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1. CHAPTER TWO THE PLANNING FUNCTION

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6. 2.1. MEANING , NATURE AND IMPORTANCE OF PLANNING 2.1.1. The Meaning of Planning Planning is the dynamic process of making decisions today about future actions and it is a selection or choice among alternatives. It bridges the gap between where we are now and where we want to be. Preparing today for tomorrow ; it is the activity that allows managers to determine what they want and how to get it.

7. CONT’D 2.1.2. Nature of Planning The contribution of planning to purpose and objectives The primacy of planning The pervasiveness /Universality of planning Planning and information Planning is a continuous process Planning is a means to an end Plans are arranged in a hierarchy

8. 2.1.3. Importance of Planning It provides direction and sense of purpose It reduces uncertainties and anticipates the future/ preparing for change Developing managers It provides basis for controlling It forces managers to see the organization as a system It promotes efficiency It provides the base for cooperative and coordinated efforts It provides guideline for decision making

9. 2.1.4. Limitations of Planning Planning is risky It is a difficult and complicated task It is expensive and time consuming It is affected by external factors

10. 2.3.The planning process Establishing objectives ( consider present and future conditions) 2. Developing premises ( environment, SWOT analysis ) 3. Determining alternative courses of actions Evaluating alternative courses of action ( cost and benefits) Selecting a course of action ( optimum) Formulating derivative plans ( to support the basic plan) Number zing plans by budgeting Implementing the plan ( Develop an action plan) Controlling and evaluating the results

11. 2.4. Types of plans 1. Based on Scope/Breadth Dimension Strategic Plan wide plan and developed by top-level management It applies to the entire organization . Looks ahead over the next five or more years . Develops the direction for the entire organization. Solving long-term problems

12. CONT’D B. Tactical Plan An intermediate plan Helps to reduce long range planning into intermediate Specific and more goal oriented than strategic plans. What the lower must do, how they must do it, and who will have the responsibilities for doing it . C. Operational Plan day to day activities and m ade at the lower level management what must be accomplished to achieve specific/operational goals .

13. CONT’D 2. Based on time Dimension long-range (five years or more), medium-range (between one and five years) and short-range plans (one year or less ). All strategic plans are long-range plans. All tactical plans are medium-range plans. All operational plans are short-range plans .

14. CONT’D 3. Based on use Dimension ( Frequency of use ) Standing Plans Used again & again and d esigned recurring problems Help decision-making in a predetermined, consistent manner . Types of standing plans are policies, rules and procedures . B. Single use plans To achieve a specific goal and to solve non recurring problems Types of single use plans are programs, projects, and budgets .

15. 2.4.1. Characteristics of a Good Plan Every sound business plan must have these characteristics: Objectivity Futurity Flexibility Comprehensive Simplicity and clarity Contingency planning Planning staff ( Responsible for developing the various components of the planning process)

16. Types of objectives in organizations Organizational objectives . They concern such areas as organizational efficiency, productivity, and profit maximization. Individual objectives , which also exist within organizations, are the personal goals each organization member would like to reach through activity within the organization.

17. Co Goals and objectives are the important ends towards which o rganizational and individual activities are directed To provide guideline and direction - To facilitate planning – To inspire motivation and commitment – To promote evaluation and control -

18. Management by objectives (MBO MBO is a system of managing or a special planning technique . It is a comprehensive managerial system that integrate many key managerial activities in a systematic manner and that consciously directed toward the efficient & effective achievement of organizational & individual objectives. MBO is the philosophy of management and an approach to planning. It emphasizes that the management and the subordinates work together in identifying and setting up of objectives and make plans together in order to achieve these objectives.

19. Planning technique Forecasting is the process of developing assumptions or premises about the future that managers/ planners can use in planning and decision making. Forecasting techniques The quantitative forecasting techniques Time-series analysis - Time-series is analysis forecasting technique that extends past information into the future through calculation of a best fit line. Casual modeling - Casual modeling is a group of different techniques that determine casual relationships between different variables. Regression models are equations that use one set of variable to predict another variable, i.e. Econometric models are casual models that predict major economic shifts and the potential impact of those shifts on the organization. Economic indicators are a key population statistic or indexes that reflect the economic well-being of a population The qualitative forecasting techniques

20. C The qualitative forecasting techniques The qualitative forecasting techniques are one of the several techniques that rely on individual or group judgments or opinions rather than on mathematical analysis. Some of the widely used qualitative approaches to forecasting are The Delphi method/ procedure - a mechanism for managing group decision making activities; The jury-of-executive/ expert-opinion approach - involves using the basic Delphi process with members of top management. In this instant top management serves as a collection of experts asked to make prediction about something. The sales-force-composition method - is the pooling of the predictions and opinions of experienced salespeople. Their experience enables to forecast quite accurately what various customers will do. The customer evaluation/expectation - Involves a survey of customers as to their future needs.