Management Concepts and Application (Planning)

One of the fundamental principles of Management Planning

1. Dr. Rishiraj Sarkar Management Concepts & Applications

2. Unit 2: Planning Definition : Planning is the fundamental management function, which involves deciding beforehand , what is to be done, when is it to be done, how it is to be done and who is going to do it. It is an intellectual process which lays down an  organization's objectives and develops various courses of action , by which the organization can achieve those objectives. It chalks out exactly, how to attain a specific goal. Planning is nothing but thinking before the action takes place . It helps us to take a peep into the future and decide in advance the way to deal with the situations, which we are going to encounter in future. It involves logical thinking and rational decision making.

3. Characteristics / Nature of Planning :

4. Managerial function : Planning is a first and foremost managerial function provides the base for other functions of the management, i.e. organising , staffing, directing and controlling, as they are performed within the periphery of the plans made. Goal oriented : It focuses on defining the goals of the organisation , identifying alternative courses of action and deciding the appropriate action plan, which is to be undertaken for reaching the goals. Pervasive : It is pervasive in the sense that it is present in all the segments and is required at all the levels of the organisation . Although the scope of planning varies at different levels and departments. Continuous Process : Plans are made for a specific term, say for a month, quarter, year and so on. Once that period is over, new plans are drawn, considering the organisation’s present and future requirements and conditions. Therefore, it is an ongoing process, as the plans are framed, executed and followed by another plan. Intellectual Process : It is a mental exercise at it involves the application of mind, to think, forecast, imagine intelligently and innovate etc.

5. Futuristic : In the process of planning we take a sneak peek of the future. It encompasses looking into the future, to analyse and predict it so that the organisation can face future challenges effectively. Decision making : Decisions are made regarding the choice of alternative courses of action that can be undertaken to reach the goal. The alternative chosen should be best among all, with the least number of the negative and highest number of positive outcomes. Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The activity helps managers analyse the   present condition to identify the ways of attaining the desired position in future . It is both, the need of the organisation and the responsibility of managers. Importance / Benefits of Planning : It helps managers to improve future performance , by establishing objectives and selecting a course of action, for the benefit of the organisation . It minimises risk and uncertainty , by looking ahead into the future.

6. It facilitates the coordination of activities . Thus, reduces overlapping among activities and eliminates unproductive work. It states in advance, what should be done in future, so it provides direction for action. It uncovers and identifies future opportunities and threats . It sets out standards for controlling . It compares actual performance with the standard performance and efforts are made to correct the same . Principles of Planning : Principle of Contribution to Objectives Principles of Management Interest Principle of Premises Principle of Primacy Principle of Efficiency Principle of Flexibility Principle of Navigational Change Principle of Commitment Principle of Timing Principle of Pervasive Principle of Alternatives Principle of Limiting Factor Principle of Comparative Strategies Principle of Cooperation Principle of Long-Range View Principle of Acceptance

7. Principle of Contribution to Objectives - Contribution of objectives states that plans must be goal-focused and should positively contribute toward the achievement of organizational goals. Principles of Management Interest - This principle states that managers should genuinely invest their interests and expertise in designing effective plans. Principle of Premises - Assumptions concerning expected future events are known as premises. By this premise principle, the future likely events should be forecasted and analyzed and the plans should be well prepared for such events. Principle of Primacy - Primacy states you should make a plan first and organize other functions in a way that ensures the achievement of goals addressed in planning. Principle of Efficiency - The planning should be done in a way that ensures the achievement of the result with minimum cost and effort. Principle of Flexibility - The plan should be flexible enough to cope with environmental changes. Principle of Navigational Change - Continuously monitor changes during the course of implementation of plan and if necessary bring changes for effective execution. Principle of Commitment - When you make a plan it should reflect the time period within which it would be achieved. This principle states the planning should also be time-specific.

8. Principle of Timing - It states which plan (activity) should be done first and which one later should be specified. Principle of Pervasive - This principle states all levels of managers should be involved in planning. Principle of Alternatives - This principle states that, like principles of decision-making, the planning should also include the selection of the best one from the pool of options. Principle of Limiting Factor - Your business might not have an abundance of all the resources that are essential to effectively achieve desired goals. Your focus should be on a component that, although being expensive, limited in supply, or scarce, significantly affects performance. Principle of Comparative Strategies - It states that while making plans you should also consider the strategies of competitors. Principle of Cooperation - It states that all members of the organization should cooperatively contribute to plan development. Cooperation in planning also reduces the confusion and unnecessary hurdles of all members and promotes efficient execution. Principle of Long-Range View - While making plans you should also consider the future impacts of such plans. Principle of Acceptance - The last principle of planning states that the plan should be acceptable and understandable to all members of your business.

9. Kinds / Types of Planning : There are four types of planning:  Strategic Operational Tactical Contingency ‍ Strategic planning : Strategic planning is defining a company's direction and goals and allocating its resources to pursue them. It consists of analyzing the competitive environment and identifying external and internal factors that can affect the organization. An example of strategic planning for a Software as a Service ( SaaS ) company that offers project management software and wants to expand its customer base and increase revenue would look like this: Conduct market research to understand the needs and preferences of its target audience. Analyze the competitive landscape to identify potential opportunities and threats. Based on this analysis, the company sets the following goals : Introduce new features and functionality to the software that addresses the specific needs and pain points of the construction and engineering industries. Develop targeted marketing campaigns to reach small and medium-sized businesses in these industries through targeted online advertising, social media marketing, and content marketing. Increase customer retention by providing exceptional customer support and offering a loyalty program for long-term subscribers. To achieve these goals, the company allocates needed resources for marketing, development, and customer support staff.

10. Operational planning : Operational planning is the process of defining specific actions and resources needed to achieve the goals set out in the strategic plan.  It involves developing detailed plans and budgets to implement the strategies and tactics outlined in the strategic plan and identifying and addressing any potential risks or challenges that may arise. The example SaaS company has identified introducing new features and functionality to its software as a key goal in its strategic plan. To achieve this goal, the company develops an operational plan that outlines the specific actions and resources needed to execute this strategy. The operational plan includes tasks such as: Implementing new features. Allocating development resources and setting goals and timelines for developing the new features. Developing a budget for testing and quality assurance efforts. Assigning staff members to oversee the development and testing of the new features. Tactical planning : Tactical planning develops plans and actions to achieve the goals set out in the operational plan .  It involves breaking down the larger goals and objectives into smaller, more manageable tasks that can be completed within a shorter time frame, typically ranging from a few weeks to a few months.  Tactical planning includes developing content marketing campaigns, promoting new features, assigning tasks to developers, etc .

11. Contingency planning : Contingency planning is the process of identifying potential risks or challenges that may arise and developing plans to mitigate or address them .  To ensure the success of the launch of the new features, our example SaaS company develops a contingency plan to mitigate potential risks or challenges that may arise.  The contingency plan includes the following measures: Identifying potential disruptions to the development process, such as staff illness or unexpected delays, and minimizing their impact on the timeline for launching the new software. Identifying potential IT issues, such as server outages or security breaches, and ensuring that the software remains accessible to customers and secure. Sudden change in market conditions or a major competitor entering the market .

12. Derivative Plans : Objectives : A specific result that a person or system aims to achieve within a time frame and with available resources. In general, objectives are more specific and easier to measure than goals. Objectives are basic tools that underlie all planning and strategic activities. Goals are the outcome you intend to achieve, whereas objectives are the actions that help you achieve a goal .

13. Steps involved in Planning : Analyzing Opportunities: Awareness of opportunities in the external environment as well as within the organisation is the real starting point for planning. It is important to take a preliminary look at possible future opportunities and see them clearly and completely. All managers should know where they stand in the light of their strengths and weaknesses, understand the problems they wish to solve and know what they gain. Setting Objectives: The major organisational and unit objectives are set in this stage. This is to be done for the long term as well as for the short range. Objective specify the expected results and indicate the end points of what is to be done, where the primary emphasis is to be placed and what is to be accomplished by the various types of plans.

14. Developing Premises: Planning premises are planning assumptions the expected environmental and internal conditions. Thus planning premises are external and internal. External premises include total factors in task environment like political, social, technological, competitors, plans and actions, government policies. Internal factors include organisation’s policies, resources of various types, and the ability of the organisation to withstand the environmental pressure. The plans are formulated in the light of both external and internal factors. Identifying Alternatives: Various alternatives can be identified based on the organisational objectives and planning premises. The concept of various alternatives suggests that a particular objective can be achieved through various actions. For example, if an organisation has set its objectives to grow further, it can be achieved in several ways like expanding in the same Field of business or product line diversifying in other areas, joining hands with other organisations , or taking over another organisation and so on. Within each category, there may be several alternatives. The most common problem is not finding alternatives but reducing the number of alternatives so that the most promising may be analysed . Evaluating Alternatives: The various alternative course of action should be analysed in the light of premises and goals. There are various techniques available to evaluate alternatives. The evaluation is to be done in the light of various factors. Example, cash inflow and outflow, risks, limited resources, expected pay back etc., the alternatives should give us the best chance of meeting our goals at the lowest cost and highest profit.

15. Selecting an Alternative: This is the real point of decision-making. An analysis and evaluation of alternative courses will disclose that two or more alternative advisable and beneficial. The fit one is selected. After formulating the basic plan, various plan are derived so as to support the main plan. Implementing Action Plan: After formulating basic and derivative plans, the sequence of activities is determined so those plans are put into action. After decisions are made and plans are set, budgets for various periods and divisions can be prepared to give plans more concrete meaning for implementation. Reviewing: Reviewing your plans helps reveal assumptions that need to be adjusted. Plans rest upon assumptions, whether you articulate those assumptions or not and therefore it should be reviewed from time-to-time. By planning process, an organisation not only gets the insights of the future, but it also helps the organisation to shape its future. Effective planning involves simplicity of the plan, i.e. the plan should be clearly stated and easy to understand  because if the plan is too much complicated it will create chaos among the members of the organisation . Further, the plan should fulfil all the requirements of the organisation .

16. Standing Plans : Standing plans, also known as ongoing plans, provide guidance for recurring activities or situations. They are long-term plans that are designed to be used repeatedly, serving as a framework for decision-making and actions over an extended period. Standing plans are commonly used for routine and repetitive activities, as well as for addressing situations that occur regularly within an organization. These plans provide consistency, efficiency, and continuity in managing day-to-day operations. Examples of standing plans include: Policies: Policies are established guidelines that define acceptable behavior, procedures, and practices within an organization. They provide a framework for decision-making and help maintain consistency and uniformity in organizational operations. Procedures: Procedures outline the step-by-step actions required to perform specific tasks or processes. They provide detailed instructions on how to carry out routine activities and ensure consistency and efficiency in work execution. Rules and Regulations: Rules and regulations establish specific requirements, limitations, or prohibitions within an organization. They serve as guidelines for behavior, safety, and compliance with legal or ethical standards. Standing plans are designed to be flexible and adaptable to changing circumstances while providing a consistent approach to recurrent situations . Single-Use Plans : Single-use plans are created to address specific, time-limited objectives. They are developed for a particular situation, project, or event that is not expected to recur in the future. Single-use plans are commonly used in organizations for non-routine activities that require specific attention and detailed planning. Examples of single-use plans include:

17. Project Plans : These plans outline the specific tasks, resources, timelines, and milestones for completing a particular project. Once the project is completed, the plan is no longer applicable. Event Plans: Event plans are developed for organizing special events, such as conferences, product launches, or charity fundraisers. They include details regarding logistics, scheduling, budgeting, marketing, and other aspects specific to the event. Campaign Plans: These plans are created for short-term marketing or advertising campaigns to achieve specific objectives, such as increasing brand awareness or promoting a new product. Once the campaign is over, the plan is no longer in use. Single-use plans are typically focused on achieving a specific outcome within a defined timeframe and are not intended for continuous use or application to ongoing activities.

18. Corporate Planning & Strategy Formulation : C orporate planning : Corporate planning is the process by which businesses create strategies for meeting business goals and achieving objectives. It involves strategy definition, strategy direction, decision-making and resource allocation. Corporate planning ensures that business operations are orderly and that the team works towards the same goals. It can also help you identify potential challenges in meeting goals, so you can provide methods to overcome them. Corporate planning is a continuous and dynamic process that lasts throughout the life of the business. Strategy formulation : It refers to the process of choosing the most appropriate course of action for the realization of organizational goals and objectives and thereby achieving the organizational vision. The process of strategy formulation basically involves six main steps: Setting Organizations’ objectives - The key component of any strategy statement is to set the long-term objectives of the organization. It is known that strategy is generally a medium for realization of organizational objectives. Objectives stress the state of being there whereas Strategy stresses upon the process of reaching there . Strategy includes both the fixation of objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider term which believes in the manner of deployment of resources so as to achieve the objectives.

19. While fixing the organizational objectives, it is essential that the factors which influence the selection of objectives must be analyzed before the selection of objectives. Once the objectives and the factors influencing strategic decisions have been determined, it is easy to take strategic decisions . Evaluating the Organizational Environment - The next step is to evaluate the general economic and industrial environment in which the organization operates. This includes a review of the organizations competitive position. It is essential to conduct a qualitative and quantitative review of an organizations existing product line. The purpose of such a review is to make sure that the factors important for competitive success in the market can be discovered so that the management can identify their own strengths and weaknesses as well as their competitors’ strengths and weaknesses. After identifying its strengths and weaknesses, an organization must keep a track of competitors’ moves and actions so as to discover probable opportunities of threats to its market or supply sources . Setting Quantitative Targets - In this step, an organization must practically fix the quantitative target values for some of the organizational objectives. The idea behind this is to compare with long term customers, so as to evaluate the contribution that might be made by various product zones or operating departments . Aiming in context with the divisional plans - In this step, the contributions made by each department or division or product category within the organization is identified and accordingly strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic trends.

20. Performance Analysis - Performance analysis includes discovering and analyzing the gap between the planned or desired performance. A critical evaluation of the organizations past performance, present condition and the desired future conditions must be done by the organization. This critical evaluation identifies the degree of gap that persists between the actual reality and the long-term aspirations of the organization. An attempt is made by the organization to estimate its probable future condition if the current trends persist . Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of action is actually chosen after considering organizational goals, organizational strengths, potential and limitations as well as the external opportunities.

21. Management by Objectives (MBO) : Definition : Management by Objectives (MBO) or otherwise called as Management by Results (MBR) is management philosophy which was first propounded by Peter F. Drucker in the year 1954 , in his book “Practice of Management” . Management by objectives is a planning and controlling system , in which the superior and subordinates work together in order to define business objectives and establish targets that are to be achieved by the subordinates, and also determine each individual’s key area of responsibility as regards the results expected. Further, these measures are considered as yardstick to run the unit and also assess the contribution of each individual . Assumption of Management by Objectives: MBO relies on the premise that people tend to perform better when they know about what is expected from them and when they can associate their personal goals with that of the objectives of the organization . In addition to this, it also proposes that people have interest in establishing goals and comparing the performance against the set target.

22. Process of Management by Objectives:

23. Goal Setting : First and foremost, the long term goals of the organization are defined, such as its strategic intent, vision, mission and goals. Once these are formulated, the management then decides specific objectives to be attained within the given time frame. Therefore, goal-setting includes: 1) Defining overall corporate objectives (Defining goals set by top management) 2) Setting Departmental Goals 3) Setting of target for individuals Action Plan : Action plan refers to the way through which the objectives are achieved. It provides direction regarding how the objectives can be achieved, as in what is to be done, what steps are to be followed, etc. This is followed by establishment of check-points or standards of performance through periodic meetings of the superior and subordinates. Performance Appraisal : Last but not the least, at this stage, a comparison is made between actual and predetermined standards. These objectives acts as a basis for reviewing the progress. This is generally followed by employee counseling. MBO, is directed towards raising the performance level of the organization by conspicuously identifying the measurable goals and end results, which are agreed to the management as well as employees of the organization. Thereafter, the employees participate in formulating the action plan and strategy for the attainment of the goals. Superior Subordinate co-ordination

24. Benefits of Management by Objectives: Better Planning Better Organisation Self-control Higher Productivity Better Appraisal of Performance Executive Development Open Communication In a nutshell, Management by objectives is nothing but a process wherein the goals, plans and control system of the organization are defined by the management and employees jointly.

25. Management by Exception : Management by exception (MBE) is a workplace practice that allows employees to work more independently and only involve their managers on specific issues or “exceptions” to normal operations. The practice uses both active and passive management. Active management by exception means assisting with challenges and preventing problems, while the passive approach means only intervening when there’s a problem. This practice can be fine-tuned so that smaller issues are handled by lower-level managers and larger issues are reported to senior management. Management by exception can also be applied within business functions or financial operations. For instance, a call center manager might only focus on major customer complaints, allowing their employees to monitor their own call performance . How does management by exception work? The process of management by exception, or by the importance of the issue, follows four objectives: 1 . Setting normal operation standards - Your company sets a standard for daily operations so employees know what warrants contacting managers. This means every employee understands the normal workday operations. The standard, or norm, should be quantifiable and achievable. 2 . Assessing whether performance is on track - Once you’ve established the norms, you can begin using management by exception.

26. 3 . Analyzing exceptions - There are two outcomes when data is compared with norms: No significant exception: You take no action.  Finding a significant exception: If you are a manager, you need to either respond to the deviation or report it higher up in the chain, depending on the procedure. 4. Solving the exceptions - When employees find situations or data that go against the company norm, they report it to the appropriate manager. That manager then works with a team or independently to address the issue. Advantages of management by exception Efficient practices Sets clear priorities Motivates employees Quickly addresses problems Disadvantages of management by exception Less focus on preventative measures Requires close monitoring Requires advanced problem-solving skills

27. Planning Premises : According to Koontz & O’Donnell, “Planning premises are the anticipated environment in which plans are expected to operate. They include assumptions or forecasts of the future and known conditions that will affect the course of plans such as prevailing policies and existing company plans that controls the basic nature of supporting plans.” Planning premises constitute the framework within which planning is done. They imply not only the assumptions about the future but also predictions. Premises are to be established on the basis of systematic forecasting. Effective planning is largely dependent on the correct knowledge and choice of planning premises. Change in planning premises may result in modification of plans. Different types of planning premises are:    1) Internal and External Premises    2) Controllable, semi-controllable and non-controllable premises    3) Tangible and Intangible premises

28. Types of Planning Premises: 1. Internal and External Premises Internal Premises come from the business itself. It includes the skills of the labor force, investment policies of the company, management style, sales forecasts, etc. External Premises come from the external environment. That is economic, technological, social, political and even cultural environment. External premises cannot be controlled by the business. 2. Controllable, Semi-controllable and Uncontrollable Premises Controllable Premises are fully controlled by the management. They include factors like materials, machines, and money. Semi-controllable Premises are partly controllable. They include marketing strategy. Uncontrollable Premises as the name suggests are those over which the management has absolutely no control. Take for example weather conditions, consumer behavior, natural disasters, wars, etc. 3. Tangible and intangible premises: Tangible premises can be estimated in quantitative terms like, production units, cost per unit etc. Intangible premises cannot be quantified, for example, goodwill of the firm, employer-employee relationships, leadership qualities of the managers, motivational factors that affect employees’ performance etc. This classification is not mutually exclusive.

29. Thank You!