Fundamentals of

Planning
 Learning Outcomes

To help build my planning skill, when studying this chapter, I will attempt to acquire:

a) A definition of planning and an understanding of the purposes of planning

b) Classify the types of goals organizations might have and the plans they use
c) Insights into how the major steps of the planning process are related
d) Define the characteristics of effective goals
e) An appreciation for the potential of a management-by-objectives (MBO) program

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◉ Does it make any sense to plan in a world typified by
rapid and dramatic change?

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◉ Planning is the process of copying with uncertainty by
formulating future course of action to achieve specific results.

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“Organizations that fail to plan, plan to fail.”

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Planning - a primary managerial activity that involves:
Defining the organization’s goals
Establishing an overall strategy for achieving those goals
Developing plans for organizational work activities

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Planning: The Primary Management Function

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 Defining Planning
◉ Planning involves setting goals and laying out how to achieve them. Planning
provides a framework that helps organizations define where they want to go
(goals) and how they will get there (plans).
◉ A plan is a blueprint for goal achievement and specifies the necessary
resource allocations, schedules, tasks, and other actions.
◉ Goals specify future ends; plans specify today’s means

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 Plan vs Planning
Example:

◉ A car manufacturing company gives targets to employees who decide their

direction of work. Planning is thinking in advance what to do and how to do
it.

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Types of Plans

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 Single-use plan
Strategic plans Specific plans
Long-term plans A one-time plan
Plans that apply to the Plans that are clearly
entire organization and Plans with a time frame specifically designed to
defined and leave no room
establish the organization’s beyond three year meet the needs of a
for interpretation
overall goals unique situation

Standing plans
Operational plans
Short-term plans Directional plans Ongoing plans that
Plans that encompass a
Plans covering one year or Plans that are flexible and provide guidance for
particular operational area
less set out general guidelines activities performed
of the organization
repeatedly

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Types of Planning

Formal planning
◉ Structured Plan
◉ Written, specific, and long-term focus, involves shared
goals for the organization.
◉ Specific goals covering a specific time period
◉ Written and shared with organizational members
Informal planning
◉ Unstructured Plan
◉ Not written down, short-term focus; on the spot
◉ It does not have any written procedure to follow
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Activity
◉ A manager casually discussing upcoming projects with their team during a
weekly meeting, without a formal agenda or documentation.
◉ A project manager drafting a detailed project plan, complete with timelines,
milestones, resource allocation, and risk assessments
◉ A financial department creating an annual budget that specifies how funds will be
allocated across departments and projects.
◉ An employee brainstorming potential solutions with colleagues to address a
sudden issue or challenge that has arisen.
◉ An individual making a mental note or to-do list of tasks he plan to accomplish
during the day, adjusting priorities based on immediate needs or unexpected
developments.

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Why Do Managers Plan?

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 Planning provides direction to managers
 It reduces uncertainty
 It minimizes waste and redundancy
 It establishes the goals or standards used in
controlling

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Levels of Goals and Plans

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 Levels of Goals and Plans

◉ Top managers are typically responsible for establishing strategic goals and
plans that reflect a commitment to both organizational efficiency and
effectiveness
◉ A division manager will formulate tactical plans that focus on the major
actions that the division must take to fulfill its part in the strategic plan set by
top management
◉ Operational plans identify the specific procedures or processes needed at
lower levels of the organization, such as individual departments and
employees
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 Improves the lives of families by
providing consumer preferred
products for Kitchen use

Improves company profit by 5 percent

next year

Increase sales by 10 percent next year

Increase output by 10 percent

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STEPS IN THE PLANNING
PROCESS

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 STEPS IN THE PLANNING
PROCESS

1. State organizational objectives----objectives stipulate those areas in which

organizational planning must occur
For Example: Increase in sales by 10 percent

2.List alternative ways of reaching objectives---a manager should list as many

available alternatives as possible for reaching those objectives
For example: To capture either a new market or increase share in existing
market

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 STEPS IN THE PLANNING
PROCESS
3.Develop assumptions on which to base each alternative----the feasibility of using
any one alternative to reach organizational objectives is determined by the premises,
or assumptions
For Example: Manager will take certain assumptions about the potential in existing
market and potential of new market
4.Choose the best alternative for reaching objectives
5. Develop plans to pursue the chosen alternative----develop strategic (long-range)
and tactical (short-range) plans
Top managers communicate the selected plans to middle level management to make
departmental planning
6. Put the plans into action
7. Follow up 22
 MANAGEMENT BY OBJECTIVES (MBO)
Management by objectives (MBO) is a system whereby managers and employees define
goals for every department, project, and person and use them to monitor subsequent
performance

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 MBO Process

◉ The MBO process consists of five steps

◉ 1. Review organizational objectives—The manager gains a clear understanding of the
organization’s overall objectives.
◉ 2. Set worker objectives—The manager and worker meet to agree on worker objectives to be
reached by the end of the normal operating period.
◉ 3. Monitor progress—At intervals during the normal operating period, the manager and
worker check to see whether the objectives are being reached.
◉ 4. Evaluate performance—At the end of the normal operating period, the worker’s
performance is judged by the extent to which the worker reached the objectives.
◉ 5. Give rewards—Rewards given to the worker are based on the extent to which the
objectives were reached.

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MBO Benefits

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How Can Managers Plan effectively in Dynamic environments?

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 Planning for a Turbulent
Environment

◉ Contingency plan
◉ Building Scenarios
◉ Crisis planning

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 Contingency Plan

◉ Contingency plans define company responses to be taken in the case of

emergencies, setbacks, or unexpected conditions.
◉ To develop contingency plans, managers identify important factors in the
environment, such as possible economic downturns, declining markets,
increases in cost of supplies, new technological developments, or safety
accidents.
◉ Managers then forecast a range of alternative responses to the most likely
high-impact contingencies, focusing on the worst case.

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 Building Scenarios

◉ Scenario building involves looking at current trends and

discontinuities and visualizing future possibilities.
◉ Rather than looking only at history and thinking about what
has been, managers think about what could be.

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 Crisis Planning

◉ Many firms also engage in crisis planning to enable them to

cope with unexpected events that are so sudden and
devastating that they have the potential to destroy the
organization if managers aren’t prepared with a quick and
appropriate response

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Characteristics of Effective Goals

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