Planning in Principles of Management

This upload presents the Planning part in Principles of Management that includes nature & purpose of planning, types of planning, management by objectives, policies and planning premises, strategic management, planning tools and techniques, decision making steps

1. UNIT II – PLANNING
R.Arun Kumar, AP/Mech, RIT

2. SYLLABUS
Nature and purpose of planning – planning process – types of
planning – objectives – setting objectives – policies – Planning
premises – Strategic Management – Planning Tools and Techniques
– Decision making steps and process.
R.Arun Kumar, AP/Mech, RIT

3. Objective:
To study different types of planning, its tools and techniques.




Outcome:
The student will be able to explain the different types of
planning process and tools used for planning.
R.Arun Kumar, AP/Mech, RIT

4. NATURE AND PURPOSE OF PLANNING :
Planning is the most basic form of all management functions.
Everyone used to plan in our day to day activities.
We plan to execute our official work, improvise career, plan our
investment, etc.
R.Arun Kumar, AP/Mech, RIT

5. BOEING 787 AIRCRAFT
R.Arun Kumar, AP/Mech, RIT

6. Planning involves defining the organizations' goals,
establishing strategies for achieving those goals and
developing plans to integrate and coordinate work
activities.
R.Arun Kumar, AP/Mech, RIT

7. Planning is deciding in advance what to do, how to do it, when
to do it, and who is to do it.
Planning bridges the gap from where we are to where we
want to go.
It makes it possible for things to occur which would not otherwise
happen.





- Harold Koontz and Cyril O’Donell
R.Arun Kumar, AP/Mech, RIT

8. In formal planning, specific goals covering a specific period of
time are defined.
Shared among all the members of an organization to reduce
uncertainty and create common understanding about what need
to be done.
R.Arun Kumar, AP/Mech, RIT

9. NATURE OF PLANNING :
1. Pervasiveness:
Occurs irrespective of level of management. Every manager
has a planning function to perform.
R.Arun Kumar, AP/Mech, RIT

10. NATURE OF PLANNING :
2. Primary in nature:
Precedes other functions of an organization.
Without planning other functions of an organization becomes
meaningless.
R.Arun Kumar, AP/Mech, RIT

11. NATURE OF PLANNING :
3. Continuous in nature:
Never ending activity.
R.Arun Kumar, AP/Mech, RIT

12. NATURE OF PLANNING :
4. Flexible in nature:
Future is unpredictable, thus planning must provide enough
room to cope with the changes in global market.
R.Arun Kumar, AP/Mech, RIT

13. NATURE OF PLANNING :
5. Goal oriented:
Carried out to attain the objective of an organization.
Provides guidelines for attaining goals.
R.Arun Kumar, AP/Mech, RIT

14. NATURE OF PLANNING :
6. Integrated process:
Integrates the plans and actions of a manager.
R.Arun Kumar, AP/Mech, RIT

15. NATURE OF PLANNING :
7. Forward looking:
Without planning, business become random in nature.
R.Arun Kumar, AP/Mech, RIT

16. NATURE OF PLANNING :
8. Intellectual process:
Involves brain activity.
R.Arun Kumar, AP/Mech, RIT

17. NATURE OF PLANNING :
9. Factual process:
Process is based on some predictions and past experiences.

R.Arun Kumar, AP/Mech, RIT

18. NATURE OF PLANNING :
10. Effective and efficient process:
R.Arun Kumar, AP/Mech, RIT

19. PURPOSE OF PLANNING :
1. Provides direction:
R.Arun Kumar, AP/Mech, RIT

20. PURPOSE OF PLANNING :
2. Reduces uncertainty:
R.Arun Kumar, AP/Mech, RIT

21. PURPOSE OF PLANNING :
3. Minimizes waste and redundancy:
R.Arun Kumar, AP/Mech, RIT

22. PURPOSE OF PLANNING :
4. Set standards for controlling:
R.Arun Kumar, AP/Mech, RIT

23. PURPOSE OF PLANNING :
5. Provides basis for team work:
R.Arun Kumar, AP/Mech, RIT

24. PURPOSE OF PLANNING :
6. Adaption to change in work environment:
R.Arun Kumar, AP/Mech, RIT

25. PURPOSE OF PLANNING :
7. Improves morale:
R.Arun Kumar, AP/Mech, RIT

26. PURPOSE OF PLANNING :
8. Facilitates decision making:
R.Arun Kumar, AP/Mech, RIT

27. PLANNING PROCESS,
TYPES OF PLANNING
R.Arun Kumar, AP/Mech, RIT

28. GOALS:
Goals are also called as objectives.
Goals are desired outcomes or targets.
They guide management decisions and form the criteria against
which the work results are measured.
R.Arun Kumar, AP/Mech, RIT

29. TYPES OF GOALS:
Financial goal
Strategic goal
R.Arun Kumar, AP/Mech, RIT

30. Stated goals
Real goals
R.Arun Kumar, AP/Mech, RIT

31. “To bring inspiration and innovation to every athlete in the
world.”
R.Arun Kumar, AP/Mech, RIT

32. “To be world’s high performance benchmark independent oil
and gas company”
R.Arun Kumar, AP/Mech, RIT

33. “To be a global transformation partner”
R.Arun Kumar, AP/Mech, RIT

34. PLANNING PROCESS:
Planning is a process which contains number of steps within it.
Planning process differs from organization to organization and
from objective to objective.
With some minor modifications, process is applied for all types of
plans.
R.Arun Kumar, AP/Mech, RIT

35. PLANNING PROCESS:
R.Arun Kumar, AP/Mech, RIT

36. PLANNING PROCESS:
1. Situation analysis:
Manager should collate all the information relevant to a given
activity for which planning is to made.
Should analyze past experience, current trends and future scope.
Helps to bring the issues and problems related to activity to
light.
R.Arun Kumar, AP/Mech, RIT

37. PLANNING PROCESS:
2. Identification of opportunities:
The exact planning starts.
Identify the opportunity and carry out SWOT analysis.
If the organization gets positive result, it would pass on to next
stage, else the opportunity would be dropped.
R.Arun Kumar, AP/Mech, RIT

38. PLANNING PROCESS:
3. Objective setting:
Represents the destination of an organization.
Objectives of an organization and various departments are fixed.
Timeline to finish the objectives are also fixed during this stage.
R.Arun Kumar, AP/Mech, RIT

39. PLANNING PROCESS:
4. Planning premises:
Denotes the circumstances under which the planning will be
undertaken.
It represents the assumptions that are to be considered.
R.Arun Kumar, AP/Mech, RIT

40. PLANNING PROCESS:
5. Determining alternative course of actions:
Requires imagination, foresight and ingenuity.
E.g. To improve productivity and organization can focus on
increasing wages or incentives or technology investment, etc.
R.Arun Kumar, AP/Mech, RIT

41. PLANNING PROCESS:
6. Evaluation of alternatives:
Analyzing various aspects and results of all the alternatives.
Involves micro analysis of all the alternatives.
R.Arun Kumar, AP/Mech, RIT

42. PLANNING PROCESS:
7. Selection of best alternatives:
After micro analysis, the best methodology is preferred for to
accomplish the goal of an organization.
R.Arun Kumar, AP/Mech, RIT

43. PLANNING PROCESS:
8. Derivative plans:
Organization have to think about secondary or sub plans to
accomplish.
E.g. If an organization prefers to provide transport facility instead
of outsourcing, then it have to think about financial burden, etc.
R.Arun Kumar, AP/Mech, RIT

44. PLANNING PROCESS:
9. Implementation of plans:
Communicating plan to all employees and providing instructions.
Deploying facilities like raw materials, man power, machinery,
etc.
Linking implementation with reward system and ensuring
execution.
R.Arun Kumar, AP/Mech, RIT

45. PLANNING PROCESS:
10. Follow up:
Monitoring the consequences of implementation, so that
necessary corrective actions can be to fine tune the plan.
R.Arun Kumar, AP/Mech, RIT

46. PLANNING TYPES:

R.Arun Kumar, AP/Mech, RIT

47. TYPES OF PLANNING
R.Arun Kumar, AP/Mech, RIT

48. PLANNING TYPES:

R.Arun Kumar, AP/Mech, RIT

49. PLANNING TYPES:
1. Breadth: Based on the range of area.
Strategic planning
Operational planning


R.Arun Kumar, AP/Mech, RIT

50. PLANNING TYPES:
Strategic Plans:
Apply to the entire organization.
Establish the organization’s overall goals.
Seek to position the organization in terms of its environment.
Cover extended periods of time
R.Arun Kumar, AP/Mech, RIT

51. PLANNING TYPES:
Operational Plans
Plans that encompasses a particular operational area of
the organization..
Specify the details of how the overall goals are to be achieved
Cover short time period.
R.Arun Kumar, AP/Mech, RIT

52. PLANNING TYPES:
2. Time frame: Based on duration for achieving the goal.
Long term goal
Short term goal
R.Arun Kumar, AP/Mech, RIT

53. PLANNING TYPES:
Long term goals:
Plans with time frames extending beyond three years.
R.Arun Kumar, AP/Mech, RIT

54. PLANNING TYPES:
Short term goals:
Plans with time frames on one year or less.
Any plans between these time duration are called as
intermediate plans.
R.Arun Kumar, AP/Mech, RIT

55. PLANNING TYPES:
3. Specificity: Based on range of defining.
Specific plans
Directional plans
R.Arun Kumar, AP/Mech, RIT

56. PLANNING TYPES:
Specific Plans
Plans that are clearly defined and leave no room for
interpretation.
They have clearly defined objectives.
No uncertainty
R.Arun Kumar, AP/Mech, RIT

57. PLANNING TYPES:
Directional Plans
Flexible plans that set out general guidelines, provide focus,
yet allow freedom in implementation.
Directional plans are used when uncertainty is high.
They provide focus but do not lock managers into specific goals
or courses of action.
R.Arun Kumar, AP/Mech, RIT

58. PLANNING TYPES:
4. Frequency of use: Based on usage of planning.
Single-Use Plan
Standing Plans
R.Arun Kumar, AP/Mech, RIT

59. PLANNING TYPES:
Single-Use Plan
A one-time plan specifically designed to meet the need of a
unique situation.
R.Arun Kumar, AP/Mech, RIT

60. PLANNING TYPES:
Standing Plans
Ongoing plans that provide guidance for activities performed
repeatedly.
R.Arun Kumar, AP/Mech, RIT

61. SINGLE USE PLANS VS STANDING PLANS
Single use plans
1.Programmes
2.Budgets
3.Projects
Standard/Repeated use plans
1.Objectives
2.Policies
3.Procedures
4.Rules
5.Strategies
R.Arun Kumar, AP/Mech, RIT

62. Single Use Plans:
1. Programmes
A specific plan devised to meet a particular situation.
2. Budget
A financial or quantitative statement prepared prior to a definite
period of time.
3. Project
Part of general programme.
R.Arun Kumar, AP/Mech, RIT

63. Standing Use Plans:
1. Objectives
Specific goals or targets to be accomplished.
Realistic, flexible.
2. Policies
Guiding principles established by the company to govern actions
usually under repetitive conditions.
3. Procedures
 Prescribe the manner or method by which the work is to be
performed.

R.Arun Kumar, AP/Mech, RIT

64. Standing Use Plans:
4. Rules
A decision made by the management regarding what is to be done
and what is not to be done in a given situation.
5. Strategy
A special kind of plan formulated in order to meet the challenge
of the polices of competitors.
R.Arun Kumar, AP/Mech, RIT

65. Tactical Planning:
Deals with the low level units of an organization.
Concerned with shorter time frames and narrower scopes.

R.Arun Kumar, AP/Mech, RIT

66. Contingency Planning:
Plans that are devised for specific situation.
R.Arun Kumar, AP/Mech, RIT

67. Advantages of Planning:
Helps in achieving objectives.
Better utilization of resources.
Economy in operation.
Reduces uncertainty and risk.
Effective control.
Improves coordination.
Guides in decision making.
Improves output of an organization.
Provides decentralization.
R.Arun Kumar, AP/Mech, RIT

68. Disadvantages of Planning:
Lack of accuracy.
Time and cost.
Inflexibility.
Delay during emergency period.
R.Arun Kumar, AP/Mech, RIT

69. OBJECTIVES AND
SETTING OBJECTIVES
R.Arun Kumar, AP/Mech, RIT

70. DEFINITIONS :
Objectives are those ends which the organizations seeks to
achieve by its existence and operations.
Objective is a specific commitment to achieve a measurable
result within a specified time.
R.Arun Kumar, AP/Mech, RIT

71. Characteristics of Organizational Objectives:
Multiplicity
Hierarchy
Networking
Time dimension
Quantifiable and non – quantifiable objectives.
Social sanction
R.Arun Kumar, AP/Mech, RIT

72. Characteristics of Organizational Objectives:
1. Multiplicity:
Multiplicity of objectives trigger the problem of fixing
priorities and harmonizing them.
R.Arun Kumar, AP/Mech, RIT

73. Characteristics of Organizational Objectives:
2. Hierarchy: (Top – down and bottom – up approaches)
Objectives are framed across different levels of an
organization.
e.g. achieving profit, improving shares – top level management
cost reduction, waste management – middle level management
reducing absenteeism, maintenance – low level management
R.Arun Kumar, AP/Mech, RIT

74. Characteristics of Organizational Objectives:
3. Networking:
Objectives are intertwined and networked with one other.
e.g. Marketing, HR and Production.
R.Arun Kumar, AP/Mech, RIT

75. Characteristics of Organizational Objectives:
4. Time dimension:
Objectives are time bound.
e.g. short term, long term, intermediate term.
R.Arun Kumar, AP/Mech, RIT

76. Characteristics of Organizational Objectives:
5. Quantifiable and non – quantifiable:
Objectives based on numbers are called quantifiable.
Objectives based on quality are called as non – quantifiable.
e.g. Improving productivity, increasing profit to certain number.
Improving job satisfaction, enhancing quality of products.
R.Arun Kumar, AP/Mech, RIT

77. Characteristics of Organizational Objectives:
6. Social sanction:
Objectives will confirm to general needs of the society.

R.Arun Kumar, AP/Mech, RIT

78. Importance and role of objectives:

Legitimacy
Sense of direction
Motivational aid
Control mechanism
Co – ordination
Unifying force
R.Arun Kumar, AP/Mech, RIT

79. Importance and role of objectives:
1. Legitimacy
They describe the purpose of an organization.
They provide the identity to an organization.
R.Arun Kumar, AP/Mech, RIT

80. Importance and role of objectives:
2. Sense of direction:
Provides the guide way towards the target.
Every employee must have clear idea about what he/she is
supposed to do in his/her job.
R.Arun Kumar, AP/Mech, RIT

81. Importance and role of objectives:
3. Motivational aid:
Apart from incentives and rewards, objective of an organization
will be the driving force to attain a goal.
R.Arun Kumar, AP/Mech, RIT

82. Importance and role of objectives:
4. Control mechanism:
Being a driving force, objectives restricts employees from
deviation.
R.Arun Kumar, AP/Mech, RIT

83. Importance and role of objectives:
5. Co – ordination:
Objectives serve as unifying force for an organization.
e.g. executives coordinates the efforts of their subordinates.
R.Arun Kumar, AP/Mech, RIT

84. Importance and role of objectives:
6. Uniqueness:
They are core force to planning.
They serve as reference points for the formulation of policies,
strategies, procedures, etc.
R.Arun Kumar, AP/Mech, RIT

85. SETTING OBJECTIVES :

R.Arun Kumar, AP/Mech, RIT

86. SETTING OBJECTIVES :
Setting objective must meet following criteria:
1.Should be consistent with the values of management.
2.Should pin point strength of an organization.
3.Should satisfy external environment factors.
R.Arun Kumar, AP/Mech, RIT

87. Objective setting guidelines:
Objectives should be clear and specific.
Should be expressed in measurable terms.
Objectives should be attainable and realistic.
Objectives should be time bound.
Should be whole heartedly accepted by employees.
Objectives should be challenging.
Objectives should have sub-goals and linked to rewards.
Objectives should be inter – connected and mutually
supportive.
Objectives should be flexible and adaptable.
It should be set down in all key – result areas.
R.Arun Kumar, AP/Mech, RIT

88. Benefits of objectives formulation:
Sets specific target.
Provides direction for employee.
Increases staff motivation.
Helps to focus on specific task.
Builds relationship.
Helps to measure the performance of employee.
Helps to prioritize.
Enables the success to be measured.
R.Arun Kumar, AP/Mech, RIT

89. Limitations in objectives formulation:
Immeasurability
Inadequate resource allocation
Stress on employee
Neglecting ground reality
Avoiding consultation
Unclear and rigid objective
Time constraint
R.Arun Kumar, AP/Mech, RIT

90. SMART Objectives:
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91. MANAGEMENT BY
OBJECTIVES
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92. MANAGEMENT BY OBJECTIVES :
MBO was conceptualized by Peter F. Drucker and was made into
practice by Harold Smiddy.
Harold Smiddy was a long time Vice President of GEC.
R.Arun Kumar, AP/Mech, RIT

93. DEFINITION:
Management By Objectives is a process of setting mutually
agreed upon goals and using those goals to evaluate
employee performance.

R.Arun Kumar, AP/Mech, RIT

94. Specific performance goals are jointly determined by employees
and managers.
Progress towards accomplishing goals is periodically reviewed.
Rewards are allocated on the basis of progress towards the goals.

R.Arun Kumar, AP/Mech, RIT

95. KEY ELEMENTS OF MBO:
Goal specificity
Participative decision making
An explicit performance/evaluation period
Feedback
R.Arun Kumar, AP/Mech, RIT

96. STEPS IN MBO:
Step 1: The organization’s overall objectives and strategies are
formulated.
R.Arun Kumar, AP/Mech, RIT

97. STEPS IN MBO:
Step 2: Major objectives are allocated among divisional and
departmental units.
R.Arun Kumar, AP/Mech, RIT

98. STEPS IN MBO:
Step 3: Unit managers collaboratively set specific objectives
for their units with their managers.
R.Arun Kumar, AP/Mech, RIT

99. STEPS IN MBO:
Step 4: Specific objectives are collaboratively set with all
department members.
R.Arun Kumar, AP/Mech, RIT

100. STEPS IN MBO:
Step 5: Action plans, defining how objectives are to be achieved,
are specified and agreed upon by managers and employees.
R.Arun Kumar, AP/Mech, RIT

101. STEPS IN MBO:
Step 6: The action plans are implemented.
R.Arun Kumar, AP/Mech, RIT

102. STEPS IN MBO:
Step 7: Progress toward objectives is periodically reviewed and
feedback is provided.
R.Arun Kumar, AP/Mech, RIT

103. STEPS IN MBO:
Step 8: Successful achievement of objectives is reinforced by
performance-based rewards.
R.Arun Kumar, AP/Mech, RIT

104. Characteristics of Well written goals:
Written in terms of outcomes, not actions
Measurable and quantifiable
Clear as to time frame
Challenging yet attainable
Written down
Communicated to all necessary organizational members
R.Arun Kumar, AP/Mech, RIT

105. STEPS IN GOAL SETTING:
1. Review the organization’s mission statement.
Do goals reflect the mission?
R.Arun Kumar, AP/Mech, RIT

106. STEPS IN GOAL SETTING:
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
R.Arun Kumar, AP/Mech, RIT

107. STEPS IN GOAL SETTING:
3. Determine goals individually or with others.
Are goals specific, measurable, and timely?
R.Arun Kumar, AP/Mech, RIT

108. STEPS IN GOAL SETTING:
4. Write down the goals and communicate them.
Is everybody on the same page?
R.Arun Kumar, AP/Mech, RIT

109. STEPS IN GOAL SETTING:
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?
R.Arun Kumar, AP/Mech, RIT

110. PLANNING IN MBO PROCESS:
R.Arun Kumar, AP/Mech, RIT

111. ADVANTAGES :
Employee feel motivated when working in the organization
because of clear goals.
Improvement of managing through result oriented planning.
Classification of organization roles and structures as well as
delegation of authority according to the results expected of the
people occupying the roles.
Encouragement of commitment to personal and organizational
goals.
Development of effective controls that measure results and lead
to corrective action.
Autonomy in implementation of plan.
R.Arun Kumar, AP/Mech, RIT

112. DRAWBACKS :
MBO is not the best approach for organization functioning in
dynamic environment.
Overemphasis on individual accomplishment may create
problems with teamwork.
Difficulty in implementation.
 Difficulty of setting verifiable goals with right degree of
flexibility.
Overuse of quantitative goals and the attempt to use numbers
in areas where they are not applicable.
R.Arun Kumar, AP/Mech, RIT

113. MBO AT MICROSOFT BY BILL GATES
Eliminate politics, by giving everybody the same message.
Keep a flat organization in which all issues are discussed
openly.
Insist on clear and direct communication.
Prevent competing missions or objectives.
Eliminate rivalry between different parts of the organization.
Empower teams to do their own things.
R.Arun Kumar, AP/Mech, RIT

114. https://www.youtube.com/watch?v=9FZDVmSvsH0
https://www.youtube.com/watch?v=0qM5YYWaRC4
R.Arun Kumar, AP/Mech, RIT

115. POLICIES AND PLANNING
PREMISES
R.Arun Kumar, AP/Mech, RIT

116. DEFINITION:
Policy is a general guideline for decision making.
According to Koontz and Weihrich, “Policies are general
statements of understandings which guides or channelize
thinking in decision making or subordinates.
R.Arun Kumar, AP/Mech, RIT

117. Policies deal with ‘How to do’ but it do not dictate terms to
subordinates.
Policy is only a framework within which decisions must be
made.
R.Arun Kumar, AP/Mech, RIT

118. NATURE OF POLICY:
1. Relationship to organization’s objectives:
Policies are based on the objectives and they contribute towards
the attainment of objectives.

R.Arun Kumar, AP/Mech, RIT

119. NATURE OF POLICY:
2. Clarity of policy:
Policies are clear, definite and explicit leaving no room for
interpretation.


R.Arun Kumar, AP/Mech, RIT

120. NATURE OF POLICY:
3. Guideline towards decision making:
Prescribes the criteria for current and future actions.
R.Arun Kumar, AP/Mech, RIT

121. NATURE OF POLICY:
4. Policies are written:
Policies are stared with precise covering of all anticipated
conditions.

R.Arun Kumar, AP/Mech, RIT

122. NATURE OF POLICY:
5. Consistency:
Provides steadiness in various operations of an organization.
R.Arun Kumar, AP/Mech, RIT

123. NATURE OF POLICY:
6. Balance of policy:
Should maintain balance between stability and flexibility.
R.Arun Kumar, AP/Mech, RIT

124. NEEDS FOR POLICY:


Operationalize objectives.
Save time and effort.
Facilitate delegation of authority.
Speedup decision making.
Control administration.
R.Arun Kumar, AP/Mech, RIT

125. POLICY FORMULATION PROCESS:
1. Definition of policy
2. Creation of policy alternatives
3. Evaluation of policy alternatives
4. Choice of policy
5. Communication of policy
6. Implementation of policy
7. Review of policy




R.Arun Kumar, AP/Mech, RIT

126. TYPES OF POLICIES:
Classification on the basis of sources:
1. Originated or Formulated policies:
Originated by top level managers, flows down the level of the
management.
Acts as a guidelines for lower level units to formulate their own
unit policies.
R.Arun Kumar, AP/Mech, RIT

127. TYPES OF POLICIES:
Classification on the basis of sources:
2. Appealed policies:
Policies formulated on the request or appeal of lower level
managers.
R.Arun Kumar, AP/Mech, RIT

128. TYPES OF POLICIES:
Classification on the basis of sources:
3. Implied policies:
Sometimes policies are not clearly stated and the actions of top
level managers provides guidelines for actions at the lower levels.
R.Arun Kumar, AP/Mech, RIT

129. TYPES OF POLICIES:
Classification on the basis of sources:
4. Externally imposed policies:
Policies that are imposed by some external forces such as unions,
government, association, etc.
R.Arun Kumar, AP/Mech, RIT

130. TYPES OF POLICIES:
Classification on the basis of functions:
Production policy
Sales policy
Financial policy
Personnel policy, etc.
R.Arun Kumar, AP/Mech, RIT

131. TYPES OF POLICIES:
Classification on the basis of organization levels:
Company policy
Department policy
Derivative policy
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132. Advantages:
Ensures uniformity in actions.
Speeds up decision at lower levels.
Delegation of Authority or work becomes easier.
Gives practical shape to the objectives by elaborating and
directing the way in which the predetermined objectives are to be
attained.
R.Arun Kumar, AP/Mech, RIT

133. PLANNING PREMISES:
Usually plans are prepared for future, which are uncertain. Thus
the management makes certain assumptions about the future.
R.Arun Kumar, AP/Mech, RIT

134. DEFINITION:
According to Koontz and Weihrich, Planning premises are the
anticipated environment in which plans are expected to
operate.
According to Dr.G.R.Terry, Planning premises are the
assumptions providing a background against which the
estimated events affecting the planning will take place.

R.Arun Kumar, AP/Mech, RIT

135. IMPORTANCE :
Well organized planning can be done.
Risk of uncertainty reduces.
Risk of flexibility reduces.
Co-ordination becomes effective.
Increases in profitability.
R.Arun Kumar, AP/Mech, RIT

136. CLASSIFICATION :
1. Internal and External:
Internal are assumptions considered within an organization.
e.g.: Man power, Resource availability, Capacity of a plant.
External are assumptions considered outside an organization.
e.g.: Business environment, Demand in market, Technological
advancement
R.Arun Kumar, AP/Mech, RIT

137. CLASSIFICATION :
2. Tangible and Intangible premises:
Tangible are the assumptions that deals with numbers.
e.g.: Working hour, Monetary unit.
Intangible are the assumptions that can’t be measured.
e.g.: Employee welfare, Motivation.
R.Arun Kumar, AP/Mech, RIT

138. CLASSIFICATION :
3. Controllable and uncontrollable:
Assumptions that are completely under control.
e.g.: Procedures, Organization structure.
Assumptions that can’t be controlled by an organization.
e.g.: Population growth, Taxation policy of government.
R.Arun Kumar, AP/Mech, RIT

139. Premises about raw materials:
What type of material and quantity?
What will be the price of raw material?
Availability of raw material resource and transportation cost.
Is there any possibility to prepare required raw material in the
company?
If raw material is going to be purchased , should it be imported or
indigenously acquired?
R.Arun Kumar, AP/Mech, RIT

140. Premises about personnel:
How much skilled , unskilled , male, female, workmen, are needed
for implementation of a plan?
How much training should be imparted in the context of new
technological development ?
To make an estimate regarding present and future employees.
R.Arun Kumar, AP/Mech, RIT

141. Premises about organization:
What will be the structure of the organization?
Coordination among departments.
Whether to centralize or decentralize the authority?
R.Arun Kumar, AP/Mech, RIT

142. Premises about basic policies:
Whether to give importance to quality or low price?
Premises about automation of office.
Premises for capital.
The methods of directing to be followed .
Policies and rules of employment.
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143. STRATEGIC MANAGEMENT
R.Arun Kumar, AP/Mech, RIT

144. DEFINITION:
The decisions and actions that determine the long-run
performance of an organization.
What the managers do to develop an organization’s strategy.
It involves all the management functions.
R.Arun Kumar, AP/Mech, RIT

145. They are the plans for how the organization will do whatever
it is in business to do.
Helps an organization to attract and satisfy its customers in
order to achieve its goals.
R.Arun Kumar, AP/Mech, RIT

146. WALMART (vs) KMART
R.Arun Kumar, AP/Mech, RIT

147. BUSINESS MODEL:
Design which defines how a company is going to make money.
Business model focuses on two factors:
1. Whether customer will value what the company is
providing?
2. Whether the company can make any money doing that?
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148. R.Arun Kumar, AP/Mech, RIT

149. R.Arun Kumar, AP/Mech, RIT

150. R.Arun Kumar, AP/Mech, RIT

151. R.Arun Kumar, AP/Mech, RIT

152. R.Arun Kumar, AP/Mech, RIT

153. R.Arun Kumar, AP/Mech, RIT

154. R.Arun Kumar, AP/Mech, RIT

155. R.Arun Kumar, AP/Mech, RIT

156. R.Arun Kumar, AP/Mech, RIT

157. IMPORTANCE OF STRATEGIC MANAGEMENT :
Can make a difference in how well an organization can
perform?
Managers face continually change in situations.
Organizations are complex and diverse.
R.Arun Kumar, AP/Mech, RIT

158. Interbrand/BusinessWeek
100 Top Global Brands (2005)
1. Coca-Cola
2. Microsoft
3. IBM
4. General Electric
5. Intel
Harris Interactive/Wall Street Journal
National Corporate Reputation (2005)
1. Johnson & Johnson
2. Coca-Cola
3. Google
4. United Parcel Service
5. 3M Company
Hay Group/Fortune
America’s Most Admired Companies
(2006)
Great Place to Work Institute/Fortune
100 Best Companies to Work For (2006)
1. General Electric
2. FedEx
3. Southwest Airlines
4. Procter & Gamble
5. Starbucks
1. Genentech
2. Wegman’s Food Markets
3. Valero Energy
4. Griffin Hospital
5. W. L. Gore & Associates
R.Arun Kumar, AP/Mech, RIT

159. Interbrand/BusinessWeek
100 Top Global Brands (2015)
1. Apple
2. Google
3. Coca - Cola
4. Microsoft
5. IBM
Harris Interactive/Wall Street Journal
National Corporate Reputation (2016)
1. Johnson & Johnson
2. Coca-Cola
3. Google
4. United Parcel Service
5. 3M Company
Hay Group/Fortune
America’s Most Admired Companies
(2016)
Great Place to Work Institute/Fortune
100 Best Companies to Work For (2016)
1. Apple
2. Alphabet
3. Amazon
4. Berkshire Hathaway
5. Walt Disney
1. Google
2. ACUITY Insurance
3. The Boston Consulting
Group (BCG)
4. Wegman’s Food Markets
5. Quicken Loans
R.Arun Kumar, AP/Mech, RIT

160. STRATEGIC MANAGEMENT PROCESSES :

R.Arun Kumar, AP/Mech, RIT

161. STRATEGIC MANAGEMENT PROCESSES :
Step 1: Identifying the organization’s current mission, goals
and strategies
Mission is the reason for a firm’s being.
Provides clues to what the organizations see as their purpose.
R.Arun Kumar, AP/Mech, RIT

162. STRATEGIC MANAGEMENT PROCESSES :
Step 1: Identifying the organization’s current mission, goals
and strategies
Mission of Infosys:
To achieve our objectives in an environment of fairness, honesty
and courtesy toward our clients, employees, vendors and society at
large.
R.Arun Kumar, AP/Mech, RIT

163. STRATEGIC MANAGEMENT PROCESSES :
Step 2: Doing an external analysis

R.Arun Kumar, AP/Mech, RIT

164. STRATEGIC MANAGEMENT PROCESSES :
Step 2: Doing an external analysis
Analyzing environment is the critical step in strategic
management process.
Find out the opportunities (smart phones) and threats.
Opportunities are the positive trends and threats are the negative
trends.
R.Arun Kumar, AP/Mech, RIT

165. STRATEGIC MANAGEMENT PROCESSES :
Step 2: Doing an external analysis
R.Arun Kumar, AP/Mech, RIT

166. STRATEGIC MANAGEMENT PROCESSES :
Step 3: Doing an internal analysis
Gives information about organization’s specific resources and
capabilities.
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167. STRATEGIC MANAGEMENT PROCESSES :
Step 3: Doing an internal analysis
Gives information about organization’s specific resources and
capabilities.
Here strengths and weakness are analyzed.
R.Arun Kumar, AP/Mech, RIT

168. STRATEGIC MANAGEMENT PROCESSES :
Step 4: Formulating strategies
After analyzing all the factors the strategies will be formulated.
Three types of strategies are: corporate, business and
functional.
R.Arun Kumar, AP/Mech, RIT

169. STRATEGIC MANAGEMENT PROCESSES :
Step 5: Implementing strategies

R.Arun Kumar, AP/Mech, RIT

170. STRATEGIC MANAGEMENT PROCESSES :
Step 6: Evaluating results
Adjustments and corrective actions.

R.Arun Kumar, AP/Mech, RIT

171. TYPES OF STRATEGIES :
1. Corporate Strategy
1.1 Growth strategy
1.1.1 Concentration
1.1.2 Vertical integration
1.1.2.1 Backward vertical integration
1.1.2.2 Forward vertical integration
1.1.3 Horizontal integration (Related and Unrelated)
1.1.3.1 Related horizontal integration
1.1.3.2 Unrelated horizontal integration
1.2. Stability strategy
1.3. Renewal strategy
1.3.1 Retrenchment strategy
1.3.2 Turnaround strategy
2. Business Strategy
3. Functional Strategy
R.Arun Kumar, AP/Mech, RIT

172. CORPORATE STRATEGY :
Specifies what businesses a company is in or wants to be in?
Top management’s overall plan for the entire organization
and its strategic business units.
R.Arun Kumar, AP/Mech, RIT

173. CORPORATE STRATEGY :
Corporate strategies are classified into three types:

1. Growth
2. Stability
3. Renewal
R.Arun Kumar, AP/Mech, RIT

174. CORPORATE STRATEGY :
1. Growth Strategies:
With growth strategy, an organization expands the number of
markets served or products offered.
Expands in current businesses or new businesses.

1.1 Concentration
1.2 Vertical Integration
1.3 Horizontal Integration
1.4 Diversification
R.Arun Kumar, AP/Mech, RIT

175. CORPORATE STRATEGY :
1.1 Concentration:
Focuses only on primary line of business and increases the
number of products offered.
e.g.: CRI Pumps, Coimbatore.
R.Arun Kumar, AP/Mech, RIT

176. CORPORATE STRATEGY :
1.2 Vertical Integration:
1.2.1 Backward vertical integration.
e.g.: eBay online payment mode
1.2.2 Forward vertical integration.
e.g.: Bata showrooms
R.Arun Kumar, AP/Mech, RIT

177. CORPORATE STRATEGY :
1.3 Horizontal Integration:
Company grows by combining with competitors.
e.g.: RNAIPL
R.Arun Kumar, AP/Mech, RIT

178. CORPORATE STRATEGY :
1.4 Diversification:
1.4.1 Related diversification (variety of business in same field)
e.g. Godrej
1.4.2 Unrelated diversification (different field)
e.g. Tata Group of India
R.Arun Kumar, AP/Mech, RIT

179. CORPORATE STRATEGY :
2. Stability Strategies:
Organization continues to do what is currently doing.
Serves the clients by offering same product.
e.g.: Iruttu Kadai
R.Arun Kumar, AP/Mech, RIT

180. CORPORATE STRATEGY :
3. Renewal Strategies:
Arises when the organization is in problem.
3.1 Retrenchment Strategy (short run renewal)
3.2 Turnaround Strategy (problems are more serious)
R.Arun Kumar, AP/Mech, RIT

181. CORPORATE PORTFOLIO ANALYSIS:
In case of collection of businesses, management uses BCG (Boston
Consulting Group) matrix.
R.Arun Kumar, AP/Mech, RIT

182. COMPETITIVE STRATEGIES :
Strategy focused on how an organization should compete in each of
its Strategy Business Unit (SBU).
R.Arun Kumar, AP/Mech, RIT

183. ROLE OF COMPETITIVE ADVANTAGE :
1. Quality as a competitive advantage:
Iruttu Kadai
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184. ROLE OF COMPETITIVE ADVANTAGE :
2. Sustaining competitive advantage:
MIT
R.Arun Kumar, AP/Mech, RIT

185. ROLE OF COMPETITIVE ADVANTAGE :
Five forces Model:
R.Arun Kumar, AP/Mech, RIT

186. NEW ORGANIZATION STRATEGIES :
1. e-Business Strategies:
R.Arun Kumar, AP/Mech, RIT

187. NEW ORGANIZATION STRATEGIES :
2. Customer Service Strategies
R.Arun Kumar, AP/Mech, RIT

188. NEW ORGANIZATION STRATEGIES :
3. Innovation Strategies:
R.Arun Kumar, AP/Mech, RIT

189. PLANNING TOOLS AND
TECHNIQUES
R.Arun Kumar, AP/Mech, RIT

190. There are three categories of planning tools and techniques:
Techniques for assessing the environment
Techniques for allocating resources
Contemporary planning
R.Arun Kumar, AP/Mech, RIT

191. Techniques for assessing the environment:
Many larger accounting firms have setup external analysis
departments to study the wider environment in which they
and their clients operate.
Three techniques helps managers to do that:
1. Environmental scanning
2. Forecasting
3. Benchmarking
R.Arun Kumar, AP/Mech, RIT

192. Techniques for assessing the environment:
1. Environmental scanning:
Managers used to screen large amount of information to anticipate
and interpret changes in the environment.
R.Arun Kumar, AP/Mech, RIT

193. Techniques for assessing the environment:
1. Environmental scanning:
Analyzing what is the need of customers and the market survival
strategy of the competitors.

R.Arun Kumar, AP/Mech, RIT

194. Techniques for assessing the environment:
1. Environmental scanning:
1.1 Competitive Intelligence:
Process by which the organizations gather information about their
competitors and get answers to questions Who they are? What
they are doing? How will they affect us?

R.Arun Kumar, AP/Mech, RIT

195. Techniques for assessing the environment:
1. Environmental scanning:
1.2 Global Scanning:
World markets are complex and dynamic.
Managers must focus how he should update the business.
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196. Techniques for assessing the environment:
2. Forecasting:
Predict the future events effectively.
1.Quantitative forecasting
2.Qualitative forecasting
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197. Techniques for assessing the environment:
2. Forecasting:
2.1 Quantitative forecasting:
Set of mathematical rules to a series of past data to predict
outcomes.
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198. Techniques for assessing the environment:
2. Forecasting:
2.2 Qualitative forecasting:
Uses judgment and opinions of knowledgeable individuals to
predict outcomes.
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199. Techniques for assessing the environment:
2. Forecasting:
CPRF (Collaborative Planning, Forecasting and
Replenishment)
Provides frame work for the flow of information, goods and services
between retailers and manufacturers.
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200. Techniques for assessing the environment:
Effectiveness of forecasting:
Helps the managers in decision making.
R.Arun Kumar, AP/Mech, RIT

201. Techniques for assessing the environment:
Quantitative
Time series analysis (Duration to complete)
Regression models (Predicting a variable by assuming another
variable)
Econometric models (Sales change due to taxation)
Economic indicators (Using a factor to predict. e.g. GDP)
Substitution effect (DVD vs Pen drive)
Qualitative
Jury of opinion (Recruiting)
Sales force composition (Predicting next year sales)
Customer evaluation (Surveying dealers.)
R.Arun Kumar, AP/Mech, RIT

202. Techniques for assessing the environment:
3. Benchmarking:
The search for the best practices among competitors and non-
competitors that lead to their superior performance.

R.Arun Kumar, AP/Mech, RIT

203. Techniques for assessing the environment:
Steps in Benchmarking:

R.Arun Kumar, AP/Mech, RIT

204. Techniques for allocating resources:
Managers must focus on the resource allocation before the
execution of a work.
Examples:
Financial (equity, debts)
Human (skilled labors)
Physical (raw materials, equipment)
Intangible (brand names, reputation)
R.Arun Kumar, AP/Mech, RIT

205. Techniques for allocating resources:
Managers must focus on the resource allocation before the
execution of a work.
1. Budgeting:
Numerical plans for allocating resources to specific activities.
Used to improve time, space and use of material resources.
e.g. revenues, expenses and capital expenditures.
R.Arun Kumar, AP/Mech, RIT

206. Techniques for allocating resources:
1. Budgeting:
Types of budgets:
R.Arun Kumar, AP/Mech, RIT

207. Techniques for allocating resources:
1. Budgeting:
Methods to improve budgeting:
Collaborate and communicate.
Be flexible.
Goals should drive budgets—budgets should not determine goals.
Use budgeting/planning software when appropriate.
R.Arun Kumar, AP/Mech, RIT

208. Techniques for allocating resources:
2. Scheduling:
Plans that allocate resources by detailing what activities have to
be done, the order in which they are to be completed, who is to do
each, and when they are to be completed.

R.Arun Kumar, AP/Mech, RIT

209. Techniques for allocating resources:
2. Scheduling:
2.1 Gantt Charts:
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210. Techniques for allocating resources:
2. Scheduling:
2.2 Load Charts:
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211. Techniques for allocating resources:
2. Scheduling:
2.3 PERT Analysis:
A flow chart diagram that depicts the sequence of activities
needed to complete a project and the time or costs associated
with each activity.
To understand this one must know the following terms:
1.Events: endpoints for completion.
2.Activities: time required for each activity.
3.Slack time: Time an individual activity can be delayed.
4.Critical path: Most time consuming sequence of events.

R.Arun Kumar, AP/Mech, RIT

212. Techniques for allocating resources:
2. Scheduling:
Steps in PERT Analysis:
1.Identify every significant activity that must be achieved for a
project to be completed.
2.Determine the order in which these events must be completed.
3.Diagram the flow of activities from start to finish
4.Compute a time estimate for completing each activity.
5.Determine a schedule for the start and finish dates of each
activity and for he entire project.
R.Arun Kumar, AP/Mech, RIT

213. Techniques for allocating resources:
2. Scheduling:
E.g.: Construction of an office building:

R.Arun Kumar, AP/Mech, RIT

214. Techniques for allocating resources:
2. Scheduling:
E.g.: Construction of an office building:

Critical Path: A - B - C - D - G - H - J - K
R.Arun Kumar, AP/Mech, RIT

215. Techniques for allocating resources:
3. Break – Even Analysis:
Used to determine the point at which all fixed costs have been
recovered and profitability begins.


Costs Variable Unit -Price Unit
Costs Fixed Total
:Breakeven
R.Arun Kumar, AP/Mech, RIT

216. Techniques for allocating resources:
4. Linear Programming:
Helps in selecting which is the most suitable or optimistic
method to find the solution.
R.Arun Kumar, AP/Mech, RIT

217. Techniques for allocating resources:
4. Linear Programming:
Department
No. of hours required
for one potpourri bag
No. of hours required
for one scented candle
Monthly production
capacity
Manufacturing 2 hours 4 hours 1,200 hours
Assembly 2 hours 2 hours 900 hours
Profit per unit Rs.10 Rs.18
R.Arun Kumar, AP/Mech, RIT

218. Contemporary Planning Techniques:
Much suited for dynamic and complex situation.

R.Arun Kumar, AP/Mech, RIT

219. Contemporary Planning Techniques:
1. Project Management:
The task of getting a project’s activities done on time, within
budget, and according to specifications.
Project is defined as one-time-only set of activities that has a
definite beginning and ending point time.
R.Arun Kumar, AP/Mech, RIT

220. Contemporary Planning Techniques:
2. Scenario Planning:
Scenario Planning
An attempt not try to predict the future but to reduce uncertainty
by playing out potential situations under different specified conditions.
Scenario
A consistent view of what the future is likely to be.
R.Arun Kumar, AP/Mech, RIT

221. Contemporary Planning Techniques:
2. Scenario Planning:
Preparing for unexpected events:
Identify potential unexpected events.
Determine if any of these events would have early indicators.
Set up an information gathering system to identify early
indicators.
Have appropriate responses (plans) in place if these unexpected
events occur.

R.Arun Kumar, AP/Mech, RIT

222. DECISION MAKING STEPS
AND PROCESS
R.Arun Kumar, AP/Mech, RIT

223. Decision Making:
Managers at all levels and in all areas of organizations make
decisions.
Top level managers – Goals, Location of manufacturing facility,
new markets etc.
Middle level and lower level – production schedules, product
quality problems, pay rises and employee discipline etc.
R.Arun Kumar, AP/Mech, RIT

224. Decision Making:
Making a choice from two or more alternatives.
For every action, decision making helps us to choose the best
solution.
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225. Decision making steps:
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226. Decision making steps:
Step1: Identifying the problem or fixing to the requirement.
Step2: Consider the factors to resolve problem (e.g. costs, features).
Step3: Adding importance / weights to each criteria.
Step4: Identify viable alternatives.
Step5: Analyze the alternatives.
Step6: Choosing all the alternates.
Step7: Implementation of alternatives.
Step8: Evaluation.
R.Arun Kumar, AP/Mech, RIT

227. Decision in management functions:
We believe that the decisions taken by managers are rational.
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228. Decision making:
Bounded rationality:
Managers make decisions rationally, but are limited (bounded) by
their ability to process information.
Managers satisfies rather than maximize.
Escalation of commitment:
Increased commitment to a previous decision despite evidence that
it may go wrong.

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229. Decision making:
Role of intuition:
Taking a decision on the basis of experience, feelings and
accumulated judgment.
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230. Types of problems and decisions:
1. Structured problems and programmed decisions.
e.g. for programmed decisions: Policy, procedure, rule.
2. Unstructured problems and non – programmed decisions.
e.g. for non – programmed decisions: expel / change the employee.
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231. Programmed vs Non – programmed decisions:
R.Arun Kumar, AP/Mech, RIT

232. Types of decision makers:
R.Arun Kumar, AP/Mech, RIT

233. Common decision making errors:
R.Arun Kumar, AP/Mech, RIT

234. Common decision making errors:
1. Overconfidence Bias
Holding unrealistically positive views of one’s self and one’s
performance.
2. Immediate Gratification Bias
Choosing alternatives that offer immediate rewards.
3. Anchoring Effect
Fixating on initial information and ignoring subsequent
information.
4. Selective observation Bias
Selecting, organizing and interpreting events based on the
decision maker’s biased perceptions.
R.Arun Kumar, AP/Mech, RIT

235. Common decision making errors:
5. Confirmation Bias
Seeking out information that reaffirms past choices and
discounting contradictory information.
6. Framing Bias
Selecting and highlighting certain aspects of a situation
while ignoring other aspects.
7. Availability Bias
Losing decision-making objectivity by focusing on the most
recent events.
8. Representation Bias
Drawing likeness and seeing identical situations when none
exist.
R.Arun Kumar, AP/Mech, RIT

236. Common decision making errors:
9. Randomness Bias
Creating unfounded meaning out of random events.
10.Sunk Costs Errors
Forgetting that current actions cannot influence past events
and relate only to future consequences.
11. Self-Serving Bias
Taking quick credit for successes and blaming outside
factors for failures.
12. Hindsight Bias
Mistakenly believing that an event could have been predicted
once the actual outcome is known (after-the-fact)
R.Arun Kumar, AP/Mech, RIT