Planning & Types of Plans

12 Feb 2015
PLANNING & TYPES OF

PLANS
LEARNING OUTLINE
What Is Planning?
Define planning.
Types (Levels) of Planning
Strategic Planning
Intermediate Planning
Operational Planning
Planning Process/ Procedure
Barriers to Effective Planning
Planning Premises
Forecasting
Key to Planning
What Is Planning?
Planning
Planning is the primary function of management.
It focuses on the future course of action.
A primary managerial activity that specifies the objectives
to be achieved in future and selects the alternative course
of action to reach defined objectives. Thus, it involves:
Defining the organizations goals
Establishing an overall strategy for achieving those goals
Developing plans for organizational work activities.
What Is Planning?
Determination of future course of actions
in advance
It is the blue print of action and operation.
Planning is intellectual process which is
concerned with deciding in advance what,
when, why, how, and who shall do the
work.
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 ODonnel
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
Why Do Managers Plan?

Purposes of Planning
Provides direction
Reduces uncertainty
Minimizes waste and redundancy
Sets the standards for controlling
Benefits of planning
Goal Focus
Minimize Uncertainty
Improve efficiency
Facilitates to Control
Innovation and Creativity
Better Coordination
Ensures Commitment
Aid to Business Success
Brings Systematization
How Do Managers Plan?

Elements of Planning
Goals (also Objectives)
Desired outcomes
organizations
for
individuals,
groups,
or
Provide direction and evaluation performance criteria
entire
Plans
Documents that outline how goals are to be accomplished
Describe how resources are to be allocated and establish

activity schedules
Types of Plans
Types of Plans
Strategic Plans
Apply to the entire organization.
Establish the organizations overall goals.
Seek to position the organization in terms of its
environment.
Cover extended periods of time.
Operational Plans
Specify the details of how the overall goals are to be
achieved.
Cover short time period.
Types of Plans (contd)

Long-Term Plans
Plans with time frames extending beyond three years
Short-Term Plans
Plans with time frames on one year or less
Specific Plans
Plans that are clearly defined and leave no room for
interpretation
Directional Plans
Flexible plans that set out general guidelines, provide
focus, yet allow discretion in implementation.
Exhibit 73 Specific Versus Directional Plans
Types of Plans (contd)

Single-Use Plan
A one-time plan specifically designed to meet the
need of a unique situation.
Standing Plans
Ongoing plans that provide guidance for activities
performed repeatedly.
Establishing Goals and Developing Plans

Traditional Goal Setting
Broad goals are set at the top of the organization.
Goals are then broken into sub-goals for each
organizational level.
Assumes that top management knows best because
they can see the big picture.
Goals are intended to direct, guide, and constrain from
above.
Goals lose clarity and focus as lower-level managers
attempt to interpret and define the goals for their areas
of responsibility.
Exhibit 74 The Downside of Traditional Goal Setting
Exhibit 77 Planning in the Hierarchy of Organizations
Contemporary Issues in Planning

Criticisms of Planning
Planning may create rigidity.
Plans
cannot
environments.
be
developed
for
dynamic
Formal plans cannot replace intuition and creativity.

Planning focuses managers attention on todays
competition not tomorrows survival.
Formal planning reinforces todays success, which
may lead to tomorrows failure.
Planning Process:
How does a manager Plan?
Establish objectives
Develop Strategies
Reviewing the
planning process
Determination of
premises
Determination of
alternatives
Implantation of
plans
Formulation of
derivative plans
Evaluation of
alternatives
Selecting a course
of action
Analyze Opportunities
Not a step of Planning, It is pre-step of planning.
Essential to make a successful plan.
SWOT analysis
Setting objectives
First and real starting point of planning.
Management has to define objectives in clear manner by
considering organizational resources and opportunities
because a minor mistake in setting objectives might
affect in implementation of plan.
Objectives must be specific, clear and practical.
They should be time bound and expressed in numerical
terms.
Determination of premises
Premises are the assumptions about the future in which the
planning is implemented.
They provide environment and boundaries for the
implementation of plan in practical operation.
These premises may be tangible and intangible and external.
(a) Tangible and intangible: Tangible premises involve
capital investment, unit of production, units sold, cost per unit,
time available etc. Similarly, intangible premises involve
employees moral, goodwill, motivation, managerial attitude,
etc.
(b) Internal and external: Internal premises involve money,
materials, machines and managements. In the similar
manner, external factors
involve competitors strategy,
technological change, government policy, social and cultural
beliefs etc.
Determination of alternatives
It is essential to identify all the possible hidden
alternatives. The information about alternative
courses of action may be obtained from primary
and secondary sources. There must be search
for the best alternative. The management must
develop alternatives through the support of
experienced and intellectual experts in
management sectors.
Evaluation of alternatives
Evaluate the alternatives from their expected
cost and benefits. This is the logical step to
evaluate each alternative from its plus and
minus points.
Each alternative is studied and evaluated in
terms of some common factors such as risk,
responsibility, planning premises, resources,
technology etc.
Selecting a course of action
Formulation of derivative plans:

It is essential to formulate action or derivative
plans for each step of work and to all
departments of the organization. These action
plans involve formulation of policies, rules,
schedule and budget to complete defined
objectives. Thus, formulation of derivative plans
is an essential step in planning process. It is
difficult to implement main plan without
formulation of derivative plan.
Implantation of plans
Without this step, other this procedure of plan will remain
as paper work.
This step brings all the procedure of plan into action.
For implementation plan, management has to take some
steps such as to communicate with subordinates who
initiate to plan into action; provide necessary instruction
and guidance; make arrangement of all resources like
materials, machines, money, equipments etc; make
timely supervision and control over subordinates.
Reviewing the planning process

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12 Feb 2015

PLANNING & TYPES OF

Defining the organizations goals

Establishing an overall strategy for achieving those goals

Developing plans for organizational work activities.

Planning is deciding in advance what to do,

Planning is that function of manner in

Why Do Managers Plan?

How Do Managers Plan?

Provide direction and evaluation performance criteria

Documents that outline how goals are to be accomplished

Describe how resources are to be allocated and establish

Types of Plans (contd)

Exhibit 73 Specific Versus Directional Plans

Types of Plans (contd)

Establishing Goals and Developing Plans

Exhibit 74 The Downside of Traditional Goal Setting

Exhibit 77 Planning in the Hierarchy of Organizations

Contemporary Issues in Planning

Formal plans cannot replace intuition and creativity.

Selecting a course of action

Formulation of derivative plans:

Reviewing the planning process

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