Management and Entrepreneurship - CS

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Planning
Kukreja.N
INDEX

1. Meaning & Features of Planning

2. Importance & Limitations of
Planning
3. Process of Planning
4. Elements of Planning
5. MBO – Meaning, Steps, Importance
& Limitation
6. Decision Making – Meaning &
Importance
7. Process of Decision Making
8. Techniques of Decision Making
Meaning of Planning
• Planning is very important for successfulness and the effective performance
of an organization not only for organizations but also for individuals. It is the
most basic of all the managerial functions. It involves selecting missions and
objectives and the actions to achieve them. Therefore, every organization
gives a greater emphasis on planning.

• Planning as a process involves the determination of future course of action,

that is why an action, what action, how to act, and when to act.

• In the words of Koontz and O’Donnell, “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.”
 1. Planning is goal oriented

2. Primacy of Planning

3. Pervasiveness of Planning – Strategic Planning, Administrative

Planning & Operational Planning across all levels of the

Features organization.

of
4. Planning is directed towards efficiency, economy and accuracy

5. Planning aims at Co-ordination

Planning 6. Flexibility

7. Intellectual

8. Continuous

9. Looking ahead/Futuristic

10. Critical Factors – Money, Manpower, Materials, Machinery and

Management cannot be overlooked.
 1. Achieve certain objectives

2. Offset uncertainty and change

3. Selection of most profitable course of action

Importance 4. Helps in co-ordination

of
5. Comparison of planned performance with actual performance

6. Increases efficiency, effectiveness & productivity of the

Planning organization

7. Facilitates decision making

8. Avoids wastage of men, money, machinery and materials

9. It is the essence of all management activities

10. Helps implement future programs in a systematic manner

 1. Time consuming

2. Expensive

limitations
3. Rigidity

of 4. Absence of accurate information

Planning 5. False sense of security

6. Environmental Constraints

7. Dynamic Conditions

8. Resistance to Change
Process of Planning
 STANDING PLANS
Mission – It is the basic purpose or function or task of
Elements of an enterprise. General purpose of business if
production and distribution of goods and services.
Planning
Objectives – Objectives are the end towards which
activity is aimed.

Standing Plans Policies – They are general statements or

• Mission understandings that guide or channel thinking in
• Objectives decision making. They define area within which a
• Policies
• Procedures
decision is to be made.
• Rules
• Strategies Procedures – Procedures are plans that establish a
required method of handling future activities.
Single-Use Plans
Rules – Rules spell out specific required actions or non-
• Programs
• Budgets
actions. They are usually the simplest type of plan.
• Schedules
• Projects Strategies – It is determination of basic long-term
• Standards objectives of an enterprise and the adoption of course
of action necessary to achieve these goals.
 SINGLE-USE PLANS

Elements of Programs – Programs are a complex of goals, policies,

procedures, rules, steps necessary to carry out an
Planning action.

Budgets – It is a statement of expected results

expressed in numerical terms. It is a quantified plan.
Standing Plans Budgets are also control devices.
• Mission
• Objectives Schedules – A schedule is a time table of work. It is a
• Policies process of establishing a time sequence for the work to
• Procedures be done.
• Rules
• Strategies
Projects – A project is a scheme for investing resources
which can be analyzed and evaluated. A single step in a
Single-Use Plans program is called a project.
• Programs
• Budgets Standards – It is a norm or criteria against which
• Schedules
performance is compared. It is a guide for performance
• Projects
• Standards evaluation.
 management by objective
• Management by Objectives (MBO) is a strategic approach to enhance the performance of an
organization. It is a process where the goals of the organization are defined and conveyed by the
management to the members of the organization with the intention to achieve each objective.

• According to the theory, having a say in goal setting and action plans encourages participation and
commitment among employees, as well as aligning objectives across the organization.

• The term was first outlined by management guru Peter Drucker in his 1954 book, The Practice of
Management.

• The major benefits of MBO are that it improves employee motivation and commitment and allows
for better communication between management and employees.
Steps for management by objective
 Advantages of mbo
1. Management by objectives helps employees appreciate their on-the-job roles and responsibilities.

2. The Key Result Areas (KRAs) planned are specific to each employee, depending on their interest,
educational qualification, and specialization.

3. The MBO approach usually results in better teamwork and communication.

4. It provides the employees with a clear understanding of what is expected of them. The supervisors set goals
for every member of the team, and every employee is provided with a list of unique tasks.

5. Every employee is assigned unique goals. Hence, each employee feels indispensable to the organization
and eventually develops a sense of loyalty to the organization.

6. Managers help ensure that subordinates’ goals are related to the objectives of the organization.
 limitations of mbo
1. Management by objectives often ignores the organization’s existing ethos and working conditions.

2. More emphasis is given on goals and targets. The managers put constant pressure on the employees to accomplish
their goals and forget about the use of MBO for involvement, willingness to contribute, and growth of
management.

3. The managers sometimes over-emphasize the target setting, as compared to operational issues, as a generator of
success.

4. The MBO approach does not emphasize the significance of the context wherein the goals are set. The context
encompasses everything from resource availability and efficiency to relative buy-in from the leadership and
stakeholders.

5. Finally, there is a tendency for many managers to see management by objectives as a total system that can handle
all management issues once installed. The overdependence may impose problems on the MBO system that it is
not prepared to tackle, and that frustrates any potentially positive effects on the issues it is supposed to deal with.
Meaning of Decision making
• Decision making is the process of choosing a particular course of action
from among the alternatives available. It involves judgement.
• Decision making is the process of responding to a problem by searching
for and selecting a solution or course of action that will create value for
organizational members.
• The objectives of decision making is to achieve organizational goal/s or
to solve problem/s.
• According to P. F. Drucker – “Whatever a manager does he does
through making decisions.” All matters relating to planning,
organizing, direction, co-ordination and control are settled by the
managers through decisions which are executed into practice by the
operators of the enterprise.
 Importance of decision making

• Best course of action

• Optimum use of resources

• Problem solution

• Promotes efficiency

• Conflict resolution

• Permeates all managerial functions

Process of decision making
 techniques of decision making
• Marginal Cost Analysis - This technique is used in decision-making to figure out how much extra
output will result if one more variable (e.g. raw material, machine, and worker) is added. Marginal
analysis is particularly useful for evaluating alternatives in the decision-making process.

• Cost Benefit Analysis - It is a systematic approach to estimating the strengths and weaknesses of
alternatives used to determine options which provide the best approach to achieving benefits while
preserving savings.

• Operation Research - One of the most significant sets of tools available for decision-makers is
operations research. An operation research (OR) involves the practical application of quantitative
methods in the process of decision-making. When using these techniques, the decision-maker
makes use of scientific, logical or mathematical means to achieve realistic solutions to problems.
 techniques of decision making
• Linear Programming - Linear programming is a quantitative technique used in decision-making. It

involves making an optimum allocation of scarce or limited resources of an organization to achieve a

particular objective. The word ‘linear’ implies that the relationship among different variables is

proportionate. The term ‘programming’ implies developing a specific mathematical model to optimize

outputs when the resources are scarce. In order to apply this technique, the situation must involve two or

more activities competing for limited resources and all relationships in the situation must be linear.

• Network Analysis – Under Network Analysis Program Evaluation & Review Technique (PERT) and

Critical Path Method (CPM) are the techniques of project management that are used to solve planning

and control problems