PLANNING AND DECISION MAKING

INTRODUCTION
Goals and plans have become general concepts in our society. A goal is a desired future state that
the organization attempts to realize. Goals are important because organizations exist for a purpose
and goals define and state that purpose. A plan is a blueprint for goal achievement and
specifies the necessary resource allocations, schedules, tasks and other actions. Goals
specify future ends; plan specify today’s means. The word planning usually incorporates both
ideas; it means determining the organizations goals and defining the means for achieving them.

DEFINATIONS
According to Robert R Kreitner, “Planning is the process of coping with uncertainty by formulating the
future course of action to achieve specified result”.
According to Richard steers, “Planning is the process by which managers define goals and take the
necessary step to ensure that these goals are achieved”.
According to Ricky W. Griffin, “Planning is setting an organization’s goals and deciding how best to
achieve them”.

PURPOSES OF GOALS AND PLANS

The complexity of today’s environment and uncertainty about the future overwhelm many managers and lead
them to focus on operational issues and short term results rather than long term goals and plans. However,
planning generally positively affects a company’s performance. In addition to improving financial and operational
performance, developing explicit goals and plans at each level is important because of the external and internal
messages they send. These messages go to both external and internal audiences and provide important benefits for
the organization.

1)LEGITIMACY
An organization’s mission describes what the organization stands for and its reasons for existence. It
symbolizes legitimacy external audiences such as investors, customers, and suppliers. The mission helps
them and the local community look on the company in a favorable light and hence accept its existence.

2)SOURCE OF MOTIVATION AND COMMITMENT

Goals and plans facilitate employee’s identification with the organization and help motivate them by
reducing uncertainty and clarifying what they should accomplish. Lack of a clear goal can damage
employee motivation and commitment

3)GUIDES TO ACTION
Goals and plans provide a sense of direction. They focus attention on specific targets and direct employee
efforts toward important outcomes. Hartford technology services co. for example set goals to establish a
customer profile database, survey customer satisfaction, and secure service agreements with ten new
customers.

4)RATIONALE FOR DECISIONS

Through goal setting and planning, managers learn what the organization is trying to accomplish. They
can make decisions to ensure that internal policies. Roles, performance, structure, products and
expenditures will be made in accordance with desired outcomes. Decisions throughout the organization
will be in alignment with the plan.

5)STANDARD OF PERFORMANCE

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Because goals define desired outcomes for the organization, they also serve as performance criteria. They
provide a standard of assessment. If an organization wishes to grow by fifteen percent, and actual growth
is seventeen percent, managers will have exceeded their prescribed standard.

PROCESS OF PLANNING
Planning means a future course of action. So, in planning future action, there is a necessary step to go for
it. While planning a plan, people must follow these steps to make sure that it will go in a right way to
achieve their goals.
1. Analyze opportunity: This is the pre-step of planning. These step analyzes both internal as well as
external environment. Management must analyze the SWOT (strengths, weakness, opportunity and
threats), which are the changing environmental factors of the business.
2. Setting goals: This is the actual starting point and also the first point of planning. Objectives must be
clear, specific and practical in nature. The entire enterprises and then for each subordinate work unit
should have their objectives.
3. Determination of Premises: After setting the goal, next step of planning is a determination of
premises. Planning premises refers to the anticipated environment which means expected environment.
They include assumption or forecasts of the future. Planning premises may be tangible and intangible or
internal and external.
4. Determination of Alternatives: The next step of planning is a determination of alternatives. There is
various alternative course of action, specially those which are not immediately changed. Management
needs to identify all these alternatives to achieve the organizational goal or objectives.
5. Evaluation of alternatives: After the determination of alternatives, another step of planning process is
an evaluation of alternatives. This is the logical steps to evaluate each and every alternative from cost and
benefits point of view. All identified alternatives are evaluated and compared in terms of their expected
costs and benefits.
6. Selecting a course of action: The next step of planning is selecting a course of action. This is the point
at which plan is adopted. Management selects best course of action or must find out the most suitable
course to follow after evaluating all available alternatives.
7. Formulation of derivatives plans: After selecting a course of action, next step of planning is
formulation of derivatives plans. In this step, plans are formulated for each stage of work, various
supporting plans are developed for each product, department unit and activity.
8. Implementation of plan: After selection of course of action, next step of the planning process is the
implementation of plan. This step brings all the procedure of plan into an action.
9. Reviewing the planning process: This is the last step of planning. In this step, planner should know
about the actual performance. It is the continued function till the organization exists. Management can
take correct action in proper time only. Right decision should be taken at the right time to achieve the
organization objectives in accordance with the plan. It is also important to adopt the changing
environment of the business.

Levels of Planning
Planning is the future base of action. It has different types. It may be classified as per time period, nature
of plans and managerial hierarchy. The planning is preparing either for a short period or long period of
time. Following are the types of planning:

● Strategic plan
● Tactical plan

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 ● Operational plan

1. Strategic plan: Strategic plan is prepared by the top level management. It is the brand action plans to
achieve the mission and strategies goals. It covers the total organization. It consists of policies, schedules
and program to utilize the available resources of the organization. These plans are mainly concerned with
the determination of organization, long- term goals and formulation realities. Strategic plans are long term
for three, five or more years. They provide long-term direction to the organization.
2. Tactical plan: Tactical plan is prepared by a middle level management. It is prepared for
implementation of corporation plan. In this planning, managers identifies the plans on the basis of priority
of work. Allocation of works and resources are a focus on the basis of programs. It prepares to allocated
divisional activities like finance, personnel, marketing, production and so on. This plays a role of a bridge
between operational and corporate plans.
3. Operational plan:Operational plan is prepared by lower or first line level management. It considers
day to day activities. Such plan is developed by lower level management. These plans have a very short
term focus. It prepares regular production schedule of production department. So, importance should be
given to regular production process.

GOAL-SETTING IN ORGANIZATIONS

Organizational MissionAt the top of the goal hierarchy is the mission—the organization’s reason for
existence—that describes the organization’s values, aspirations, and reason for being. The formal mission
statement is a broadly stated definition of purpose that distinguishes the organization from others of a
similar type. The content often focuses on the market and customers and identifies desired fields of
endeavor. Some mission statements describe company characteristics such as corporate values, product
quality, location of facilities, and attitude toward employees.

Strategic Goals, Plan, Planning

Strategic goals - broad statements describing where the organization wants to be in the future. Official
goals; whole organization

Strategic plans define the action steps by which the company intends to attain strategic goals.

A strategic plan is a blueprint that defines organizational activities and resource allocations strategic
planning tends to be long-term.

Goals and Plans

Strategic goals are broad statements describing where the organization wants to be in the future.
Sometimes called official goals, they pertain to the entire organization rather than to specific divisions or
departments.

Strategic plans define the action steps by which the company intends to attain strategic goals. A strategic
plan is a blueprint that defines organizational activities and resource allocations.Strategic planning tends
to be long-term.

PLANS ACCORDING TO THE EXTENT OF RECURRING USE

Plans can be categorized on the basis of how frequently they will be used. There are two types of plans

1) Single use plans are plans aimed at achieving a specific goal that once reached, will most likely not to
recur in the future. There are two major types of single use plans

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a) A PROGRAM is a comprehensive plan that coordinates complex set of activities related to a major
non- recurring goals. Programs usually involves several different departments or units of the
organizations. It is composed of several different projects and may take more than one year to complete

Program usually include six basic steps

1. Dividing what is to be done into major parts or projects

2. Determining the relationship among parts and developing a sequence

3. Deciding who will take the responsibility for each part

4. Determining how each part will be completed and what resources will be necessary

5. Estimating the time required for completion of each part

6. Developing a schedule for implementing each step

B) A project is a plan that coordinates a set of limited scope activities that do not need to be divided into
several major projects in order to reach an important non-recurring goals

2)Standing plans

Are plans that provide ongoing guidance for performing recurring activities. The three typesof standing
plans are

A policy is a general guides that specifies the broad parameters within which organizational m,emebers
are expected to operate in pursuit of organizational goals. Policies do not normally dictate what actions
should be taken,rather they provide general boundaries for actions.

A procedure is a prescribed series of related steps to be taken under certain recurring circumstances. well
established and formalized procedures are often called SOPs

A rule is a statement that spells out specific actions to be taken or not to be taken in a given situation.
Unlike procedures , rules do not normally specifies a series of steps . instead they dictate what must be
and what must not be done , leaving little flexibility or room for deviation.

DECISION MAKING PROCESS

A decision is a choice made from available alternatives. Decision making is the process of identifying
problems and opportunities and then resolving them

Management decision typically falls in to one of two categories

1) PROGRAMMED DECISION
It involves situations that have occurred often enough to enable decisions rules to be developed and applied in the
future.
Programmed decisions are made in response to recurring organizational problems . the decisions to re order paper,
and other office supplies when inventories drop to a certain level is a programmed decision.

2)Non programmed decision

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Are made in response to situation that are unique, are poorly defined and largely unstructured and have
important consequences for the organizations
Many non programmed decisions involved strategic planning because uncertaininty is great and decisions
are complex. Decision to built new factory, develop a new product or service , enter a new geographical
market or relocate headquarters to another city are all programmed decisions.

STEPS IN DECSION MAKING PROCESS

1. RECOGNITION OF DECISION REQUIREMENT

Managers confront the decisions requirement in the form of either a problem or an opportunity. A
problem occurs when organizational accomplishment is less than established goals. An
opportunity exists when manages see potential accomplishment that exceed specified current
goals. Manages see the possibility of enhancing performance beyond current levels.

2. DIAGNOSIS AND ANALYSIS OF CAUSES

Once a problem or opportunity has come to managers’ attention , the understanding of situation
should be refined. Diagnosis is the first step in decision making process in which managers
analyze underlying causes factors associated with the decision situation. Manager make a mistake
here if they jump right into generating alternativeswith first exploring the causes of the problem
more deeply.

3. DEVELOPMENT OF ALTERNATIVES
once the problem or opportunity has been recognized and analyzed ,decision makers begin to
consider taking actions the nest stage is to generate possible alternative solutions tht will respond
to the needs of situation and correct the underlying causes.

4. SELECTION OF DESIRED ALTERNATIVE (S) once feasible alternatives have been

developed , one must be selected. The decision choice is the selections of the most promising of
several alternatives courses of actions. The best alternative is one in which the solution best fits
the overall goals and values of the organization and achieve the desired results using fewer
resources. The manager tries to select the choice with least amount of risk and uncertainty.

5. IMPLEMENTATION OF CHOSEN ALTERNATIVE THE IMPLENTATION SAGE

INVOLVES THE USE of managerial, administrative and persuasive abilities to ensure that the
chosen alternative is carried out. The ultimate success of the chosen alternative depends on
whether it can be translated into actions. Sometimes an alternatives never become reality because
manager lacks the resources or energy needed to take things happen. Implementation may require
discussion with people affected by the decision .Communication, motivation and leadership
skills must be used to see that the decision is carried out.
6. EVALUATION AND FEEDBACK in the evaluation stage of decision process , decision
makers gather information that tells them how well the decision was implemented and whether it
was effective in achieving its goals.
Feed back is important because decision making is the continuous , never ending process.
Decision making is not completed when an executive or BOD VOTES YES OR NO. Feed back
provides decision makers wit information that can precipitate new decision cycle. The decision
fail, thus generating a new analysis of the problem , evaluation of alternatives and selection of
new alternatives

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