Unit 3 Planning

Planning : 

Planning Unit II

Planning : 

Planning Planning as a process involves the determination of future course of action that is Why an action What action How to take action When to take action Planning is a basic activity in management process.

Features of Planning : 

Features of Planning Process that determines the future course of action Primarily concerned with looking into future, requires forecasting of future situation. Selecting suitable course of action Undertaken at all levels of management Planning is flexible as commitment is based on future condition which are always DYNAMIC It is a continuous managerial function involving complex processes of perception, analysis, conceptual thought, communication, decision & action

Steps in Planning : 

Steps in Planning ☻ Being aware of Opportunities ☻ Setting objectives. ☻Considering planning premises. ☻Identification of alternatives ☻Evaluate the alternatives. ☻Choose the best alternative ☻Formulating supportive plan ☻Numberizing plans by making Budgets.

Importance of planning: : 

Importance of planning: Primacy of Planning. To offset uncertainty & change. To focus attention on objectives. To help in Coordination. To help in control. To increase Org. effectiveness.

Understanding the need for Planning : 

Understanding the need for Planning To reduce the time span btw Present decision & future results. Increasing org. Complexity. Increased external change. Planning & other management function.

Types of Planning : 

Types of Planning Corporate Planning: Done by the top level or corporate level, focus on the long term obj. taking org. obj. as a whole. Normally corporate planning is divide into strategic planning, operational etc. Functional Planning: It is segmental, undertaken for major functions like HR, finance, mkt etc & in second it goes for sub functions within the major functions of mkt like sales promotion, mkt research etc.

cont : 

cont Operational planning: Under taken by lower level management Proactive planning: It is based on org. response to environmental dynamics, here planning is designed in anticipation of likely changes in the relevant environment. Some resources are reserved for future utilization. Most successful, org. go for this. Reactive Planning: After the envir. changes taken place this planning start.

The Essentials of Planning : 

The Essentials of Planning A Plan: Is a specific document consisting of an objective (end) and an action statement (means). States what, when, and how something is to be done. Essentials of Sound Planning Organizational mission Types of planning Objectives Priorities The planning/control cycle

Types of Planning : 

Types of Planning

Slide 11: 

Reduces the Impact of Change Provides Direction Minimizes Waste Sets Standards to Facilitate Control Reasons for Planning

Slide 12: 

Criticisms of Formal Planning May Create Rigidity Can’t Replace Intuition and Creativity Can’t Be Done in a Dynamic Environment Focus on Today’s Competition not on future Reinforce Success

Business Objectives : 

Business Objectives Objective can be defined as a process of specifying the end results which as organization wants to achieve. Objectives are goals, aims or purpose that organization wish over varying periods of time. -Mc. Farland A managerial objective is the intended goal that prescribes definite scope & suggests direction to the planning efforts of a manager.

Business Objectives : 

Business Objectives Objectives An objective is a firm commitment to achieve a measurable result within a specified period. Writing Good Objectives Objectives should be expressed in quantitative, measurable, and concrete terms. What specific result is to be achieved? When is the result to be achieved? Who will be responsible for achieving the result? How the result is to be measured?

Nature of objectives : 

Nature of objectives Objectives may be board or specific It may be clearly defined or may not be clear & have to be interpreted by the behavior of organizational members (top level), bcoz clearly defined obj. provides clear direction. It has hierarchy, broad at Top level & specific at department level. Org. obj. have social sanction, rules & customs created within the social norms. Org are social units their obj should conform to the general needs of the society. There may be multiple objectives in an org. Obj. can be changed by replacing them with new.

Hierarchy of Objectives : 

Hierarchy of Objectives Top down approach Socio Economic Purpose Visionary long term concept of Organization Organizational Mission Organizational Objectives Objectives in Key Result areas Departmental Objectives Sectional Objectives Individual-level objectives

Some important words to learn : 

Some important words to learn Mission & Purpose: Is the external orientation & relates the organization to the society in which it operates. What it can do for the country Goals: Are short term results, temporary, more specific than objectives.

Management By Objectives (MBO) : 

Management By Objectives (MBO) A method whereby managers and employees define objectives for every department, project, and person and use them to monitor subsequent performance. The Term MBO coined by Peter F. Drucker in 1954.

Management by Objectives : 

Management by Objectives A goal-setting process in which managers and subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate their attainment of those goals. Specific goals are set at each level of the firm. Goal setting is participatory with manager and worker Periodic reviews of subordinates progress toward goals are held (pay raises and promotions are tied to goal attainment). Teams are also measured in this way with goals and performance measured for the team.

Peter F. Drucker : 

Peter F. Drucker “It’s just another tool. It’s not the great cure for management inefficiency… Management by Objectives works if you know the objectives; 90% of the time you don’t”. “The productivity of work is not the responsibility of the worker but of the manager”

SMART Objectives : 

SMART Objectives MBO introduced the SMART method for checking the validity of the objectives, which should be:• Specific• Measurable• Achievable• Realistic• Time-related

Slide 22: 

Organizational Objectives Divisional Objectives Departmental Objectives Individual Objectives What Is Management by Objectives?

Process of MBO : 

Process of MBO Setting of org. purpose & objectives: Key Result Area (KRA) Setting subordinates objectives Matching resources with objectives Appraisal Recycling

Benefits of MBO : 

Benefits of MBO Better managing Clarity in Organizational Action Personnel satisfaction Basis for org. change

Limitations of MBO : 

Limitations of MBO Time & cost Failure to teach MBO philosophy Problems in objective setting Emphasis on short term objectives Inflexibility Frustration

Slide 26: 

More Difficult Goals Lead To Higher Performance Does MBO Work? Specific Goals Lead to Better Results Support from Top Management Is Critical Participation Is Key

Decision Making : 

Decision Making Management means decision making - William Moore “Decision represents a judgement to a solution.” From various alternatives selecting a desirable alternative to solve a problem is called decision making.

Decision Making : 

6–28 Decision Making Decision Making a choice from two or more alternatives. The Decision-Making Process Identifying a problem and decision criteria and allocating weights to the criteria. Developing, analyzing, and selecting an alternative that can resolve the problem. Implementing the selected alternative. Evaluating the decision’s effectiveness.

The Decision-Making Process : 

© The Decision-Making Process

Step 1: Identifying the Problem : 

Step 1: Identifying the Problem Problem A discrepancy between an existing and desired state of affairs. Characteristics of Problems A problem becomes a problem when a manager becomes aware of it. There is pressure to solve the problem. The manager must have the authority, information, or resources needed to solve the problem.

Step 2: Identifying Decision Criteria : 

Step 2: Identifying Decision Criteria Decision criteria are factors that are important (relevant) to resolving the problem. Costs that will be incurred (investments required) Risks likely to be encountered (chance of failure) Outcomes that are desired (growth of the firm)

: 

Decision criteria are not of equal importance: Assigning a weight to each item places the items in the correct priority order of their importance in the decision making process. Step 3: Allocating Weights to the Criteria

Criteria and Weights for Computer Replacement Decision : 

Criteria and Weights for Computer Replacement Decision

Step 4: Developing Alternatives : 

Step 4: Developing Alternatives Identifying viable alternatives Alternatives are listed (without evaluation) that can resolve the problem. Step 5: Analyzing Alternatives Appraising each alternative’s strengths and weaknesses An alternative’s appraisal is based on its ability to resolve the issues identified in steps 2 and 3.

Assessed Values of Laptop Computers Using Decision Criteria : 

Assessed Values of Laptop Computers Using Decision Criteria

Step 6: Selecting an Alternative : 

Step 6: Selecting an Alternative Choosing the best alternative The alternative with the highest total weight is chosen.

Step 7: Implementing the Alternative : 

Step 7: Implementing the Alternative Putting the chosen alternative into action. Conveying the decision to and gaining commitment from those who will carry out the decision.

Step 8: Evaluating the Decision’s Effectiveness : 

Step 8: Evaluating the Decision’s Effectiveness The soundness of the decision is judged by its outcomes. How effectively was the problem resolved by outcomes resulting from the chosen alternatives? If the problem was not resolved, what went wrong?

Types of Decisions : 

Types of Decisions Programmed Decisions A structured decision or one that occurs frequently within the frame work of org. policies & rules. They can be solved easily as they arise in the org. (internal) Non programmed decisions An unstructured decision, which are unique, unusual problems occurs less frequently than a programmed decision, these decision have high importance.

Cont.. : 

Cont.. Strategic Decision: It is a major choice of action concerning allocation of resources & contribution to the achievement of org.obj. Its decision effects whole org., normally a non programmed decision & almost long term decisions, involvement of Top mgt. Eg. expansion of Buzz Tactical Decision: Related to day to day operations of org., short term decisions, programmed ,involvement of lower level mgt. eg. Purchase of raw material.

Decision-Making Conditions : 

Decision-Making Conditions

Decision-Making Conditions : 

Decision-Making Conditions Decision Making Under Certainty: Mgr exactly knows which state of nature will occur, here he can make perfectly accurate decisions time to time. Decision Making Under Risk: Some information is available but that is not sufficient to answer all the questions about the outcomes of decisions. Decision Making Under Uncertainty: A condition in which the decision maker does not know the alternatives, the risks associated with each, or the consequences of each alternative