INTRODUCTION_TO_MANAGEMENT CHAPTER THREE 333

Introduction to Management CHAPTER THREE

1. CHAPTER T H REE THE PLANNING FUNCTION

2. Definitions Planning is: Determining specified objectives & how to accomplish them. The process of preparing for change coping with uncertainty by formulation future courses of action. Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. Planning is the primary managerial function.

3. Definition … cont’d Planning is the most fundamental function of management. It involves defining organizations goals , establishing an overall strategy for achieving those goals, and developing plans (development of schedules and times) for organizational work activities. It concerned with ends ( what is to be done ) and with means ( how it is to be done ).

4. Definition … cont’d It involves two things: Determining the aims and objectives Selecting course of action on the bases of past experience, present facts and circumstances and future possibilities, the best course of action to realize the planned objective.

5. Nature/Characteristics of Planning 1 . The Primacy of planning The primacy of planning means that the function of planning precedes all other managerial functions. all the other managerial functions must be planned if they are to be effective but, they are inseparable especially, planning and controlling are Siamese twins .

6. 2 . Pervasiveness of planning It means that: It is the function of all managers regardless of the level they belong and, planning exists in all organizations regardless of their type and size.

7. 3 . Contribution to purpose & objective This implies that the purpose of any plan and all its supportive & derivative plans is to facilitate the accomplishment and the achievement of the purposes and the objectives of the organization.

8. 4. Planning is directed towards efficiency Means that its contribution to purpose and objectives in terms of costs and the degree of individual & group satisfaction. 5 . It concerns future activity Since planning is deciding currently about the future, it involves forecasting and decision making. The essence of planning is looking ahead & is concerned with deciding in the present what is to be done in the future.

9. 6 . It has dynamic aspects (it is flexible & continuous) A manager plans on the basis of some assumptions , which may not come true in the future . Therefore, he had to go on revising, modifying and adjusting plans in the light of the prevailing realities/circumstances .

10. Importance/purpose of planning Planning provides directions - employees can easily know what their organization or work unit is trying to accomplish and what they must contribute in order to reach goals. To minimizes uncertainty- Future is always full of uncertainties and changes which make planning a necessity because planning foresees the future and makes provisions for it.

11. Importance…cont’d To gain economical operation/ minimizes waste and redundancy, and any activities are depend on plans. It minimizes costs because of its emphasis on efficient operation and consistency. To facilitate control- it establishes the goals or standards used in controlling. This is because; unplanned action cannot be controlled , for control involves keeping activities on course by correcting deviations from plans.

12. Importance…cont’d To focus attention on objectives- all planning efforts are directed towards achieving enterprise objectives, the very act of planning focuses attention on these objectives.

13. The planning process Discussion question! if you are appointed to setup a 10 year plan for a particular project/ project z, what are the necessary procedures you should follow?

14. The planning process Understanding of the existing situations this involves understanding both internal (strengths and weaknesses) and external (opportunities threats). Internal situations- checking the availability of resources (both human and non human).

15. Process …cont’d External environment- the economic situations (competition, prices, demand, supply, etc.), political situations (government policies, taxation, peace and stability), socio-cultural (culture of the society, directions in change of culture, attitude of the society towards different products and services.

16. Process …cont’d 2. Forecasting – it is determining about what the future will look like in order to decide where we wants to go. 3. Establishing short range and long term objectives for the entire organization and to each work unit. Objectives specify the expected results and indicate the end point of what is to be done, where the primary emphasis is to be placed, and what is to be accomplished by the net work of strategies, policies, procedures, rules, budgets, and programs.

17. Process …cont’d 4. Determining alternative course of action- to achieve the pre-determined objectives identifying alternatives is very important. 5. Evaluating alternative course of action- evaluate each and every alternative by weighing them against in the light of the existing situations, expectations/forecasts, and goals. It requires making an adjustment for the forecast plan if any; see if the cost, speed, and quality requirements are satisfied and if mechanization expedites the work for the achievement of desired objectives in terms of each possible course of action.

18. Process …cont’d 6. Selecting a course of action /best Alternative- that will help efficiently achieve the organization objectives. When we decide, we have to make sure that the plan possesses flexibility to adjust to varying conditions, acceptance of the plan by operating personnel as well as the existing capacity of the firm and need for new equipment, space personnel, training and supervision.

19. Process …cont’d 7 . Formulating derivative plans- this plans are invariably required to support the basic plan. An arrangement of detailed sequence and timing should be made for the proposed plan.

20. Process …cont’d 8. Numbering Plans by Budgeting- After decisions are made and plans are set, the final step is to give them meaning that is to numberize plans by converting them to budgets, this helps to establish verifiable targets of achievement, to facilitate control.

21. Types of Plans Planning can be classified based on: Duration /Time dimension – Short, Intermediate, long Scope /comprehensiveness/breadth – Strategic and Operational or Tactical Their repetitiveness in use – Standing Plan and single use plan

22. 1 . Time dimension It is based on the length of time/time horizon that the plan covers. Short range plans- a plan for a year or less one year like, Annual plan of sales, revenue, production material requirement, operating expenses budget. Intermediate range plans- plan between a year and five years. P  5 years, Development of new products, modernization of facilities. Long range plans- Plan for five or more years like Long term leases on production or ware house facilities.

23. 2. Scope dimension It is based on the scope or wideness of activities they represent. Strategic Plans- These plans are comprehensive in scope & reflect long-term needs & direction of the organization. - Strategic plans/ top management plans include the development of overall company objectives . - They are primarily concerned with solving long-term problems associated with external, environmental influences. - They establish the mission of the organization.

24. - Strategic planning is a process that involves the assessment of market conditions, customer needs, competitive strengths and weakness; sociopolitical, legal and economic conditions; technological developments and the availability of resources that lead to the specific opportunities or threats facing the organization.

25. Strategic plans include: Mission- the reason/purpose of their existence. For example, the purpose of a business generally is the production & distribution of goods and services in line with customer needs and attaining profit. Objectives/Goals- are desired future results. They represent not only the end of planning but the end toward which organizing, staffing, leading and controlling are aimed.

26. Strategies - derived from Greek word ' strategos ', meaning 'general' It means general programs of action and deployment of resources to attain comprehensive objectives. Generally, it is concerned with the direction in which human and material resources will be applied in order to increase the chance of achieving selected objectives.

27. B. Operational/tactical plan - Are plans used to implement strategic plans . These plans are more limited in scope & address those activities & resources required to implement strategic plans. These plans deal more with the allocation of resources & scheduling of actual work activities than with the selection of strategies.

28. 3. Based on their use dimension/ repetitiveness Standing plan- are used to guide activities that occur over a period of time. are designed to be used again and again. Standing plans exist in the form of: Policies - general statements or understandings which guide or channel thinking in decision making. Policies help to decide issues before they become problems. E.g. hiring policy- "All employees of the organizations must have a college degree/diploma. They allow discretion.

29. Procedures - show a sequence of activities. For example, telling how to perform a job. Rules and Regulations- are plans that describe exactly how one particular situation is to be handled. Rules are statements of actions that must be taken or not taken . Rules are must restricting device. There is no room for flexibility . E.g. No smoking at an employee's desk or, all employees must be at their desks at 8:00 A.M. in the morning.

30. B. Single Use Plans: Are plans that are used once , and not over and over again. They are also called one-time plans. Under these plans, we have: Program- Programs are goals , policies , procedures , rules , task assignments , steps to be taken , resources to be employed and other elements necessary to carry out a given course of action; they are ordinarily supported by budgets.

31. Budgets- are statements of resources set aside for specific activities expressed in numerical or quantitative terms. They are primary devices to control organization activities and are thus, important components of programs and projects.

32. Organizational objectives Classifications- based on: 1. The levels of decision making authority / authority . These are: - strategic , tactical and operational objectives. 2. the time length that the objective covers. - long-term , intermediate and short-term objectives

33. Strategic Objectives- are broad and appropriate to the organization as a whole. They focus on such issues as profitability , market positioning and managerial performance and attitude and public responsibility . The top-level management has the responsibility and authority to make strategic objectives.

34. B. Tactical objectives Define the outcomes that major departments and divisions must achieve in order for the organization to reach overall objectives . Tactical objectives are set by the middle management level in line with strategic objectives.

35. c . Operational Objectives- Are specified and measurable results expected from departments , first-level managers , work groups and individuals within an organization. Example- Setting daily, weekly and monthly sales targets for each product category .

36. B. Time Frame Objectives Long-term Objectives These objectives extend up to 5 years. They must be accomplished to ensure the long-term survival of the organization .

37. Intermediate Objectives These objectives cover a time period between the short-term objectives and long-term objectives- probably 1-3 years . Short-term Objectives These objectives can be accomplished in less than a year .

38. CXs of Objectives Specific and Measurable Challenging but Realistic Defined Time Period: Linked to Reward Priority of Objectives

39. Transitions in setting objectives Traditional goal setting – Top management and executives are responsible for setting goals and No involvement of operational area managers . Management by objective – A process of setting mutually agreed goals and performance standards by employees and managers.