TOPIC 2
PLANNING
Lecturer:
Abang Sulaiman AS
Course Code:
MGT400
Lesson outcomes
Definition and the importance of planning
and goals
Types of planning (Strategic planning &
Operational planning)
Barriers to effective planning
Ways to overcome barriers to planning
2 Planning
Planning
Planning Defined
– The process of outlining the activities that
are necessary to achieve the goals of the
organization.
A Plan
– A blueprint for action that prescribes the
activities necessary for an organization to
realize their goals.
3 Planning
Purpose of Planning
The purpose of planning is simple—to ensure that
the organization is both effective and efficient in its
activities.
Help determine opportunity
Identify course of actions
Avoid risk, utilise resources
Achieve goals and reduce overlapping
Attain confidence & identify future changes
4 Planning
Why Plan?
As “Road map”
Better Coordination
Focus on Forward Thinking
Participatory work environment
More Effective Control System
5 Planning
The Benefits of Planning
A “Road map”
– Planning provides a guide and direction
Better Coordination
– Planning provides a foundation for the coordination
of a broad range of organizational activities.
– A plan helps to define the responsibilities of
individuals and work groups and helps coordinate
their activities.
6 Planning
The Benefits of Planning (cont’d)
Focus on Forward Thinking
– The planning function forces managers to think ahead and
consider resource needs and potential opportunities or threats
that the organization may face in the future.
Participatory Work Environment
– Successful planning requires the participation of a wide range
of organizational members.
More access to a broad base of experience and knowledge
in the planning process.
More “buy in”—organizational members are more likely to
accept a plan that they have helped develop.
7 Planning
The Benefits of Planning (cont’d)
More Effective Control Systems
– An organization’s plan provides a foundation for control of
the processes and progress of the company.
– The implementation of the plan can be evaluated and
progress toward the achievement of performance objectives
can be monitored.
– Controls provide mechanism for ensuring that the
organization is moving in the right direction and making
progress toward achieve its goals.
8 Planning
Planning as a Linking Mechanism
Goals
Provide a clear,
engaging sense
of direction and
specify what is to
be accomplished.
9 Planning
Planning as a Linking Mechanism
Goals Control
Provide a clear, Monitor the extent
engaging sense to which goals have
of direction and been achieved and
specify what is to ensure the organ-
be accomplished. ization is moving in
the right direction
10 Planning
Planning as a Linking Mechanism
Goals Plans Control
Relationship among goals,
plans, and controls.
11 Planning
Cost of planning
Management time
Delayed decision making
12 Planning
Where Should Planning Begin?
↓Top-Down Planning↓
Planning efforts begin with the board
of directors and top executives of the
firm
↑Bottom-Up Planning↑
Planning is initiated at the lowest level
in the organization
13 Planning
Advantages of Each Planning
Approach
Top-Down Planning
– Top managers, who are the most knowledgeable
about the firm as a whole, drive the development
of the plan.
Bottom-Up Planning
– The people closest to the operating system,
customers, and suppliers drive the development
of the plan.
14 Planning
Goals
Goals
– Target which activity is aimed
– Are very broad statements of the results that an
organization wishes to achieve in the long run.
– Relate to the mission and vision of the
organization and specify the level of performance
that the organization wants to achieve.
15 Planning
Goals (cont’d)
SMART goals are:
– Specific…
– Measurable…
– Achievable…
– Realistic/ Results-oriented…
– Timeline
16 Planning
MISSION
The reasons for which the organization exists
Reflects its fundamental reason existence
Expressed in a statement that provides
strategic directions to the members of an
organization
17 Planning
MISSION STATEMENT
Should have 3 primary aspects:-
Its target markets (WHO)
Its primary products & services (WHAT)
An outline of overall strategy for delivering
these products & services to satisfy
customers in the target market (HOW)
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IMPORTANCE OF MISSION
STATEMENT
Promotes unity
Helps allocate scarce resources
Helps move from ideas to action
Establishes culture
19 Planning
Type of planning
Strategic Plans
Operational Plans
20 Planning
Strategic Plan
Long term planning
done by top
management to
determine the overall
organizational purpose
and objectives and
how they are achieved
21 Planning
Levels of Strategic Planning
PLANNING FOCUS
Corporate “What business should we be in?”
“How do we compete in our existing
Business
lines of business?”
“How do we implement our
Functional
corporate and business strategies?”
22 Planning
Operational Planning
Operational Planning
– Focuses on the day-to-day activities that are necessary to
achieve the long-term goals of the organization.
Operational Plans
– Are more specific, address shorter-term issues, and are
formulated by mid- and lower-level managers who are
responsible for the work groups in the organization.
– Can be categorized as either standing or single-use
plans.
23 Planning
Single-Use Plans
Single-Use Plans
– Are developed to address a specific organizational
situation. They include:
Programs: govern a relatively comprehensive set of activities
that are designed to accomplish a particular set of goals.
Projects: direct the efforts of individuals or work groups
toward the achievement of specific, well-defined objectives.
Budgets: specify how financial resources should be allocated.
24 Planning
Standing Plans
Standing Plans
– Designed to deal with organizational issues or
problems that recur frequently. They include:
Policies: general guidelines that govern how certain
organizational situations will be addressed.
Procedures: more specific and are designed to give
explicit instructions on how to complete a recurring task.
Rules: provide detailed and specific guidelines and limits
for action.
25 Planning
Individual Plans
Increasingly, organizations are looking for
ways to translate boarder organizational
plans to the level of individual employees.
Two approaches for doing so include:
– Management by Objectives
– The Balanced Scorecard
26 Planning
Management by Objectives (MBO)
A method for developing individualized plans
which guide the activities of individual
members of an organization.
27 Planning
MBO Benefits
Provides a foundation for a more integrated
and system-oriented approach to planning.
Requires communication between employees
and their managers since they must agree on
the performance goals outlined in the plan.
Creates a participatory work environment
where employees have a voice in how their
jobs are designed and what their performance
targets should be.
28 Planning
MBO Disadvantages
Requires time and commitment of top
management.
May require excessive paperwork.
May create a tendency to focus on short-
term vs. long-term planning.
Can be difficult to establish and
operationalize.
29 Planning
MBO
Program
Steps
30 Planning
The Balanced Scorecard (BSC)
A system-wide performance measurement
process that aligns individual goals with the
strategic goals of the organization.
– Allows an organization to translate strategy
into operational actions at every level.
– Ensures employees that their individual
action plans and goals are consistent with
the overall strategic direction of the
organization.
31 Planning
Measuring Performance with the
BSC
Measurement Implications for
Key Principles
Criteria Leaders
Align to the Understand the “big
Customers
strategy picture”
Translate strategy
Internal BSC measures
to operational
Processes performance at all levels
terms
View strategy as a Execute strategy into
Innovation
continual process action
Make strategy Empower frontline
Growth
everyone’s job employees
32 Planning
Barriers to Effective Planning
Demands on the manager’s time
Ambiguous and uncertain operating environments
Resistance to change
Lack of meaningful objectives of goals & commitment
33 Planning
Barriers to Effective Planning
(cont’d)
Failure to see scope of plans
Rely too much on experiences
Lack of top management support & clear
delegation of authority
Lack of adequate control technique &
information
34 Planning
Overcoming the Barriers to
Planning
Apply Management Functions
– Priority, use of plan, delegate, communicate & coach
employees
Involve Employees in Decision Making
– Input from all levels of a firm is essential for successful
planning
35 Planning
Overcoming the Barriers to
Planning
Take Advantage of a Diversity of Views
– Diverse views lead to a broader assessment of
organizational problems and opportunities.
Encourage Strategic Thinking
– Effective strategic thinking can be developed through
training and practice.
36 Planning
Ifyou are failed to plan, then you
are planning to fail.
37 Planning