Principles of
Management ,2e
Anil Bhat
Arya Kumar
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PLANNING – A TOOL
FOR EFFECTIVE
MANAGEMENT
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Learning Objectives
To understand the importance of planning
To know what plan and planning mean
To learn about steps involved in planning
To learn about different types and levels of
planning
To understand SWOT analysis as a tool for
business strategies development
To understand the use of BCG matrix in
categorization of businesses
To understand concept of MBO and its relevance
to planning
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Planning and its Various Facets
Planning refers to a systematic approach towards making
decisions about goals and objectives and the associated
activities that need to be carried out along with various
resource requirements.
What is Planning?
Planning
Systematic approach of making
decision about goals and objectives
and associated activities
A
Goals & Objectives
C
Plans
T
Policies
I
Procedures
V
Rules
I
Strategy
T
Task
I
Resources
E
Program
S
Budget
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Goals and Objectives
Goals refer to specific objectives that an
organization aspires to accomplish in total, or
in some combination, in order to achieve some
larger purpose, i.e., the mission of an
organization.
Objectives are clear and verifiable
yardsticks against which performance can be
measured. The accomplishment of various
functional and departmental objectives lead to
the achievement of goals.
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Plans and Policies
Plans are the actions or means that a
manager proposes to use for achieving pre-
determined goals. A plan indicates what the
management wants to achieve. It specifies the
steps that are to be taken towards the
achievement of goals.
Policies refer to a broad statement and/or
a set of guidelines that direct decision-
making. It is a plan of action adopted by an
individual or an organization. They define the
framework within which managers are
expected to make decisions leading to the
achievement of objectives.
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Procedures, Rules and Strategies
Procedures are plans that set out the
required methods and processes to
handle future activities.
Rules refer to principles or conditions
that govern behavior. They define specific
required actions and inactions in given
circumstances .
Strategies are an elaborate and
systematic plan of action. These are
the methods or processes required in
total, or in some combination, to achieve
the goals.
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Objectives and Tasks
Objectives are specific targets that
must be accomplished in total, or in
some combination so as to achieve the
predetermined goals in the plan.
A piece of work that is undertaken to
contribute towards the achievement of
objectives is called ‘task’.
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Resources, Programmes , and
Budget
Resources include the people, materials,
machines, technologies, money, etc.
required to implement the strategies or
processes.
A program is a combination of goals,
policies, procedures, rules, and set of
activities to be undertaken, resources to be
deployed and other interrelated actions
required to be undertaken for accomplishment
of a purpose.
Budget is a statement of expected
provisions or results expressed in numerical
terms. It can be for inputs as well as outputs.
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Definitions:
“Generally speaking, planning is deciding in advance
what is to be done” -W H Newman
“Planning is deciding in advance what to do, how to do,
when to do and who is to do it. Planning bridges a gap
between from where we are to where we want to go”
-Harold, Koontz and O’Donnel
“Planning is that function of manner in which he decides
in advance what he will do. It is a decision making
process of a special kind, its essence is futurity.”
-Hayness and Massie
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The Downside of Traditional Goal Setting
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Planning in the Hierarchy of Organizations
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Contemporary Issues in Planning
Criticisms of Planning
Planning may create rigidity.
Plans cannot be developed for dynamic
environments.
Formal plans cannot replace intuition and
creativity.
Planning focuses managers’ attention on
today’s competition not tomorrow’s survival.
Formal planning reinforces today’s success,
which may lead to tomorrow’s failure.
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Steps Involved in Planning
Situational Analysis
Desired Goals, Objectives and Result from System
Goal and Plan Evaluation
Establish Goals and Plans
Chalk out Strategies to Reach Goals and
Implementation
Acknowledge Completion and Celebrate Success
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Types of Plans
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Types of Planning
Types of Planning
Short-term Medium-term Long-term
Planning Planning Planning
Management: Principles, Processes & Practices
© Oxford University Press 2008
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Levels of Planning
Levels of Planning
Strategic Tactical Operational
Strategic planning is undertaken at the top-level of the management. It deals
with decision making about the organization’s long-term goals and strategies .
Tactical planning deals primarily with the specific goals and plans pertaining
to functional areas – production, marketing, human resources management,
etc. It deals with major actions pertaining to implementation phase of the
planning process.
Operational planning deals with specific systems, procedures, and processes
required to implement the tactical plan at the level of the operational or frontline
manager.
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What is SWOT Analysis?
SWOT Analysis
External Internal
Opportunities Threats Strengths Weaknesses
Develop Business Strategies
Opportunities and threats are diagnosed by undertaking an external
environmental analysis.
Strengths and weaknesses are essentially internal to the organization and
pertain to its resources. These relate to resources – human and non-human,
physical, processes, programs, and organization in key areas.
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Developing Business Strategy
SWOT analysis helps in identification of possible
strategies based on the following criteria:
Build and develop on strengths
Resolve and overcome weaknesses
Exploit and avail opportunities
Avoid or minimize the effect of threats
BCG (Boston Consulting Group) has developed a
tool that enables the mapping of all the
organization’s businesses based on the criteria of
market growth and relative competitive position
vis-à-vis competitors.
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BCG Matrix—A Tool for Mapping
Businesses of Organization
STARS QUESTION
MARKS
Market Growth
CASH COWS DOGS
Relative Competitive Position
Stars are the businesses having high growth as well as a strong competitive position.
Dogs have low growth and weak-competitive position businesses.
Cash Cow businesses have low growth but are having strong competitive position .
Question Marks are the businesses that have high growth but weak competitive
position
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Management By Objectives (MBO) MBO is a
management system that is goal driven and success-oriented
MBO is defined as an integrated managerial system that
is systematically and consciously directed towards
achievement of organizational and individual objectives
Employees Get Adequate and Strong Input
to be Clear about their Objectives, Time
Lines for Completion
Synchronizing Goals and Subordinate
objectives throughout the Organization
Tracks Performance to Provide a Feedback
for Taking Timely Corrective Measures
Enhances Organizational Performance
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Salient Features of MBO
Cascading of Organizational Goals
and Objectives
Specific Objectives Driven
Salient Features of Participative Decision Making
MBO Process
Explicit Time Period Deadlines
Performance Evaluation and
Feedback
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Benefits of MBO
Ensuring personal commitment to organizational goals
Provides goal and role clarity in the organization and
in turn helps in devising organizational structure
conducive for improving efficiency and effectiveness
Ensures result oriented planning
Development of effective control mechanism leading
to timely corrective actions
Less supervision of subordinates and increased
motivational level as a result of each employees clear
definition of responsibilities
Employees accountability increases
Improved managerial effectiveness and efficiency
results in greater satisfaction level to the employees
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Disadvantages of MBO
Failure to teach the philosophy of MBO across the
organization
Lack of guidelines to goal setters
Difficulty in setting verifiable objectives
Over emphasis on short term achievements at the cost of
long term growth and development
Lack of flexibility to attune changes with changing
environmental forces
Over emphasis on quantitative goals, even where it may
not be applicable
It turns out to be paper passing buck, especially in
organizations where in well set mechanism to monitor and
evaluate the performance does get laid down
It is a time consuming process to imbibe the philosophy of
MBO in the organization
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THANK YOU
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