3rd Chapter
Planning
Planning:
Planning involves defining the organization's goals, establishing strategies
for achieving those goals, and developing plans to integrate and coordinate
work activities. It is concerned with both ends (what) and means (how).
When we use the term Planning, we mean formal planning. In formal
planning, specific goals covering a specific time period are defined. These
goals are written and shared with organizational members to reduce
ambiguity and create a common understanding of what needs to be done.
Finally, specific plans exist for achieving these goals.
Why Do Managers Plan? / The Purpose of Planning:
Managers plan because planning is essential for achieving organizational
goals effectively and efficiently. It provides a structured approach to
decision-making, ensures optimal use of resources, and helps mitigate
uncertainties. Here's why managers prioritize planning:
1. Provides Direction:
Planning provides direction to managers and non-managers alike. When
employees know what their organization or work unit is trying to accomplish
and what they must contribute to reach goals, they can coordinate their
activities, cooperate with each other, and do what it takes to accomplish
those goals. Without planning, departments and individuals might work at
cross purposes and prevent the organization from efficiently achieving its
goals.
2. Reduces Uncertainty:
Planning forces managers to look ahead, anticipate change, consider the
impact of change, and develop appropriate responses. Although planning
won't eliminate uncertainty, managers plan so they can respond effectively.
3. Minimizes Waste and Redundancy:
When work activities are coordinated around plans, inefficiencies become
obvious and can be corrected or eliminated.
4. Establishes Goals and Standards:
Planning establishes the goals and standards used in controlling. When
managers plan, they develop goals and plans. When they control, they see
whether the plans have been carried out and the goals met. Without
planning, there would be no goals against which to measure or evaluate
work effort.
Types of Planning
Planning can be classified based on different criteria:
1. On the Basis of Breadth:
Strategic Planning:
Strategic plans are long-term, high-level plans that set the overall direction
and priorities for an organization. They provide a framework to achieve the
organization's vision and mission by establishing goals and allocating
resources effectively.
Example:
Company: ABC Technology
Vision: To be a global leader in artificial intelligence solutions.
Mission: To provide innovative, scalable AI technologies that enhance
customer experiences and business efficiency.
Goals:
1. Market Expansion: Expand operations into Europe and Asia within
three years and open new offices in major cities worldwide.
2. Product Development: Launch three new AI-driven software products
by 2026 and allocate $10 million annually for research and development.
Operational Planning:
Operational plans encompass a particular operational area of the
organization. An operational plan shows how a company will convert its
strategic and tactical goals into specific actions and tasks.
Example: A restaurant's operational plan might include daily tasks like
inventory management, staff scheduling, and customer service protocols. It
might also set goals like increasing sales by a specific amount, with
timelines for achieving those goals.
2. On the Basis of Time Frame:
Long-Term Plans:
Long-term plans used to mean anything over seven years. However, it is
now challenging for managers to establish plans that far into the future.
Long-term plans are now defined as those with a time frame beyond three
years.
Example: Becoming a senior-level executive in a multinational company
within 10 years. This plan might include pursuing an MBA, earning
certifications, and building a professional network by attending conferences
and seminars.
Short-Term Plans:
Short-term plans are those covering one year or less. These plans are
usually designed to focus on specific, actionable tasks that contribute to
long-term goals.
Example: Increasing sales by 10% in the next quarter by launching a
promotional campaign, providing sales training, and offering limited-time
discounts to attract more customers.
3. On the Basis of Specificity:
Specific Planning:
This type of planning involves detailed and precise planning with
well-defined objectives, timelines, and methods to achieve specific
outcomes.
Example: Conducting a training program for employees in a specific skill
within two months.
Directional Planning:
This type of planning provides a broad framework or direction for
decision-making rather than focusing on specific goals or outcomes. It is
more flexible and adaptable to changes.
Example: Building a culture of innovation within the organization over time.
4. On the Basis of Frequency of Use:
Standing Plans:
These are used repeatedly for recurring activities or situations. They
provide consistent guidelines and frameworks for routine decision-making
and operations.
Example: Step-by-step instructions for specific tasks (e.g., customer
complaint handling).
Single-Use Plans:
These plans are created for one-time purposes and are designed to
address unique, non-recurring situations or objectives. Once the goal is
achieved, the plan is no longer applicable.
Example: Financial plans for specific activities or periods, such as an
annual budget for a corporate event or an advertising campaign.
Steps of Planning
1. Setting Objectives:
The first step in planning is to define the organization's goals or objectives.
These should be specific, measurable, attainable, relevant, and time-bound
(SMART). Goals provide direction and a basis for decision-making.
2. Developing Premises:
Planning premises are assumptions about the future environment in which
the plans will operate. These include external and internal factors like
market trends, resource availability, and technological changes. Correct
assumptions lead to better plans.
3. Identifying Alternatives:
Once objectives are set, various ways to achieve them should be identified.
A wide range of alternatives ensures flexibility and the best possible choice.
4. Evaluating Alternatives:
Each alternative should be analyzed and compared based on criteria like
feasibility, costs, risks, and potential outcomes. Managers need to weigh
the pros and cons to identify the most suitable course of action.
5. Selecting the Best Alternative:
After evaluation, the most appropriate alternative is chosen. This decision
should align with the organization's goals, resources, and constraints.
6. Developing Plans:
Once an alternative is selected, detailed plans are created. This includes
setting timelines, defining responsibilities, allocating resources, and
specifying processes.
7. Implementing the Plan:
Implementation involves putting the plan into action. This step requires
effective communication with team members, assigning roles, and ensuring
everyone understands their responsibilities.
8. Monitoring and Evaluating Progress:
Regular monitoring ensures the plan is on track and objectives are being
met. Feedback and performance metrics help managers identify deviations
and make necessary adjustments.
This Reflection in Crucial for Learning and Improving the Planning Process
in the Future
Limitations of Planning
Limitations of planning can be classified as internal and external:
Internal Limitations of Planning:
1. Planning Leads to Rigidity:
Plans are drawn up with specific goals to be achieved within a specific
timeframe. These plans decide the future course of action, and managers
may not be in a position to change them. Plans need flexibility.
2. Planning May Not Work in a Dynamic Environment:
The environment consists of several dimensions—economic, political,
physical, legal, and social. The organization must constantly adapt itself to
changes.
3. Planning Reduces Creativity:
Middle-level management and other decision-makers are often not allowed
to deviate from plans or act on their own. As a result, much of the initiative
or creativity inherent in them gets lost or reduced.
4. Planning Involves Huge Costs:
These costs may be in terms of time and money. For example, checking
the accuracy of facts may involve significant time. Detailed plans require
scientific calculation to ascertain facts and figures. There are also incidental
costs, such as expenses for boardroom meetings.
5. Planning is a Time-Consuming Process:
Plans take so much time to draw up that there is often not enough time left
for their implementation.
6. Planning Does Not Guarantee Success:
The effectiveness of plans depends upon their implementation. Every plan
is not a solution to a problem, and plans can fail under certain
circumstances in the future.
External Limitations of Planning:
Plans may fail due to external factors beyond the control of the
management:
1. Political Changes:
Changes in government policies, the ideology of the ruling party, etc., can
affect planning.
2. Labour Unions:
Labour unions can disrupt plans by organizing strikes, lockouts, and
agitation.
3. Technological Changes:
Competitors adopting the latest machinery or technology can pose
challenges and render plans ineffective.
4. Policies of Competitors:
Competitors' policies related to sales, recruitment, advertising, etc., can
pose significant problems in implementing plans successfully.
5. Natural Calamities:
Disasters such as earthquakes, lightning, heavy rainfall, or famines can act
as significant hurdles to the success of plans.
6. Changes in Demand and Prices:
Variations in customer preferences, fashion trends, and the prices of raw
materials can affect planning outcomes.
Factors Affecting Planning
Many factors can influence planning in management, including:
1. Resources:
The availability of resources like time, effort, and materials can impact
planning.
2. Environment:
The overall economy, market dynamics, and competitive landscape affect
planning.
3. Organization:
The size and complexity of the organization, along with its culture, can
impact planning.
4. Stakeholders:
Stakeholder expectations influence the frequency and focus of planning.
5. Regulations:
Industry regulations and compliance requirements impact planning,
particularly in highly regulated sectors.
6. Technology:
Technological advancements create opportunities or necessitate
adjustments in planning.
7. Communication:
Open communication encourages feedback and innovation, improving
planning processes.
8. Forecasting:
Planning requires anticipating future events and making provisions for
them.
9. Managerial Ability:
Managers' skills and competencies influence the effectiveness of the
planning process.
10. Commitment:
Setting a timeframe ensures that targets are met on time.
Goals in Management
Goals are specific, measurable, and time-bound objectives that
organizations or individuals aim to achieve. They serve as benchmarks for
success and provide focus for teams and individuals.
Characteristics of Goals in Management:
1. Specific:
Clearly defined and precise, detailing exactly what is to be accomplished.
2. Measurable:
Quantifiable, allowing progress tracking and success evaluation.
3. Achievable:
Realistic and attainable, considering the resources and constraints.
4. Relevant:
Aligned with broader organizational objectives and the business
environment.
5. Time-Bound:
Defined within a specific timeframe, aiding task prioritization and deadline
management.
Types of Goals:
Goals can be divided into two types:
1. Stated Goals:
These are the official goals explicitly articulated by an organization, often
found in mission statements, vision statements, annual reports, or strategic
plans. They are used to communicate the organization's purpose, values,
and aspirations to stakeholders, including employees, customers, and
investors.
Example:"To provide the highest quality customer service and achieve
sustainable growth."
2. Real Goals:
These are the actual objectives an organization pursues, as evidenced by
the actions, decisions, and resource allocation of its management and
employees. Real goals reflect the true priorities and operational focus of
the organization.
Example:A company states its goal is "sustainability," but in practice, it
prioritizes cost-cutting measures that may harm the environment.
Meaning and Nature of Decision-Making
Decision-making is the process of selecting the best course of action
among several alternatives to achieve a desired goal. It is a critical function
in both personal and professional contexts and involves a combination of
analytical, psychological, and social factors. The process includes
identifying a problem, gathering information, evaluating options, and
making a choice.
Nature of Decision-Making
1. Goal-Oriented Process:Decision-making is a goal-oriented process
aimed at achieving specific objectives within the organization.
2. Selection Process:It involves selecting the best alternative course of
action from the available options.
3. Continuous Process:Decision-making is ongoing because managers
need to make decisions for various activities continuously.
4. Art as Well as Science:Decision-making is considered both an art and a
science. It requires intuition and experience (art) as well as data analysis
and systematic evaluation (science).
5. Responsibilities of Managers:Decision-making is a responsibility
shared by managers at all levels of management.
6. Positive as Well as Negative:Decisions can have positive outcomes (to
perform certain activities) or negative outcomes (to avoid certain activities).
7. Future Course of Action:Decisions are made for future actions, based
on past experiences and present conditions.
