PLANNING
WHAT IS PLANNING?
PLANNING
➢ Planning is the selection and relating of
facts and making and using of
assumptions regarding the future in the
visualization and formalization of the
proposed activities believed necessary to
achieve desired result. –
George R. Terry
CHARACTERISITICS
➢ Determines the future.
➢ Requires forecasting.
➢ Involves decision-making
➢ Undertaken at all levels.
➢ Flexible
➢ Pervasive and continuous
WHY PLANNING?
OR
IMPORTANCE OF PLANNING
NEED OF PLANNING
➢ Primacy of planning
➢ To offset change and uncertainty
➢ To focus attention on objectives
➢ To help in coordination
➢ To help in control
➢ To increase organizational
effectiveness.
THE HIERARCHY OF
ORGANIZATION PLANS
Mission statement
Strategic plans
Operational plans
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MISSION STATEMENT
➢ Broad org. goals , based on planning
premises , which justifies an organization’s
existence.
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STRATEGIC PLANS
➢ Are plans designed to meet an
organizational goals.
➢ Designed by high – ranking managers.
➢ It deals with the relationship between
people at organization and people acting
at other org.
➢ Time horizon- look ahead several years
back
OPERATIONAL PLANS
➢ Plans that contain details for carrying out,
or implementing, those strategic plans in
day-to day activities.
➢ They deal with people within the
organization.
➢ Time horizon- relevant time period is often
a year.
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STRATEGIC MANAGEMENT
PROCESS
➢ Themanagement process that involves an
organization’s engaging in strategic
planning and then acting on those plans.
STRATEGIC MANAGEMENT
PROCESS
Goal setting
Strategic
planning
strategy formulation
administration
Strategic
implementation
Strategic control
LEVEL OF BUSINESS
STRATEGY
➢ Corporate-level strategy
➢ Business-unit strategy
➢ Functional –level strategy
➢ Operating plans
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CORPORATE-LEVEL STRATEGY
➢ Strategy formulated by top management to
oversee the interest and operations of
multiline corporation.
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BUSINESS –UNIT STRATEGY
➢ Strategy formulated to meet the goals of a
particular business.
➢ Also called line - of - business strategy.
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FUNCTIONAL –LEVEL
STRATEGY
➢ Strategyformulated by an specific
functional area in an effort to carry out
business-unit strategy.
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STEPS IN PLANNING
➢ Identification of problem.
➢ Perception of opportunities
➢ Establishing objectives
➢ Planning premises
➢ Identification of alternatives
➢ Evaluate alternatives
➢ Choice of alternative
➢ Formulation of supporting plans
➢ Establishing sequence of activities.
PROBLEM
➢A situation when an actual state of affairs
differs from the desire state of affairs.
➢A problem is an opportunity in
disguise.
THE PROBLEM-FINDING
PROCESS
➢A deviation from past.
➢ A deviation from set plans.
➢ Other people.
➢ The performance of the competitors.
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OPPORTUNITY
➢A situation when the circumstances offer
an organization the chance to exceed
stated goal.
➢ Dialectical inquiry method is used in
problem solving and opportunity finding.
Being Aware of Opportunity
➢ In light of:
➢ The Market.
➢ Competition.
➢ What customers want.
➢ Our strengths
➢ Our weaknesses
➢ Planning requires a realistic diagnosis of
the opportunity situation.
Setting Objectives or Goals
➢ Where we want to be
➢ And what we want to accomplish
➢ And when
➢ Objectives give direction to the major
plans
Considering Planning Premises
➢ In what environment – internal or external
– will our plans operate?
➢ Premises: assumptions about the
environment in which the plan is to be
carried out
➢ The major principle of planning premises
is this: the more thoroughly individuals
charged with planning understand and
agree to utilize consistent planning
premises, the more coordinated enterprise
planning will be.
Identifying Alternatives
➢ What are the most promising alternatives
to accomplishing our objectives?
➢ Search for alternative course of action
➢ Reducing the number of alternatives to
analyze the most promising.
Comparing Alternatives in Light
of Goals
➢ Which Alternative will give us the best
chance of meeting our goals at the lowest
cost and highest profit?
Choosing an alternative
➢ Settingthe course of action we will pursue
➢ The real point of decision-making
Formulating Supporting Plans
➢ Such as plans to:
➢ Buy equipment
➢ Buy materials
➢ Hire and train workers
➢ Develop a new product
Quantifying Plans by Making
Budgets
➢ Develop such budgets as:
➢ Volume and price of sales
➢ Operating expenses necessary for plans
➢ Expenditures for capital equipment