UNIT 2

PLANNING
Source: Principles of Management
By TRIPATHI & REDDY

1
 OBJECTIVE OF STUDY

Nature and Purpose of Planning.

Importance of Planning.
Forms of Planning.
Types of Plans.
Steps in Planning.
Limitation of Planning.

2
 Nature and Purpose of Planning
 Beginning of the process of management.
 Planning is an intellectual process.

 Decision Making is an integral part of planning.

 Manager has to decide on Goals, assumption, resource

 Planning is a continuous process.

(principle of navigational change)

 Plan must be flexible.

Flexibility in FIVE major areas

Technology, Market ,Finance, Personnel and organization
 Planning is an all-pervasive function.

3
 Importance of Planning

 Minimizes Risk and Uncertainty

 Leads to success

 Focuses attention on the organization’s goals

 Facilitates Control

4
 Forms of Planning
Strategic Planning Tactical Planning
 1. Decides major goals and  1. Decides the detailed use
policies of allocation of of resources for achieving
resources to achieve the each goals.
goals.
 [Link] at the HIGHER level  [Link] at the LOWER
of management level of management
 3. It is LONG-TERM  3. It is SHORT-TERM
 [Link] based ON  [Link] based PAST
LONG-TERM FORECAST
PERFORMANCE of the
about technology, political
organization and is less
environment and is more
uncertain.
certain.

5
 Forms of Planning

 Strategic Planning  Tactical Planning

 5. It is less detailed  5. It is more detailed
because it is not because it is involved
involved with the with the day-to-day
day-to-day operations operations of the
of the organisation.. organisation..

6
 Types Of Plan
Objectives

Strategies

For Non-repetitive Activities For Repetitive Activities

Single-Use Plan Standing Plan

(Programmes and Budgets) (Policies ,Procedures,
Methods and Rules)

7
 Objectives

 Objectives are the goals which the management wishes the

organization to achieve. (Specific Targets)
 Objective should be distinguished from other words “Vision”,
”Purpose” and “Mission”
 Vision: is the dream that an entrepreneur creates in his /her
waking hours of his/her preferred future.
 Purpose: The primary role defined by the society in which it
operates. (Broad Aim)
 Mission: It is the unique aim that sets the organisation apart
from others of its types. (specialization)

8
 Characteristics of Objectives

 Objectives are multiple in number.

( Market standing,innovation,prductivity,profitability, manager performance
and development,workers performance and attitude, Public responsibility)
 Objectives are either tangible or intangible.
 Objectives have a priority.

E. g.: Finance department, University

 Objectives are generally arranged in hierarchy

(Corporate Objectives, divisional objectives, section

objective, individual objectives)
 Objectives sometimes clashes with each other

9
 Requirement of sound objectives

 Objectives must be both clear and acceptable

 Objectives must support one another
(There must be close-Knit between long-range and
short term objectives)
 Objectives must be precise and measurable
 Objectives should always remain valid

10
 Advantage of objectives
 Provide basis for planning
 Acts as a motivators for individuals and department.
 Eliminates haphazard actions
 Facilitates the coordinated behavior of various groups.
 It functions as a basis for managerial control
 Facilitate the better management of the enterprise
 Lessen the misunderstanding and conflicts and
facilitate the communication
 Provide legitimacy of organization's activities

11
 Strategies
Two important activities involved in strategy formulation
are….
 Environmental appraisal
1. Political and legal factors
2. Economic factors
(level of eco development & distribution of income, trend in prices
,exchange rate ,BOP, supply of labour, material, capital)
1. Competitive factors
2. Social and cultural factors
 Corporate Appraisal
( leadership, excellent product design, efficient distribution and customer
service, logistics, effective sales promotion, ability to influence legislation)

12
 Single-Use Plan
(Non-Repetitive Activities)
 Single-use plans are developed to achieve a specific ends;
when that end is reached ,then the plan is dissolved.
 Programmes: are the precise plan or definite steps in
proper sequence which needs to be taken to discharge a
given task.
E.g. Introducing new product in market, deputing employees
for training
(Ingredients of Programme: time phasing and Budgeting)
 Budgets: It is the plan for the future period of time
containing the statements of expected results in numerical
terms.
E.g. Sales Budget, Production budget, Cash Budget,
Revenue and expenses budget
13
 Standing Plan

There are Four Types of Standing Plan

 (A) Policies

 (B) Procedures

 (C) Methods

 (D) Rules

14
(A) Policy
 “Policy is a verbal, written, implied overall guide, setting
up boundaries that supply the general limits and direction
in which the managerial actions will takes place “ .
-George R Terry
Advantages of Policy
 1. Ensure the Uniformity of actions in respects of various

matters at various organizational points.

 2. Speed up the decisions at the lower levels

 [Link] is easier to delegate the authority to the subordinates

 4. Policies give a practical shape to the objectives by

elaborating and directing the way in which the

predetermined objectives are to be attained
15
 Types of Policy
On the basis of sources
 1. Originated Policies

 2. Appealed Policies

 3. Implied Policies

 [Link] imposed Policies

 On the basis of functions

 On the basis of organizational level

(Major Company policies, Minor derivative policy

applicable to segments)

16
Guideline for effective policy-
making
 Should be in writing and understood by all.
 Reflects the objectives of organization, define
method and action.
 Top managers and Subordinates should participate in
its formulation
 Must strike a balance between stability and
flexibility.
 Policies should not pull in different directions
 Should not be detrimental to the interest of society
 Should cover as many contingencies as possible
 Policies should be periodically reviewed
17
Procedures
A Procedure Provides a detailed set of instructions for
performing a sequence of actions involved in doing a
certain piece of work

Policies Procedure
 Guide to both thinking and  Guide to action only for
actions of people at higher people at lower level
level  Shows the way to implement
 Helps in fulfilling the the policies
objectives  Are specific and lay down the
 are broad and allow some sequence of definite act
discretion  Often established after
 Often established without any thorough study and analysis of
detailed study work
18
Advantages & Limitation of
Procedure
Advantages
 Standard way of performing a task

 Work simplification and elimination of

unnecessary steps
 Facilitates control over performance

 Enable the employee to improve their efficiency

Limitation
 Limits the scope for innovation

19
Methods and Rules

Methods:
Prescribed way in which one step of a procedure it to be
performed.
 It helps in increasing the effectiveness and usefulness of

procedure.
Rules:
Detailed or recorded that a specific actions must /must not
be performed in a given situations.
e.g. Sanctioning overtime, travelling allowance ,Uniform
way of handling employee

20
 Steps in Planning
1. Establishing verifiable goals or set the goals to
be achieved.
2. Establishing Planning premises.
3. Deciding the planning period.
4. Finding alternative courses of action.
5. Evaluating and selecting a course of action.
6. Developing derivative plans.
7. Measuring and controlling the progress.

21
STEP 1. Set the goals to be achieved

 Desired sales volume or sales growth

 Development of a NEW product

 More abstract goals like becoming more popular in

the community.
Setting the goals will depend on a number of factor…
[Link]
2. Value
3. Actual and potential abilities of the organisation

22
STEP 2. Establishing Planning Premises

Planning Premises: assumptions about the future

(A) Internal and External Premises.

(B) Tangible and Intangible Premises.

(C) Controllable and Non-controllable Premises.

23
Steps 3: Deciding the planning period

Factor influencing the choice of the period…

(A) Lead time in development and

commercialization of a new product

(B) Time Required to recover the capital

investments or the pay back period.

(C) Length of the commitment already made.

24
 Steps 4: Finding the alternative courses of action
E.g. Technological Know-How, Product distribution
 Steps 5: Evaluating and selecting the best course of

action
 Steps 6: Developing the derivatives Plan

Derivative Plan: Broad goals must be translated into

day-to-day operations of the organization.
 Steps 7: Measuring and controlling the progress

25
 Limitation of Planning

 1. Planning is an expensive and time-consuming

process.
 2. Planning sometimes restricts the organization
to the rational and risk-free opportunities.
 3. The scope of planning is limited in
organization with rapidly changing situations.
 4. Flexibility of planning can not be maintained.
 5. Difficulty of formulating accurate premises.
 6. Planning may sometimes face peoples
resistance to it.

26
27