Management Information System (MIS)

Subject Code: BBA-305

Unit-2: Planning & Decision-Making

Topics Covered:

1. The Concept of Corporate Planning

2. Strategic Planning

3. Types of Strategic Planning

4. Tools of Planning

5. MIS: Business Planning

6. Decision Making Concepts

7. Decision Making: Methods

8. Decision Making: Tools & Procedures

9. Organizational Decision Making

10. MIS and Decision-Making Concepts

Planning
 Definition: Planning is the fundamental management function, which
involves deciding beforehand, what is to be done, when is it to be done, how
it is to be done and who is going to do it. It is an intellectual process which lays
down an organisation’s objectives and develops various courses of action, by
which the organisation can achieve those objectives. It chalks out exactly, how
to attain a specific goal.
 Planning is nothing but thinking before the action takes place. It helps us to
take a peep into the future and decide in advance the way to deal with the
situations, which we are going to encounter in future. It involves logical thinking
and rational decision making.

Characteristics of Planning

1. Managerial function: Planning is a first and foremost managerial function

provides the base for other functions of the management, i.e., organising, staffing,
directing and controlling, as they are performed within the periphery of the plans
made.
2. Goal oriented: It focuses on defining the goals of the organisation, identifying
alternative courses of action and deciding the appropriate action plan, which is to
be undertaken for reaching the goals.
3. Pervasive: It is pervasive in the sense that it is present in all the segments and is
required at all the levels of the organisation. Although the scope of planning varies
at different levels and departments.
4. Continuous Process: Plans are made for a specific term, say for a month,
quarter, year and so on. Once that period is over, new plans are drawn,
considering the organisation’s present and future requirements and conditions.
Therefore, it is an ongoing process, as the plans are framed, executed and
followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the application of
mind, to think, forecast, imagine intelligently and innovate etc.
6. Futuristic: In the process of planning, we take a sneak peek of the future. It
encompasses looking into the future, to analyse and predict it so that the
organisation can face future challenges effectively.
7. Decision making: Decisions are made regarding the choice of alternative courses
of action that can be undertaken to reach the goal. The alternative chosen should
be best among all, with the least number of the negative and highest number of
positive outcomes.

Planning (Another Definition)

 Planning is the function of management that involves setting objectives and determining
a course of action for achieving those objectives. Planning requires that managers be
aware of environmental conditions facing their organization and forecast future conditions.
It also requires that managers be good decision makers.
 Planning is a process consisting of several steps. The process begins with environmental
scanning which simply means that planners must be aware of the critical contingencies
facing their organization in terms of economic conditions, their competitors, and their
customers. Planners must then attempt to forecast future conditions. These forecasts form
the basis for planning.
 Planners must establish objectives, which are statements of what needs to be achieved
and when. Planners must then identify alternative courses of action for achieving
 objectives. After evaluating the various alternatives, planners must make decisions about
the best courses of action for achieving objectives. They must then formulate necessary
steps and ensure effective implementation of plans. Finally, planners must constantly
evaluate the success of their plans and take corrective action when necessary.

There are three different types of Planning:

1. Strategic planning involves analyzing competitive opportunities and threats, as well as

the strengths and weaknesses of the organization, and then determining how to position
the organization to compete effectively in their environment. Strategic planning has a long-
time frame, often three years or more. Strategic planning generally includes the entire
organization and includes formulation of objectives. Strategic planning is often based on
the organization’s mission, which is its fundamental reason for existence. An
organization’s top management most often conducts strategic planning.
2. Tactical planning is intermediate-range (one to three years) planning that is designed to
develop relatively concrete and specific means to implement the strategic plan. Middle-
level managers often engage in tactical planning.
3. Operational planning generally assumes the existence of organization-wide or subunit
goals and objectives and specifies ways to achieve them. Operational planning is short-
range (less than a year) planning that is designed to develop specific action steps that
support the strategic and tactical plans.

1. The Concept of Corporate Planning

Corporate planning is a total system of planning which involves the determination of the objectives for

the company as a whole and for each department of it; formulation of strategies for the attainment of

these objectives (all this being done against the background of SWOT analysis); conversion of strategies

into tactical plans (or operational plans); implementation of tactical plans and a review of the progress

of tactical plans against the corporative planning objectives.

What is Corporate Planning?

Corporate planning is a process that is used by businesses to map out a course of action to
grow, increase profits, gain exposure, or strengthen brand identity. Corporate planning is a tool that
successful business use to leverage their resources more wisely than their competitors.

Why Plan?
No matter the size of your business, it is crucial to have a plan. A plan is not only beneficial to keep

your business organized, but it can also help to increase:

 Clarity & Direction

 Ensure efficiency use of resources

 Provide a way of measuring progress

 Support effective decision-making

 Coordinate activities

 Allocate responsibilities

 Motivate and guide staff

Process of Corporate Planning

i. Environmental Analysis & Diagnosis

ii. Determination of Objectives

iii. Strategy Formulation

iv. Development of Tactical Plans

v. Implementation of Tactical Plans

vi. Follow-Up-Action

Six Key Elements of a Successful Plan

As a business, you must take many factors into consideration before you begin planning a business

strategy. You must take a step outside of your position in the business and look at the following

elements as if you were a competitor or a consumer. To create a successful corporate plan, you will

need to

 Gather Information

 Set objectives of the plan

 Devise strategies to meet goals

 Implement your plan

 Monitor plan performance

 Evaluate the effectiveness/success of your plan

2. Strategic Planning

 Strategic planning is a process in which an organization's leaders define their vision for the future

and identify their organization's goals and objectives. The process includes establishing the

sequence in which those goals should be realized so that the organization can reach its stated

vision.

 Strategic planning typically represents mid- to long-term goals with a life span of three to five years,

though it can go longer. This is different than business planning, which typically focuses on short-

term, tactical goals, such as how a budget is divided up. The time covered by a business plan can

range from several months to several years.

 The product of strategic planning is a strategic plan. It is often reflected in a plan document or other

media. These plans can be easily shared, understood and followed by various people including

employees, customers, business partners and investors.

 Organizations conduct strategic planning periodically to consider the effect of changing business,

industry, legal and regulatory conditions. A strategic plan may be updated and revised at that time

to reflect any strategic changes.

Figure 1. Strategic Planning Cycle

Figure 1. Strategic Planning Cycle

Strategic Planning (Another Definition)

Strategic Planning is an organizational management activity that is used to set priorities, focus energy

and resources, strengthen operations, ensure that employees and other stakeholders are working

toward common goals, establish agreement around intended outcomes/results, and assess and adjust

the organization’s direction in response to a changing environment. It is a disciplined effort that produces

fundamental decisions and actions that shape and guide what an organization is, who it serves, what it

does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where

an organization is going and the actions needed to make progress, but also how it will know if it is

successful.

Strategic Planning (Another Definition)

Strategic plans define the framework of the organization’s vision and how the organization intends to

make its vision a reality.

 It is the determination of the long-term objectives of an enterprise, the action plan to be adopted

and the resources to be mobilized to achieve these goals.

 Since it is planning the direction of the company’s progress, it is done by the top management of

an organization.

 It essentially focuses on planning for the coming years to take the organization from where it

stands today to where it intends to be.

 The strategic plan must be forward looking, effective and flexible, with a focus on accommodating

future growth.

 These plans provide the framework and direction for lower-level planning.

Steps in Strategic Planning & Management

There are many different frameworks and methodologies for strategic planning and management. While

there are no absolute rules regarding the right framework, most follow a similar pattern and have

common attributes. Many frameworks cycle through some variation on some very basic phases:

(i) Analysis or assessment, where an understanding of the current internal and external environments

is developed.

(ii) Strategy formulation, where high-level strategy is developed and a basic organization level strategic

plan is documented.
(iii) Strategy execution, where the high-level plan is translated into more operational planning and action

items.

(iv) Evaluation or sustainment / management phase, where ongoing refinement and evaluation of

performance, culture, communications, data reporting, and other strategic management issue occurs.

The Purpose of Strategic Planning

 The purpose of strategic planning is to set your overall goals for your business and to develop a

plan to achieve them. It involves stepping back from your day-top-day operations and asking

where your business is headed and what its priorities should be.

 Taking the decision actively to grow a business means embracing the risks that come with growth.

Spending time on identifying exactly where you want to take your business and how you will get

there – should help you reduce and manage those risks.

 As your business becomes larger and more complex, so strategy formulation will need to become

more sophisticated, both to sustain growth and to help you muster the leadership and resources

you need to keep your business developing.

3. Types of Strategic Planning

Website Link:

 https://theintactone.com/2019/02/24/topic-2-types-of-strategies-used-in-
strategic-planning-for-achieving-global-competitive-advantage/

 https://blog.hubspot.com/sales/strategic-planning-models

Strategic Planning Models

 Strategic planning is used to set up long-term goals and priorities for an organization.
A strategic plan is a written document that outlines these goals.
 Strategic planning is focused on long-term goals, while tactical planning is focused on the
short-term.
Decision-Making
Definition: Decision-Making is the process of selecting a best alternative course of action;
from among a number of alternatives given to management or developed by it after carefully
and critically examining each alternative.
Relationship between Decision-Making and Decision
According to the definition, it follows that decision-making is a process and a decision is an
outcome of this process. Accordingly, the better the decision-making process; the better would
be the decisions emerging out of it leading to an efficient commitment of precious
organizational resources.

Major Features/ Characteristics of Decision-Making:

1. Decision-Making is Goal-Oriented:

2. Decision-Making is Pervasive.

3. Decision-Making is an Intellectual Exercise.

4. Decision-Making involves a Problem of Choice.

5. Decision-Making is a Continuous Process.

6. Decision-Making is the Basis of Action.

7. Decision-Making is Situational.

8. Decision-Making implies a Commitment of Organizational Resources.

Major Features/ Characteristics of Decision-Making: (Another Definition)

1. Rational Thinking: It is invariably based on rational thinking. Since the human brain with
its ability to learn, remember and relate many complex factors, makes the rationality possible.

2. Process: It is the process followed by deliberations and reasoning.

3. Selective: It is selective, i.e., it is the choice of the best course among alternatives. In other
words, decision involves selection of the best course from among the available alternative
courses that are identified by the decision-maker.

4. Purposive: It is usually purposive i.e.; it relates to the end. The solution to a problem
provides an effective means to the desired goal or end.

5. Positive: Although every decision is usually positive sometimes certain decisions may be
negative and may just be a decision not to decide. For instance, the manufacturers of VOX
Wagen car once decided not to change the model (body style) and size of the car although the
other rival enterprise (i.e., the Ford Corporation) was planning to introduce a new model every
year, in the USA.

6. Commitment: Every decision is based on the concept of commitment. In other words, the
Management is committed to every decision it takes for two reasons- viz., (/) it promotes the
stability of the concern and (ii) every decision taken becomes a part of the expectations of the
people involved in the organisation.

7. Evaluation: Decision-making involves evaluation in two ways, viz., (i) the executive must
evaluate the alternatives, and (ii) he should evaluate the results of the decisions taken by him.

Decision-Making Concept:
 Decision-making is a cognitive process that results in the selection of a course of action
among several alternative scenarios.
 Decision-making is a daily activity for any human being. There is no exception about that.
When it comes to business organizations, decision-making is a habit and a process as
well.
 Effective and successful decisions result in profits, while unsuccessful one’s cause losses.
Therefore, corporate decision-making is the most critical process in any organization.
 In a decision-making process, we choose one course of action from a few possible
alternatives. In the process of decision-making, we may use many tools, techniques, and
perceptions.
 In addition, we may make our own private decisions or may prefer a collective decision.
 Usually, decision-making is hard. Majority of corporate decisions involve some level of
dissatisfaction or conflict with another party.

Decision-Making Concept: (Another Definition)

1. A decision is a choice out of several alternatives (options) made by the decision maker to

achieve some objectives in a given situation.

2. Business decisions are those, which are made in the process of conducting business to

achieve its objective in a given environment.

3. Managerial decision-making is a control point for every managerial activity may be

planning, organizing, staffing, directing, controlling and communicating.

4. Decision-making is an art of reasoned and judicious choice out of many alternatives. Once

the decision is taken, it implies the commitment of resources.

Steps followed in Decision-Making Process:

Following are the important steps of the decision-making process. Each step may be supported
by different tools and techniques:

Figure 1. Decision-Making Process

Brief Explanation of all the Steps stated above:

Step 1: Identification of the Purpose of the Decision

In this step, the problem is thoroughly analyzed. There are a couple of questions one should
ask when it comes to identifying the purpose of the decision.
 What exactly is the problem?

 Why the problem should be solved?

 Who are the affected parties of the problem?

 Does the problem have a deadline or a specific time-line?

Step 2: Information Gathering

 A problem of an organization will have many stakeholders. In addition, there can be dozens of

factors involved and affected by the problem.

 In the process of solving the problem, you will have to gather as much as information related to the

factors and stakeholders involved in the problem. For the process of information gathering, tools

such as 'Check Sheets' can be effectively used.

Step 3: Principles for Judging the Alternatives

 In this step, the baseline criteria for judging the alternatives should be set up. When it comes to
defining the criteria, organizational goals as well as the corporate culture should be taken into
consideration.
 As an example, profit is one of the main concerns in every decision-making process. Companies
usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise,
baseline principles should be identified related to the problem in hand.

Step 4: Brainstorm and Analyze the Choices

 For this step, brainstorming to list down all the ideas is the best option. Before the idea generation
step, it is vital to understand the causes of the problem and prioritization of causes.
 For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect
diagram helps you to identify all possible causes of the problem and Pareto chart helps you to
prioritize and identify the causes with the highest effect.
 Then, you can move on generating all possible solutions (alternatives) for the problem in hand.

Step 5: Evaluation of Alternatives

Use your judgment principles and decision-making criteria to evaluate each alternative. In this step,
experience and effectiveness of the judgment principles come into play. You need to compare each
alternative for their positives and negatives.
Step 6: Select the Best Alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best
alternative is an informed decision since you have already followed a methodology to derive and select
the best alternative.

Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the
help of subordinates.

Step 8: Evaluate the Results

Evaluate the outcome of your decision. See whether there is anything you should learn and then correct
in future decision making. This is one of the best practices that will improve your decision-making skills.

https://www.ispatguru.com/organizational-decision-making/

Decision Making: Methods

1. Marginal Analysis

 This technique is also known as “Marginal Costing”. In this technique, the additional revenues from
additional costs are compared. The profits are considered maximum at the point where marginal
revenues and marginal costs are equal. This technique can also be used in comparing factors other
than costs and revenues.

 For example: If we try to find out the optimum output of a machine, we have to vary inputs against
output until the additional inputs equal the additional output. This will be the point of maximum
efficiency of the machine. Modern analysis is the “Break-Even Point (BEP)” which tells the
management the production where there is no profit and no loss.

2. Co-Effectiveness Analysis

 This analysis may be used for choosing among alternatives to identify a preferred choice when
objectives are far less specific than those expressed by such clear quantities as sales, costs or
profits. Further, it emphasized for synthesizing model i.e., combining these results, may be made
to show the relationships of cost and effectiveness for each alternative.

3. Operation Research

 This is a scientific method of analysis of decision problems to provide the executive the needed
quantitative information in making these decisions. The important purpose of this is to provide the
 managers with scientific basis for solving organizational problems involving the interaction of
components of the organization. This seeks to replace the process by an analytic, objective and
quantitative basis based on information supplied by the system in operation and possibly without
disturbing the operation.
 This is widely used in modern business organizations. For example: (a) Inventory models are used
to control the level of inventory, (b) Linear Programming for allocation of work among individuals in
the organization.

4. Linear Programming

 It is a technique applicable in areas like production planning, transportation, warehouse location

and utilization of production and warehousing facilities at an overall minimum cost. It is based on
the assumption that there exists a linear relationship between variables and that the limits of
variations can be ascertained.
 It is a method used for determining the optimum combination of limited resources to achieve a given
objective. It involves maximization of a linear function of various primary variables known as
objective function subject to a set of some real or assumed restrictions known as constraints.

Organizational Decision-Making

 Decision making is considered one of the most important tasks of management. The

manager plays a crucial role in serving his/her decision, as the growth and failure of an

organization are dependent on timely decisions taken. Each managerial decision like

planning, organizing, staffing, and directing are all parts of decision making.

 A decision is a process that is consciously chosen from among a set of desired options

to achieve the result.

Types of Decision Making

The managers or non-managers have to make decisions at some point to get their
organizational goals done. These decisions are categorized further. The types of decision
making in an organization are as follows:

1. Organizational and Personal Decisions:

If the decision is taken collectively keeping in mind the organizational goal, it is known as the
organization goal, and if the manager takes any decision in the personal capacity (affecting
his/her life). It is known as personal decisions. These decisions may sometimes affect the
functioning of the organization as well. For example, if the employee has decided to leave the
organization, it may affect the organization. The authority of taking personal decisions cannot
be delegated and is dependent on the individual itself.

2. Long-Term Departmental and Non-Economic Decisions:

In case of Long-term decisions, the period covered is long and the risk involved is more.
Departmental decisions art-taken by the departmental heads and relate to the department
only. Decisions relating non-economic factors (such as technical values, moral behaviour
etc.) may be termed as Non-Economic Decisions.

While taking decisions on these factors, care should be taken to see that justice is done to
all and as a result of this decision; no new problem is created for the organization.

3. Individual and Group Decisions:

When the decision is taken by an individual, it is categorized as an individual decision.

Usually, routine decisions are taken by individuals within the policy framework of the
organization.

Group decisions are taken by a group of individuals in the form of a standing committee.
Generally, important types of decisions in management are shifted to this committee. The
main aim of a group decision is to involve the maximum number of individuals in the process
of decision making.

4. Programmed and Non-Programmed Decisions:

Programmed decisions are routine and repetitive in nature. These decisions deal with common
and frequently occurring problems in an organization such as buying behaviour of consumers,
sanctioning of different types of leave to employees, purchasing decisions, salary increment,
etc.

Non-programmed decisions are not routine or common in nature. These are related to
exceptional situations in which guidelines or routine management is not set. For example,
problems arising from a decline in market share, increasing competition in the business
environment. The majority of the decisions taken by managers do fall in this non programmed
category.

5. Operational (Routine) and Strategic Decisions:

Operational decisions are just the normal functioning of the organization. These decisions do
not require much time and take a shorter time as compared to other decisions taken. Ample of
responsibilities are delegated to subordinates. The main decision is to create harmony in an
organization and to see whether the management is proper or not.

Strategic decisions include all present issues and problems. The main idea is to achieve better
working conditions, better equipment, and efficient use of existing equipment, etc. These all
fall under this category. Usually, strategic decisions are taken by top-level management.

6. Major and Minor Decisions:

These are classified as the type of decision-making in management where decision-related to

purchase of new premises is a major decision. These are taken by top management whereas
the purchase of stationery is a minor decision. Minor decisions can be taken by the
superintendent.

7. Policy and Operating Decisions:

Whether to give profit bonus to employees or not a matter of policy to be decided by the top
management; but calculating the bonus in respect of each employee is an operating decision
which can be taken at a much lower level.

MIS: Business Planning

 A business plan is a document that defines in detail a company's objectives and how it

plans to achieve its goals. A business plan lays out a written road map for the firm

from marketing, financial, and operational standpoints. Both start-ups and established

companies use business plans.

 A business plan is an important document aimed at a company's external and internal

audiences. For instance, a business plan is used to attract investment before a company

has established a proven track record. It can also help to secure lending from financial

institutions.

 Furthermore, a business plan can serve to keep a company's executive team on the same

page about strategic action items and on target for meeting established goals.
 Although they're especially useful for new businesses, every company should have a

business plan. Ideally, the plan is reviewed and updated periodically to reflect goals

 that have been met or have changed. Sometimes, a new business plan is created for an

established business that has decided to move in a new direction.

Key Takeaways (Summarize Way)

1. A business plan is a document describing a company's core business activities and how

it plans to achieve its goals.

2. Start-up companies use business plans to get off the ground and attract outside investors.

3. A business plan can also be used as an internal guide to keep an executive team focused

on and working toward short- and long-term objectives.

4. Businesses may create a lengthier traditional business plan or a shorter lean start-up

business plan.

5. Good business plans should include an executive summary and sections on products and

services, marketing strategy and analysis, financial planning, and a budget.

Business Plans for Start-Ups:

Typical structure for a business plan for a start-up venture:

1. Cover Page and Table of Contents

2. Executive Summary

3. Mission Statement

4. Business Description

5. Business Environment Analysis

6. Swot Analysis

7. Industry Background

8. Competitor Analysis

9. Market Analysis

10. Marketing Plan

 11. Operations Plan

12. Management Summary

13. Financial Plan

14. Achievements and Milestones

Strategic Planning
Definition: Strategic Planning can be understood as a systematic long-range planning

activity, that an organization uses to fix priorities, strengthen operations, ascertain

objectives and focus on the resources required and are to be allocated in order to

pursue the strategy and attain the objectives.

It is a part of the strategic management process, which ensures that every aspect of
the organization is working towards the achievement of the organization’s goals, i.e.,
in the right and intended direction.

Strategic Planning ascertains what an organization is, to whom it serves, where is it

going and what are the paths, which are to be followed to follow its vision. It includes
strategic decision making, strategic intent, strategic management model and strategy
formulation.

Characteristics of Strategic Planning

The following are the major characteristics of Strategic Planning:

1. Strategic Planning is an analytical process which formulates strategic and operational

plans for the organization. The implementation of strategic plans is possible through

projects, whereas various units or divisions of the firm implement operational plans.

2. It performs SWOT Analysis, i.e., during the planning process, the firm’s strengths,

weaknesses, opportunities and threats are taken into consideration.

3. It is a forward-looking activity wherein the future opportunities and threats are ascertained

while considering its profitability, market share, product and competition.

4. It presupposes that a firm should always be ready to adapt itself according to the dynamic

business environment. For this purpose, alternative strategies are developed for different

circumstances, i.e., from best to worst, for the future.

5. It can be done for the entire organization or to a specific business unit.

6. It is helpful in selecting the best strategy, among the various strategies taking into account

the firm’s interest, personal values and corporate social responsibility.

7. It acts as a guide to the executive to reduce the risk involved in the business and also to

take the best possible advantage of the opportunities. So, in this way, it contributes to the

success of the enterprise.

Organizational Planning & Different Types of Organizational Planning:

Website Link:

https://pingboard.com/blog/organizational-planning-guide-types-of-plans-steps-and-
examples/

General Management:
Website Link:
https://thefactfactor.com/facts/management/general/plans/575/
Decision-Making Tools
The decision-making tools help you to map out all the possible alternatives to your

decision, its cost, as well as chances of success or failure. These applications provide

a useful way to make the right choice by simplifying the decision-making process and

by drawing a diagram.

Decision Making Techniques and Tools

1. SWOT Diagram

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT

Diagram is an important management application that helps any organization to
assess its current situation. It works as a basic guide for strategic planning.

2) Decision Making Diagram

Decision making diagrams are graphs that enable you to map out the decision you
have taken. It is one of the best decision-making methods that helps you to estimate
eventual actions based on the outcomes and risks. You can use this diagram for
planning team strategy.

Decision-Making Tools:
Decision-making tools are methods and exercises that individuals can use to
approach problem-solving and choice-based scenarios effectively. These tools can
often help guide you through the following phases of the decision-making process:

1. Determination: This phase refers to the stage in the decision-making process

through which you identify what your options and goals are.
2. Analysis: After determining your options and goals, you can conduct research,
gather key information and analyze the impact of each potential choice.
3. Evaluation: With a full analysis of the actions, you can take and any alternatives
you've generated, you can enter the evaluation stage through which you determine
the value of each option, including its benefits and drawbacks.
4. Selection: Using the data you've gained through your analysis and evaluation
phases; you can make an informed decision and select an option you identified
through the determination stage.
5. Assessment: After you make a decision, you can later assess your actions and
examine them to understand the short-term and long-term impacts of your choice.

Decision-Making Procedures:
In Decision-making process, steps normally refer to processes, procedures and
phases which are usually followed for better decision.

According to Stanley Vance decision-making consists of the following six steps:

1. Perception

2. Conception

3. Investigation

4. Deliberation

5. Selection

6. Promulgation

For brief explanation of these 6 points stated above, follow the below website
link:

https://theintactone.com/2020/01/07/decision-making-tools-and-procedures/