conceptual

•Design

•Technical

All functions and skills are linked to planning function.

Benefits of Planning

• Planning leads to success.

• It acts as a bridge between where we are

and where we want to be.

• It helps in saving resources, money and

• Jobs are well coordinated thus duplication

of effort is avoided and skills and

potentials are fully utilized.

Myths about Planning

• Planning that proves inaccurate is a waste of

management time.

• Planning can eliminate change.

• Planning reduces flexibility.

Is a pre-determined course of action.

•It brings orderliness.

•Avoids confusion.

•Gives better use of resources.

•Cuts waste.

Plans are changed or modified but not

abandoned.

Effectiveness:

is the achievement of objective.

Efficiency: Is the achievement of objective with least amount of resources.

Effectiveness of Plans

Effectiveness of plan pertains to the

degree to which it achieves its objectives.

Efficiency of plan refers to its attainment of

objective at a reasonable cost.

Efficiency of Plans

Types of Plans • Single use or one time plans

• Standing Plans

• Specific Plans

• Subject Plans

• Directional Plans

• Short Term Plans

• Long Term Plans

• Operational Plans

• Strategic Plans

Single Use or One Time Plan

It is specifically designed to meet the needs of

a unique situation and is created in response to

non-programmed decisions that managers

Standing Plans

Ongoing plans that provide guidance for

activities repeatedly performed and are created

in response to programmed decisions that

managers make.

Specific Plans

These plans are clearly defined and explicit and

leave no room for interpretation.

Subject Plans

These plans are limited to one particular aspect

of an organization’s activates.

Marketing

Production

Recruitment

Financial

Manpower etc

Directional Plans

These are flexible plans that set out general

guide lines and permit considerable discretion to

users.

Short Term Plans

Plans that are formulated to cover a period of less

than one year.

Long–Term Plans

Plans that are formulated to extend upto

beyond five years.

Operational Plans

Plans that specify details on how overall

objectives are to be achieved.

Strategic plans

These plans are organization–wide, establish

overall objectives and position an organization

in term of its environments.

Cornerstone of Planning

Objectives

• Multiplicity of objectives

• Stated objectives • Real objectives

• Traditional objective setting

Objective

It is a desired outcome for groups or an entire

organization.

It is a desired out come for an individual.

Stated Objectives

Official statements of what an organization says and what it wants public to believe.

Real Objectives

Objectives that an organization actually pursues, as defined by the action of its

Management.

Traditional Objective Setting

Objectives are set at the top and then broken down into sub-objectives for each level in an organization. The top imposes its standards on every one below.

Principle of Planning

The more thoroughly individuals charged with planning understand and agree to utilize consistent planning premises the more coordinated and realistic planning will be.

Components of Plans Mission

Objectives

Premises

Policies

Procedures

Budgets

Mission

The purpose of an organization is called its mission.

Policies

Guidelines that establish parameters for making decisions.

Premises

This is the anticipated environment in which

plans are expected to operate and include

forecasts of the future and conditions that are

likely to affect the operation in future.

Procedures

A series of interrelated sequential steps that can

be used to respond to a structured problem.

Explicit statements that tells managers what

they ought or ought not to do.

Structured problem

It is a straightforward, familiar and easily

defined problem.

Non Structured problem

A new problem for which information is

ambiguous or incomplete.

Budget

A budget is a numerical plan for allocating

resources to specific activities.

A budget is a statement of expected results

expressed in numerical terms.

Types of Budget

Revenue: A budget that projects future

Expense: A budget that lists the

primary activities by a unit and allocates amount to each

Profit: A budget to determine a unit’s

contribution to overall profit of an organization

Cash:A budget that forecasts how much an organization will have and how much it will need to meet expenses

Capital Expenditure:A budget that forecasts investments in property, buildings and major equipment.

Fixed:A budget that assumes a fixed level of sales or production.

Variable:A budget that takes into account those cost that vary with volume of production.

Approaches to Budgeting

Incremental (or traditional)

A budget that allocates funds to various activities

according to allocations in the pervious period

(and adjusted to cater for inflation etc)

Zero-base

A system in which budget requests start form

scratch regardless of pervious budgetary

allocations.

Steps in Planning

Pre-requisite : Awareness of opportunities

1st: Establishing Objectives 2nd: Developing Premises 3rd: Determining Alternative Courses 4th: Evaluating 5th: Selecting Best Course

Post-requisiteDerivative or Supportive Plans

Awareness of Opportunities

• Not strictly a step in planning process. But it is a real starting

point.

• Managers must look at possible opportunities in the light of their

organization's strengths and weaknesses

• Must also look at future environment both external and internal.

• Setting realistic objectives depends on this awareness.

1st Step: Establishing Objectives

• Selecting objectives for the entire organization.

• Based on organizational objectives, establishing objectives for each

subordinate work unit.

Organizational objectives give direction to the major plans, which define

objectives for every major department.

Major departmental objectives control objectives of subordinate departments.

2nd Step: Developing Premises

Developing premises is critical to planning. These include:

. Forecasts

. Basic Policies

. Existing Plans

. Anticipated Environment

3rd Step: Determining Alternative Courses

• There is seldom a plan for which reasonable

alternatives do not exist.

• Common problem is not finding alternatives

but reducing their numbers.

• Most fruitful possibilities must be looked at.

4th Step: Evaluating Alternative Courses

• Evaluate courses by examining their strong and

weak points.

• Weigh them in the light of premises and objectives.

• Complex courses can be evaluated with the help of

operational research, mathematical and computing

techniques.

Evaluating Alternative Courses

1. Establishing criteria

2. SFA test

5th Step: Selecting the Best Course

Selecting the best course is the real point of decision

making.

By establishing criteria, eg

Achieving objectives at least cost

Requiring least changes

Ensuring maximum return on investment

SFA Test

Planning

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