Definition and Nature of Planning

NATURE OF PLANNING
• Planning is a complex, comprehensive intellectual management process, focused on
proper selection of goals and objectives and developing a course of action on the tasks
and resources to be employed to achieve these goals and objectives for future
organizational performance. It is the initial and chief function of management will all
other function like organizing, staffing, directing and controlling, dependent on it.
Essential characteristics of planning

1. Planning is crucial
Basic management function with all other function of management largely interconnected
to it
2. An intellectual process- Number of steps are to be taken to choose the best future
course of action
3. A continuous function- dynamic process that need frequent revisions based on the
nature of environment.

4. Planning is flexible – any one of the available alternatives is selected, through the best
option is implemented based on certain assumption.
5. For all managerial function – Planning is an all-encompassing function of management
which is all present at all levels and all departments of an organization.
6. Planning contributes to the objectives – A decisive, sound and efficient planning
process recognizes how and when to tackle a problem that will lead to the attainment of
goal and objectives.
7. Future is always full of uncertainties – Planning helps in foreseeing in a business
organization which may be caused by changes.
8. Better utilization of resources – Planning makes useful and appropriate use of
organization resources.
9. Increase organization effectiveness- Effectiveness guarantees that the organization is in
the best position to attain its goal and objectives owing to improve efficiency of the
organization via planning.
10. Reduces the cost of performance – The choice of only one course of action among the
different course of action
 11. Helps in coordination – Various departments work based with the general plans of the
organization which creates harmony in the organization and avoid duplication of effort
and conflict of jurisdiction
12. Delegation is facilitated – An excellent plan constantly makes possible delegation of
authority in a better approach to subordinates
Importance of Planning
• Planning provides directions
• Planning reduces risks of uncertainty
• Planning reduces overlapping and wasteful activities
• Planning promotes innovative ideas
• Planning facilitates decision making
• Planning establishes standards for controlling
Steps involved in Planning
1. Defining current situations
2. Establishing goal and objectives - an objective that follow S-M-A-R-T
is more likely to succeed because it is
SPECIFIC – clear
MEASURABLE –way to quantify the completion
ATTAINABLE – Likely to happen
RELEVANT– significant to you and in the society
TIME – time bound
Goal and Objectives
Goal: To earn profit through limiting expenses ( broad,general result and long term)
Objectives: To increase profit by to 5% in 12 months (definite, specific and short term)
3. Establishment of planning premises – Internal (SWOT) and external (PEST)
4. Determining alternative courses of action
5. Evaluating all alternatives
6. Choosing a course of action
7. Devising supporting plans – divide for the completion of master plan
 8. Establishing succession of activities- Timeframe
9. Feedback action – observe if the plan is working soundly if not it should be changed.
Types of Plan at different management level
A. TOP LEVEL MANAGEMENT / MANAGERS
Activities:
1. Determines the objectives, policies and plans of the organization
2. Assembles and bring together available resources
3. Does mostly the work of thinking, planning and deciding
4. Spends more time in planning and organizing
5. Prepares long term plans of the organization which are generally made for 5 to 20 years.
How Top Managers plan? Strategic plan
Strategy is a blueprint of action and resource distribution intended to realize the goal of
the organization
Strategic plans are long term plans that make apparent the manner on how the
organization will serve customers and position itself among competitors in the industry
for the next five years.
Strategic plans are designed with and for the whole organization and begin with an
organization’s mission and vision in mind.
Mission is a statement of the company’s fundamental intention and the reach of
operations
Vision provides the future direction of the organization and what it can become
B. MIDDLE LEVEL MANAGEMEN/MANAGERS
Activities:
1. Gives recommendations or advices to the top-level management
2. Implements the policies and plans in conformance with company’s policies and the
objectives which are made by the top-level management
3. Co-ordinates the activities of all the department
4. Communicates about information and policies with the top-level management and the
lower level management
5. Prepare short term plan of their departments which are generally made 1-5 years
6. Inspires and provides guidance to low-level managers towards better performance
 How Middle Managers plan? Tactical plan
Tactical plans are the means needed to activate strategy and make it work
It is concerned with what the lower level units within each division must do, how they
must do it, and who is in charge at each level
Tactical plans carry out strategic plans by transforming them into definite plans
appropriate to a specific area of the organization.
The time frames of tactical plans are shorter while the scope are narrower than strategic
plans
C. LOWER LEVEL MANAGEMENT/ MANAGERS
Activities:
1. Assign employees tasks
2. Guides and supervises employees on day-to-day activities
3. Develop morale in the workers
4. Maintains a link between workers and the middle level management
5. Inform the workers about the decisions which are taken by the management
6. Informs the management about the performance, difficulties, feelings, demands, etc.,
of the workers
7. Ensures the quality and quantity of production
8. Makes recommendation and suggestions
[Link] employee problems

How First line / low level Managers plan? Operational plan

Operational plans identifies specific procedures and processes that occur within the
lowest levels of the organization
Types of Plan according to Frequency of Use Plans
A. SINGLE USE PLAN are those unique plans that are intended to be used only once and simply
cover the content involved in one situation
Managers generally use three types of single-use plans: programs, projects, and budgets
• Programs—a complex set of policies, rules, and procedures necessary to carry out a
course of action.
• Projects—specific action plans often created to complete various aspects of a program.
• Budgets—plans expressed in numerical terms.

B. STANDING OR ONGOING PLANS are typically prepared once and preserve their
significance over a period of years while going through periodic modifications and updates when
necessary.
 ------ongoing plans are in the form of POLICIES, PROCEDURES, RULE
standing plan is called a standard operating procedure (SOP).
• Policies—general statements of understanding or intent; guide decision-making,
permitting the
• Rules exercise of some discretion; guide behavior (for example, no employee shall
accept favors and/or entertainment from an outside organization that are substantial
enough in value to cause undue influence over one’s decisions on behalf of the
organization).

• Procedures—like rules, they guide action; specify a series of steps that must be
taken in the performance of a particular task.

C. TIME FRAME PLANS

The organization’s need to address the future is captured by its time-frame plans.
This need to address the future through planning is reflected in short-, medium-, and
long-range plans. Short-, medium-, and long-range plans differ in more ways than the
time they cover. Typically, the further a plan projects into the future, the more
uncertainty planners encounter. As a consequence, long-range plans are usually less
specific than shorter-range plans. Also, long-range plans are usually less formal, less
detailed and more flexible than short-range plans in order

D. CONTINGENCY – BACK UP PLAN

The following question can facilitates develop contingency plan:
1. What events may happen that require a response?
2. What disaster might occur during execution of the plan?
3. What is the worse case scenario of events for the situation?
4. What scenario are probable for the situation?
5. What event would cause the greatest interference of present activities and
plans?
6. What turns out if costs of the plan are too much? What takes place if
postponements occur?
PLANNING TECHNIQUE AND TOOLS AND THEIR
APPLICATIONS
COMMONLY USED TECHNIQUE AND TOOLS
GANNT CHART
Horizontal bar chart developed as a production control tool
Presents schedule of a plan and real progress project.
This chart allows everyone to see at a glance
1. What various activities are
2. When each activity begin and ends
3. How long each activity is scheduled to last
4. Where activities overlap with other activities
5. How much the start and end date of the whole project
MILESTONE CHART
Graphically embodies important events along timescale in the life of the project or every
project activity
1. Name the important dates, deadline and deliverables of the projects
2. Evaluates task necessary to finish
3. Prioritize milestone based on dependencies
Critical path method (CPM)
Is a mathematical way of planning and scheduling of programmed management to
ensure a timeless and minimum use of resources
DECISIONS TREE
is a complete graphical visualization of a possible decision under conditions of risk
which permits a manager to make a diagram of outcome of different alternatives.
PAYBACK ANALYSIS
If a manager needs to decide whether to purchase a piece of equipment
PAYBACK PERIOD = Initial Investment / Annual net cash flows
Payback period = 105M / 25M = 4.2 years
SIMULATIONS
 Is a model building type of activity that tries to mimic an existing situation in simpler
manner
PRACTICAL WAYS OF USING SIMULATIONS
1. Training- case study and ans. questions
2. Process Improvement- models of business processes
3. Predicting outcomes – using worksheet
4. Managing Risk-using spreadsheet/worksheet
BENCHMARKING
Is the process of calculating an organization’s internal processes by identifying,
understanding and adapting exceptional practices from other organizations considered to be
best in class.
Several types of Benchmarking
1. Best practices-companies that they aspire to be like.
2. Peer benchmarking-similarities
3. SWOT-understanding their climate
4. Collaborative benchmarking-Association that company can join.
DECISION MAKING
 Selecting the best Option
CERTAIN . UNCERTAINTY AND CONFLICT,
NON-PROGRAMMED DECISION-new and novel decision (difficult situation)
PROGRAMMED DECISION- solvable using rules and policies
 Common Decision Barriers
1. Anchoring – disproportionate weight to the first information received
2. Status quo- keeping things the same without any action.
3. Confirming evidence-This is asking a value coworker to dispute against ones perspective.
4. Illusion of control – This is the belief of people that they can manipulate events even
when in reality they have no power to direct what will happen in the future.
5. Framing effects – This is when managers are quick to phrase or present a problem as
being comparable to problems they have resolved before. No room for new course of
action.
 6. Discount the future- This is giving more weight on short term cost and benefits compared
to long term costs and benefits
7. Time pressures- Creating business decisions too long. ACT on them at the earliest time
possible. TIMING is very important.
8. Social realities – making decisions as a result of social interactions bargaining and
politicking to be agreeable to conflicting parties
 Decision Making Process
1. Pinpoint the purpose of the decision
2. Information gathering
3. Principles for judging the options
4. Brainstorm and analyze the different alternatives
5. Evaluate the choices
6. Pick the finest option
7. Implement the decision made
8. Assess the results
 Group decision Making
Is a form of participatory process in which several individuals collectively examine
problems or situations, think, and assess options of actions and choose from among the
options a solution or solutions.
Common Decision making method
1. Brainstorming – leader to facilitate
2. Dialetical inquiry- Debate- two contrasting sides
3. Nominal group technique-all in writing, publicly documented, rate in order of preference
4. Delphi Technique- when individual are in different geographical locations
e.g. E-mail, fax, online in a discussion room

Sources: Table 17.1 (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0
license)

Textbook, (Principles of Organization and management by Prof. Angelita Ong Camilar-Serrano)