PLANNING

Planning

 A plan is a blueprint for goal achievement that specifies the

necessary resource allocations, schedules, tasks, and other
actions

 Planning means determining the organization's goals and

defining the means for achieving them
 It allows managers the opportunity to adjust to the
environment instead of merely reacting to it.
 It increases the possibility of survival in business by actively
anticipating and managing the risks that may occur in the
future
It answers six basic questions in regard to any activity:

 What needs to be accomplished?

 When is the deadline?
 Where will this be done?
 Who will be responsible for it?
 How will it get done?
 How much time, energy, and resources are required to
accomplish this goal
Objectives of Planning

 Reduce Uncertainty
 Bring cooperation and coordination
 Economy in operation
 Anticipate unpredictable contingencies
 Achieving the predetermined goals
 Reduce competition
Steps in Planning Process

1. Goal setting
2. Developing the planning premises
3. Reviewing Limitations
4. Deciding the planning period
5. Formulation of policies and strategies
6. Preparing operating plans
7. Integration of plans
Types of Plans

Different ways of classifying Plans

1. On the basis of nature:

 Operational Plan
 Concerned with the day to day operations of the
organization
 It is detailed and specific
 It usually covers functional aspects such as production,
finance, Human Resources
 Are formulated by the lower level management for short
term period of up to one year
 Tactical Plan
 The tactical plan is also known as coordinative or
functional plan
 It involves how the resources of an organization should
be used in order to achieve the strategic goals
 It is concerned with the integration of various
organizational units and ensures implementation of
strategic plans on day to day basis

 Strategic plan
 They decide the major goals and policies to achieve the
goals.
 It takes in a note of all the external factors and risks
involved and makes a long-term policy of the
organization.
 It involves the determination of strengths and
weaknesses, external risks, mission, and control system
to implement plans.
 It is formulated by the top level management for a long
period of time of five years or more
2. On the basis of Level
 Top Level Plans
 Plans which are formulated by general managers and
directors are called top-level plans.
 Under these plans, the objectives, budget, policies etc.
for the whole organization are laid down.
 These plans are mostly long term plans.

 Middle Level Plans

 The plans formulated by the departmental managers are
called middle-level plans.

 Low level Plans

 These plans are prepared by the foreman or the
supervisors.
 They take the existence of the actual workplace and the
problems connected with it.
 They are formulated for a short period of time and called
short term plans
3. On the basis of time
 Long Term Plans
 Long-term plan is the long-term process that business
owners use to reach their business mission and vision.
 It determines the path for business owners to reach their
goals.
 It also reinforces and makes corrections to the goals as the
plan progresses.

 Intermediate Plans
 Intermediate planning covers 6 months to 2 years.
 It outlines how the strategic plan will be pursued.
 In business, intermediate plans are most often used for
campaigns.

 Short term Plans

 Short-term plan involves pans for a few weeks or at most a
year
 Short-term plans outline objectives necessary to meet
intermediate plans and the strategic planning process
4. On the basis of use
 Single Plan
 These plans are connected with some special problems.
 These plans end the moment the problems are solved.
 They are not used, once after their use.
 They are further re-created whenever required

 Standing Plan
 These plans are formulated once and they are repeatedly
used
 It is said that a standing plan is a standing guide to
solving the problems.
 These plans include mission, policies, objective, rules and
strategy
DECISION MAKING
Decision Making
Decision making is the process of choosing the best among the
available alternatives with a purpose under a given set of
circumstances

Importance of Decision- Making

 Managers perform all their functions and activities through
decision- making.
 Making the decision in right time values much to the
organisation rather than making a right decision in the
wrong time.
 Decision- making process helps the management to procure
necessary data and information.
 Decision- making further helps in the formulation of
strategies and implement them.
Process of Decision Making

1. Problem Awareness
2. Problem diagnosis
3. Development of
alternative solutions
4. Evaluation of
alternative solutions
5. Selection of the
best solution
6. Implementation
of the decision
7. Follow up
Types of Decisions

 Programmed and Non-Programmed Decisions

 Major and Minor Decisions
 Routine and Strategic Decisions
 Policy and Operative Decisions
 Organizational and Personal Decisions
 Individual and Group Decisions
 Long-Term and Short-Term Decisions
Techniques of Decision-making
Marginal 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

Financial Analysis:
 This decision-making tool is used to estimate the profitability
of an investment, to calculate the payback period and to
analyze cash inflows and cash outflows

Break-Even Analysis:
 This tool enables a decision-maker to evaluate the available
alternatives based on price, fixed cost and variable cost per
unit.
 Using this technique, the decision-maker can determine the
break-even point for the company as a whole, or for any of its
products.
 At the break-even point, total revenue equals total cost and
the profit is nil
Ratio Analysis:
 It is an accounting tool for interpreting accounting
information
 Ratios define the relationship between two variables.
 The basic financial ratios compare costs and revenue for a
particular period. The purpose of conducting a ratio analysis
is to interpret financial statements, to determine the
strengths and weaknesses of a firm, as well as its historical
performance and current financial condition

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
Delphi method:
 In this method of decision-making, the facilitator allows
team members to individually brainstorm and submit their
ideas “anonymously”.
 Other team members do not know the owner of the ideas.
 The facilitator then collects all the inputs and circulates
them among others for modifying or improving them.
 This process continues until a final decision is made.
 Later, the facilitator collects the improvised strategies and
chooses the best one

Brainstorming:
It is a combination of group problem-solving and discussions.
It works on the belief that the more the number of ideas,
greater the possibility of arriving at a solution to the
problem that is acceptable to all.
It starts with the group generating ideas which are then
analyzed, with action points based on the discussions
Nominal group technique:
 In a nominal group technique, the team divides itself into
smaller groups and generates ideas. Possible options are
noted down in writing and the team members further
discuss these to narrow down the possible choices they
would like to accept.
 Team members then discuss and vote on the best possible
choice.
 The choice that receives the maximum votes is accepted as
the group decision.
Management By Objectives
The term MBO was coined by Peter F. Drucker
In MBO there will be the participation of concerned managers in
objective setting and performance reviews.
Each manager takes active part in setting objectives for himself and
also in evaluating his performance about how he is performing.
The total MBO process revolves round the objectives set jointly by the
superior and the subordinate

Process of MBO
GOAL SETTING
BY TOP
MANAGEMENT

SETTING
REVIEW OF
PROCESS OF INDIVIDUAL
PERFORMANCE
MBO GOALS

AUTONOMY FOR
SELECTING MEANS
FOR GOAL
ACHIEVEMENT