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1. Chapter Two Planning Function

2. Definitions of P lanning The planning function is the primary activity of management. Planning is the process of establishing goals and a suitable course of action for achieving those goals. Planning implies that managers think through their goals and actions in advance and that their actions are based on some method, plan, or logic Plans give the organization its objectives and set up the best procedures for reaching them. The organizing, leading and controlling functions all derived from the planning function.

3. The what and the why of planning Planning usually incorporates both ideas ; it means determining the organization’s goals and defining the means for achieving them. Planning involves defining the organization’s goals, establishing strategies for those goals, and developing plans to integrate and coordinate activities. The process of thinking about and organizing the activities required to achieve a desired goal In formal planning, specific goals covering specific time period are defined

4. Why do Managers plan? At least four reasons can given: Provides direction to managers and non-managers alike Reduce uncertainty by forcing managers to look ahead, anticipate change, and develop appropriate strategies Minimize waste and redundancy. Establish the goals or standards used in controlling Managers use: Strategic, Tactical, and Operational goals to direct employees and resources toward achieving specific outcomes that enable the organization to perform efficiently and effectively

5. Planning Process Step1. Establishing goals /objectives Step 2. Environmental analysis and forecasting Step 3. Determining alternative course of action Step 4. Evaluating the alternatives Step 5. Select the best alternatives Step 6. Implementing the plan Step 7. Controlling and evaluating the results

6. Components (Elements) Of Planning While planning there are several elements needs to be considered. Some of them are: 1. Objectives The following are the characteristics of sound objectives. Priority of objectives : Hierarchy of objectives : Objectives are arranged in hierarchy from overall company wide objectives to individual objectives. C. Organizational objectives should be stated in writing : D . Objectives should be specific and measurable. E. Objectives should be realistic and attainable

7. Elements of Planning 2. Course of Action : are the means or specific activities planned to achieve the objectives   3 . Resources The third phase in the planning function is budgeting resources for each important plan.   4. Implementation of Plans Implementation involves the assignment and direction of personnel to carry out the plan.

8. TYPES OF PLANNING Types of plans Time Breadth Specificity Frequency Of use Strategic Operational Long term Short term Directional Specific Single use Standing

9. Types of plan based on frequency of use Single use plans They include: programs, projects, and budgets. Single use plans are those plans which have no more use after objective is accomplished. Standing plans Are ongoing plans that provide guidance for activities performed repeatedly. Policy, Procedures, Rules

10. Types of plan based on breadth Strategic plans apply to the entire organization and establish the organization’s overall goals The process of determining a company's long-term goals and then identifying the best approach for achieving those goals. Operation plans encompass a particular operational area of the organization The two plans differ in scope where the prior focus on broad issues while the later the narrow term operations

11. Types of plan based on time Long term plans defined as those with the time frame beyond three years. Short term plans cover one year or less. Any time period in between would be considered as intermediate plan Although this time frame is common, organizations can use any planning time frame as required.

12. Types of plan based on specificity Specific plans … are clearly defined and leave no room for interpretation . It states objectives in a way that eliminates ambiguity and problem with misunderstanding. Such type of plans are used under condition of certainty. Directional plans … are flexible and set out general guidelines Preferable when there is high uncertainty .

13. Contingency Factors in Planning Three contingency factors affect the choice of plan: Organizational level, Degree of environmental uncertainty and Length of future commitment i. Organizational/Managerial level Vs. Planning Strategic Planning Operational Planning Top Executives Middle level managers First line managers

14. Cont’d… ii. Environmental uncertainty When uncertainty is high, plans should be specific but flexible. iii. The commitment concept Committed to whatever future expense are generated by the planned decision Managers live with the decision and its consequence, good or bad

15. Planning Tools and Techniques Techniques for Assessing the Environment Three commonly used techniques to assess the environment are; Environmental Scanning Forecasting & Benchmarking

16. Cont’d… Environmental Scanning- Companies that use environmental scanning have higher performance. Techniques for environmental scanning are; Competitors intelligence experts suggest that 80% of what managers need to know about competitors can be found out from their own employees, suppliers, and customers Global scanning - subscription to some information source.

17. Cont’d… Forecasting- the second technique is forecasting which is a prediction of what will occur in the future. Forecasts are estimates of the occurrence, timing or magnitude of future event. Forecasting is the basis of planning ahead even though the actual demand is quite uncertain. Techniques for forecasting are; Quantitative forecasting -applies a set of mathematical rules when managers have sufficient data. Qualitative forecasting -use judgment and opinions of knowledge.

18. Cont’d… Benchmarking The search for the best practices among competitors that lead to superior performance. Steps in Benchmarking: The benchmarking activity has to come across the following seven major steps: 1 st Identify the benchmark potentials 2 nd Target and study focus areas 3 rd Form team to benchmark 4 th Develop measurement metrics 5 th Identify and select partners 6 th Study and evaluate target areas 7 th Adapt and implement findings

19. Techniques for Allocating Resources Four techniques for allocating resources are; Budgeting Scheduling Breakeven Analysis Linear Programming Budget is numerical plan for allocating resource to specific anticipated activities to be done. Fixed budget Flexible budget Zero-level budget and Capital expenditure

20. Cont’d… Scheduling The use of Gantt chart Time lined at horizontal and activities are arranged in vertical then, planned vs. actual compared over time. Breakeven Analysis Breakeven analysis is valuable for managers because it points out the relationship between revenue, cost, & profit BE is given as TFC P-VC Revenue, cost, and profit will be identified

21. Cont’d… Linear programming To solve problems of resource allocation , managers may use mathematical programming: linear programming. We use linear programming for outcome optimization. It can’t applied for all resource allocation 4S+2B ≤ 600 2S+2B ≤ 450 Department Shoe Bags Monthly capacity Manufacturing 4 2 600 Assembly 2 2 450 Profit per unit 18 10 Find a combination that bring optimum outcome ?

22. Contemporary issue in Planning Today’s managers face the challenges of planning in the environment that’s both dynamic and complex. Two planning techniques appropriate for such types of environment are: Project Management and Scenarios Planning Project Management is the task of getting a project’s activities done on time, within budget, and according to the specification.

23. In conclusion… Planning tools and techniques can help managers prepare confidently for the future But never replace the manager’s skills and capabilities in using the information gained to develop effective and efficient plans

24. End of the chapter !!!