PLANNING
Lecture Outline
1.1 Introduction
1.2 Definition of planning
1.3 The importance of planning
1.4 Types of plans
1.5 Steps in the planning process
1.6 Limitations to planning
1.7 Review questions
1.8 Reading list
Lecture objectives
At the end of this lecture you should be able to:
Understand the importance of planning
Identify different types of plans
Outline the planning and controlling processes.
Understand how planning occurs in today’s organizations.
1.1 Introduction
- Planning is the most fundamental function of management. An
organisation can succeed in effective utilization of its human,
financial and material resources only when its management decides
in advance its objectives, and methods of achieving them.
- In simple word planning is deciding in advance what to do, how to
do, when to do & who is to do it. Planning is a bridge between
present & future. It is an intellectual process & thinking before
doing.
1.2 Defining planning
Omran (2002) – it is the process by which an individual organisation
decides in advance on some future courses of action.
Certo (2000) is the process of determining how the organisation can get
where it wants to go.
Fayol – it is deciding the best alternatives among others to perform
different managerial operations in order to achieve predetermined goals.
1.3 The importance of planning
It helps the organisation to discover new opportunities and to
anticipate and minimise future uncertainties.
Planning improves employee’s moral
It provides direction to the organisation:
It facilitates coordination
It helps with better utilization and allocation of resources
It provide basis of control
It helps in achieving the objectives
1.4 TYPES OF PLANS
Many different types of plans are adopted by managers to conduct
operations, and monitor and control organisational activities. Three such
most commonly used plans are: Strategic, tactical and operational plans
Strategic plans
- Strategic planning are long-range plans that focus on the entire
organization and are developed by the top management to fulfil the
organisation’s mission ad vision.
- These plans have a time frame of three to ten years or more.
- The purpose of strategic plans is to turn organizational goals into
realities within that time period.
Tactical plans
- Tactical plans are plans of the different functional levels of an
organisation that they intend to achieve.
- They are carried out by middle management designed to help
execute the major strategic plans and to accomplish a specific part
of the company’s strategy.
- They are usually made for a period of one to three years.
Operational plans
- Operational plans (short-term plans) are developed by the first level
management to achieve operational goals and to support tactical
plans.
- Operational plan is the department manager’s tool for daily and
weekly operations.
- Operational plans can be single use plans or ongoing.
- Single use plans – it is applied to those activities which do not
recur or repeat.
- Continuing or ongoing plans (standing plans) – these are
usually made once and retain their value of a period of years while
undergoing periodic revision and updates. E.g policies, procedures,
rules.
- These plans are made for less than a year and they focus on the
daily and weekly tasks of supervisors, department, managers and
individual employees.
1.5 STEPS IN THE PLANNING PROCESS
Planning is a process which embraces a number of steps to be taken.. The
steps generally involved in planning are as follows
ASSESSS CURRENT CONDITIONS
ESTABLISH OBJECTIVES
ESTABLISH ACTION PLAN
ALLOCATE RESOURCES
IMPLEMENTATION
REVIEW
Assess current conditions
- Planning starts with analysis of the environment. This is essential for
managers to be aware of opportunities and threats in the market.
- They must consider changes in consumer demand, number of
competitors, change in habits, change in technology etc.
- At the same time the manager has to conduct internal analysis of its
strengths & weaknesses. It means it has to examine its available
resources. This process is also known as a situational analysis.
Establish objectives
- The entire planning activity is directed towards achieving the
objectives of the organisation.
- This step involves determining objectives for the organisation as a
whole and then for each unit and subordinate tier.
- Managers should set objectives that flow from the mission to take
advantage of opportunities and address problems identified in the
situational analysis.
- This is to be done for the long term as well as for the medium and
short range.
- Therefore, objectives should be stated in a clear, precise and
unambiguous language, that is, must be specific, measurable,
attainable, realistic time bound (SMART).
Establish action plan
- Actions are specific, prescribed means to achieve objectives.
- Managers begin to develop long-term, medium term and short term
plans.
- These planned courses of action are called strategies and tactics,
and are usually differentiated by scope and time frame and are
directed toward changing a future condition – that is, achieving
objectives.
Allocate resources
- With decisions made and plans are set, the next step is to give
meaning to them by quantifying them with numbers converting
them into budgets.
- A budget is a predetermined amount of resources linked to activity.
- An enterprise usually has overall budgets representing the sum total
of income and expenses, with consequent profit or surplus.
- Each department of the enterprise or organization can have its own
budgets, which make up the overall budget.
Implementation
- Implementation means using resources to put plan into action.
- In most large organizations, however, the manager must implement
plans through others, motivating them to carry out the plan,
rewarding them for successful performance, and redirecting them
when their actions lead to outcomes that differ from the objectives.
- Managers have three ways of implementing plans through others;
authority, persuasion and politeness.
Review
- After completing the first five steps in the planning process,
management must control the planning decision.
- Managers need to check the progress of their plans so that they can
(a) take whatever remedial action is necessary to make the plan
work, or (b) change the original plan if it is unrealistic.
1.6 Limitations to planning or Why planning fails
Lack of Dependable / reliable Information: -
Time Consuming
Expensive
Internal Inflexibility (rigidity):
Changes in the external environment
Unrealistic objectives
Resistance to change
Lack of involvement and communication
Lack of knowledge of the benefits of planning
Exercise 1.1
Super Fine Rice Ltd. has the largest share of 55% in the market. The
company’s policy is to sell only for cash. In 2015, for the first time
company’s number one position in the industry had been threatened
because other companies started selling rice on credit also. But the
managers of Super Fine Rice Ltd. continued to rely on it’s previously tried
and tested successful plans which didn’t work because the environment is
not static. This led to decline in sales of Super Fine Rice Ltd. The above
situation is indicating two limitations of planning which led to decline in it
sales.
Identify these limitations
1.7 Review questions
i. “Failure to plan is planning to fail.” Using examples, discuss the 3
types of plans used in organisations. (10 marks)
ii. Why do plans fail? (10 marks)
2. Craft nine (9) objectives of your own that are short term (3), medium
term (3) and long term (9).
3. Discuss various solutions that can be put in place to avoid plans failing
4. State any three limitations of planning
5. Josh joins as a sales manager of a company dealing in naturotherapy
products. Being proficient in his work, he knew that without good planning
he will not be able to organise, direct, control or perform any of the other
managerial functions efficiently and effectively. Only on the basis of sales
forecasting, he would assist in the preparation of the annual plans for its
production and sales. Besides, he will have to prepare sales plans
regularly on weekly, monthly, quarterly and half yearly basis. While
preparing the sales forecasts, he undertakes intellectual thinking involving
foresight, visualization and issued judgement rather than wishful thinking
or guess work. Most importantly, all these planning activities will be
meaningful only if they will coincide with the purpose for which the
business is being carried out.
In context of the above case, identify the various features of planning
highlighted in the above paragraph by quoting lines from it.
