Learning Objectives

WEEK 5
• After this session, you should be able to:
Introduction to Planning –Explain the needs for planning
–Describe the different types of planning
–Understand the principles of planning
–Describe the stages and steps of the planning process.

Principles of Management –Summarize the planning process and describe

organizational goals.
–Discuss how tactical plans are developed and
Evans Khadambi Luyali executed.
Department of Civil & Structural Engineering –Describe the basic types of operational plans used by
organizations.

Four Functions of Management

Figure 1.2
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The Planning Process The Planning Process

• Planning Planning is concerned with ends (what is to be
–Planning is determining the objectives and formulating
done) as well as means (how it is to be done)
the methods to achieve them. During planning one needs to ask the following:
(It is more simply said than done)
• A job well planned is half done.
1. What am I trying to accomplish? i.e. What is my
objective?
–Identifying and selecting appropriate goals and
courses of action for an organization. 2. What resources do I have and need to accomplish
• The organizational plan that results from the planning process the same?
details the goals and specifies how managers will attain those
goals.
3. What are the methods and means to achieve the
objectives?

4. Is this the optimal path?

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1
 Informal Planning Formal Planning

• All managers engage in planning • Specific objectives are written down and made
–In informal planning very little if any is written down available to organization members
• What is to be accomplished is in the head of one or a few –Management clearly defines the path it wants to take
people from where it is to where it wants to be
– The organizations objectives are rarely verbalized
• This describes planning in many small businesses
– The manager or owner has a private vision of where they want
to go and how they expect to get there
– This type of planning is general and lacks continuity
–Informal planning exists in some large organisations
while some small businesses have sophisticated
formal plans

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Need For Planning Why Planning Is Important

Proper coordination of all the individuals in the group. • Planning determines where the organization is
If the group effort is to be successful then every member now and where it will be in the future.
must know exactly what is expected of them. –Participation: all managers are involved in setting
– This is the fundamental function of planning. future goals.
– This is a basic function of the manager. –Sense of direction and purpose: planning sets goals
– Planning is the most crucial part of the functions of the and strategies for all managers.
manager. –Coordination: plans provide all parts of the firm with
• It has been rightly said, “Failure to plan is planning to fail”. understanding about how their systems fit with the
Most organisations very often fail due to poor planning. whole.
–Control: Plans specify who is in charge of
accomplishing specific goals.

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• Establishes coordinated effort • By forcing managers to look ahead –

• Gives direction to managers and non managers •Anticipate change
• All understand where the organization is going and the •Consider impact of change
specific roles they are to play
•Develop appropriate responses
• They then coordinate their activities fostering cooperation and
team work

Why
Provide direction
Why
Provide direction

Why
Reduce
impact of change

Managers
Managers
Plan
Managers
Plan

Plan
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2
 •Planning establishes objectives or standards that facilitate control
• If organization members are unsure of what they are to achieve, how can
• Planning reduces overlapping and wasteful activities they determine whether they have achieved it ?
•Coordination before the fact is likely to uncover waste and
redundancy •In planning objectives are developed
• When means and ends are clear, inefficiencies become •In controlling performance is compared against the established
obvious objectives
• If and when significant deviations are identified, corrective action can be
taken
Reduce Reduce
Provide direction Provide direction
impact of change impact of change
Why Why
Managers Managers
Plan Plan
Minimize waste Minimize waste Set standards
and redundancy and redundancy for control

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Decision Making and the Planning Process Organizational Goals

• Purposes of Goals
–Provide guidance and a unified direction for people in
the organization.
–Have a strong effect on the quality of other
aspects of planning.
–Serve as a source of
motivation for
employees of the
organization.
–Provide an effective
mechanism for evaluation
and control of the organization.

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Organizations Have a Purpose— Kinds of Goals

That’s Why They Need Goals
• By Level
–Mission statement is a statement of an organization’s
Identification fundamental purpose.
–Strategic goals are goals set by and for top
management of the organization that address broad,
Adaptation Integration general issues.
Organizational
purpose for
–Tactical goals are set by and for middle managers;
goals their focus is on how to operationalize actions to
strategic goals.
–Operational goals are set by and for lower-level
Collaboration Revitalization managers to address issues associated with tactical
goals.

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3
 Setting Goals Kinds of Plans
Well set goals should be “SMART” • Strategic Plans
• Specific –A general plan outlining resource allocation, priorities,
and action steps to achieve strategic goals. The plans
• Measurable are set by and for top management.
• Attainable • Tactical Plans
• Realistic –A plan aimed at achieving the
• Timely tactical goals set by and for
middle management.
• Operational Plans
–Plans that have a short-term focus.
These plans are set by and for lower-level managers.

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Types of Plans Types of Plans

Policies

Programs
Standing Single Use
Procedures
Plans Plans

Budgets

Rules

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Types of Plans Types of Plans

Standing Plans
–Used in programmed decision situations
– Policies, procedures, and rules developed for
handling repetitive situations.
– Policies
• General guidelines to be followed when making decisions.
These are general guides to action.
– Procedures
• A sequence of actions to be followed in order to achieve an
objective. Standard Operating Procedures (SOP) specify an
exact series of actions to follow.
– Rules
• A statement of exactly what should or should not be done.
Rules are formal written specific guides to action.

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 Types of Plans Types of Plans
Single-Use Plans Single-Use Plans
–Developed for a one-time, non programmed issue.
– Budget
–Programs and budgets developed for handling non • Represents the funds allocated to operate a unit for a
repetitive situations. fixed period of time.
– Program • Is a planning tool initially and becomes a control tool
• A set of activities designed to accomplish an objective after implementation of the plan.
(specific goal) over a specified period of time.
– Program development
• Set project objectives.
• Break the project down into a sequence of steps.
• Assign responsibility for each step.
• Establish starting and ending times.
• Determine the resources needed for each step.
– Project
• Specific action plans to complete programs.
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Allocating Resources: Budgeting Scenario Planning

• Budgets Scenario Planning (Contingency Planning)
–Are numerical plans for allocating resources (e.g., –The generation of multiple forecasts of future
revenues, expenses, and capital expenditures). conditions followed by an analysis of how to effectively
respond to those conditions.
–Are used to improve time, space, and use of material –Planning seeks to predict the future, but the future is
resources. unknowable.
–Are the most commonly used • By generating multiple possible “futures,” a firm can see how
and most widely applicable its plans might work in each and prepare for the possible
outcomes.
planning technique for
organizations. –Scenario planning is a learning tool to improve
strategic planning results.

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Prentice Hall,
Inc. All rights
9–27
reserved. 28

Planning for Contingencies: Special-Purpose Plans

Scenario Planning
• Planning for Change
1. Define the scope of the • Using steps 1-4 create
scenario initial scenarios • Planning for
2. Identify the major • Check each scenario for Contingencies
stakeholders consistency and • Planning for Product
3. Identify environmental plausibility of facts Development
trends • Create contingency plans
4. Identify key from each scenario
uncertainties and • Develop measures to
outcomes indicate when scenario
events are occurring

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5
 Planning From Top to Bottom Planning From Top to Bottom

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Three Stages in Planning Planning Process Stages

• Determining the Organization’s Mission and
Goals
–Defining the organization’s overriding purpose and its
goals.
• Formulating strategy
–Managers analyze current situation and develop the
strategies needed to achieve the mission.
• Implementing strategy
–Managers must decide how to allocate resources
between groups to ensure the strategy is achieved.

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Steps in Planning Steps in Planning

Stage I Stage II
Determining the Organization’s Mission Formulating strategy
and Goals –Managers analyze current situation and develop the
strategies needed to achieve the mission
[Link] the goals or objectives for 2. Determining the planning premises
the entire organisation.
3. Decide the planning period.
– Defining the organization’s overriding purpose
and its goals 4. Search for and examine alternative courses of
actions.
5. Evaluating the alternatives.

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 Steps in Planning
Stage III
Implementing strategy
–Managers must decide how to allocate resources At the next Session
between groups to ensure the strategy is achieved.
6. Decision making.
7. Making of derivative plans.
Strategic Planning

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