UNIT II
PLANNING
CONCEPT
Arranging is the principal the board work, which includes choosing previously, what could possibly be done, is it to be done, how it is to be done and who will do it. It is a scholarly cycle which sets out an association's destinations and creates different strategies, by which the association can accomplish those goals. Precisely, how to accomplish a particular objective. Arranging is only speculation before the activity happens. It encourages us to bring a peep into the future and choose ahead of time the best approach to manage the circumstances, which we will experience in future. It includes legitimate reasoning and objective management.
PROCESS OF PLANNING
1. Perception of Opportunities: Perception of chances isn't carefully a portion of the arranging cycle. In any case, this consciousness of chances in the outside climate just as inside the association is the genuine beginning stage for arranging. It is essential to investigate conceivable future chances and see them plainly and totally.
2. Establishing Objectives: This is the second step in the arranging cycle. The major authoritative and unit destinations are set in this stage. This is to be accomplished for the long haul just as for the short reach. Objective determine the normal outcomes and show the end purposes of what can anyone do, the essential accentuation is to be set and what is to be cultivated by the different kinds of plans.
3. Planning Premises: After assurance of hierarchical destinations, the subsequent stage is setting up arranging premises that is the conditions under which arranging exercises will be attempted. Arranging premises are arranging suspicions the normal ecological and interior conditions.
4. Identification of Alternatives: The fourth step in arranging is to distinguish the other options. Different options can be recognized dependent on the hierarchical destinations and arranging premises. The idea of different choices recommends that a specific target can be accomplished through different activities.
5. Evaluation of Alternatives: The different elective strategy should be investigated in the light of premises and objectives. There are different methods accessible to assess choices. The assessment is to be done in the light of different variables. Model, money inflow and outpouring, chances, restricted assets, expected compensation back and so onward, the options should give us the most obvious opportunity with regards to meeting our objectives at the least expense and most noteworthy benefit.
6. Choice of Alternative Plans: This is the genuine purpose of management. An investigation and assessment of elective courses will reveal that at least two. Which is appropriate and advantageous and fit one is chosen.
7. Formulation of Supporting Plan: After planning the fundamental arrangement, different plans are determined in order to help the principle plan. In an association there can be different subsidiary plans like making arrangements for purchasing gear, purchasing crude materials, enlisting and preparing individual, growing new item and so forth these subsidiary plans are figured out of the essential or fundamental arrangement and perpetually needed to help the essential arrangement.
8. Establishing Sequence of Activities: After detailing essential and subordinate plans, the arrangement of exercises is resolved so those plans are placed without hesitation. After choices are made and arrangements are set, spending plans for different periods and divisions can be set up to give designs more solid importance for execution.
PLANNING TYPES:
Corporate, Operational, Functional and Proactive Planning!
I. Corporate Planning:
The term corporate planning denotes planning activities for the whole enterprise.
The basic focus of corporate planning is to determine the long-term objectives of the organisation as an entire .then to get plans to attain these objectives taking into mind the likely changes within the external environment (macro level). Corporate planning is usually carried out at the top level of management.
“Corporate planning includes the setting of objectives, organizing the work, people and systems to enable those objectives to be attained, motivating through the planning process and thru the plans, measuring performance then controlling progress of the plan and developing people through better decision making, clearer objectives, more involvement and awareness of progress.” —David Hussey
Hussey has given a broad definition of corporate planning. It covers various functions of management besides defining planning. Corporate planning is that the total planning activities in the organisation and not the entire management functions.
“Corporate Planning is the continuous process of creating present risk taking decisions systematically and with the greatest knowledge of their futurity; Organising systematically the efforts needed to carry out these decisions, and measuring expectations through organised, systematic feedback.” —Peter Drucker
The corporate planning activities are carrying out at the top level. They’re important for the success of the whole organisation. The highest management is liable for the formulation of such plans and is prepared according to the inputs that are given to them either from the environment or the lower levels in the organisational hierarchy. The plans are generally long term and are broad based.
The corporate planning is of two types:
i. Strategic Planning
ii. Operational Planning
Strategic Planning consists of the method of developing strategies to reach a defined objective. It sets the long-term direction of the organisation during which it wants to proceed in future. According to Anthony it are often defined as the “process of selecting the objectives of the organisation, on changes on these objectives and on the policies that are to control the acquisition, use and disposition of these resources.”
An assessment of available resources is made at the top and then things are planned for a period of time of upto 10 years. It basically deals with the entire assessment of the organisation, strengths capabilities and weaknesses and an objective evaluation of environment is formed for future pursuits.
Examples of strategic planning in an organisation may be; planned growth rate in sales, diversification of business into new lines, sort of products to be offered then on. Strategic planning also involves the analysis of various environmental factors specifically with reference to how organisation relates to its environment.
The strategic planning may be carried out serial of steps that include the
1. Specifying Missions and Objectives.
2. Elaborate Environmental Scanning.
3. Strategy Formulation.
4. Strategy Implementation
5. Evaluation and Control
Strategic planning is of prime importance for any organisation as they might specify the other decisions that require to be taken.
II. Operational or Tactical Planning:
Operational planning, is also called tactical or short-term planning, usually, covers one year approximately . Operational planning involves the conversion of strategic plans into detailed and specific action plans. These plans are designed to sustain the organisation in its products Operational planning is done at the middle or lower level of management Operational planning are often defined as follows:
“Operational planning is that the process of deciding, the most effective use of the resources already allocated and to develop an impact mechanism to assure effective implementation of the actions so that organisational objectives are achieved.”
An Operational plan is an annual work plan:
It narrates short term business strategies; it explains how a strategic plan will be put into operation (or what portion of a strategic plan will be put into operation (or what portion of a strategic plan are addressed) during a given operational period (fiscal year).
These plans are to support strategic plans whenever some difficulty is faced in its implementation. Any changes in internal organisation or external environment need to be met through tactical plans.
For examples, there's sudden change in prices of products, difficulty in procuring raw materials, unexpected moves by competitors; tactical plans will help in meeting such unforeseen situations. The success of tactical plan depends upon the speed and adaptability with which management acts to fulfill sudden situation.
Operational planning is concerned with the efficient use of resources already allocated and with the development of a control mechanism to make sure efficient implementation of the action in order that business objectives are attained.
III. Functional Planning:
The planning that's made to make sure smooth working of the organisation taking into account the needs of each and every department. the aim of functional planning is to market standardized management practices for corporate functions within the department’s decentralized corporate management structure.
The following three basic activities need to be carried out in functional planning:
(1) Functional Guidance:
Managers must be told and guided what they must be doing to properly manage corporate functions within the enterprise.
(2) Goal Setting:
Certain quantifiable goals need to be set that would measure the effectiveness of the functional planning. Goals should be meaningful, achievable and measureable.
(3) Functional Assessments:
Functional assessment wraps up the functional planning process. Here the Comparison is formed between the goal setting and therefore the goal achievement. The functional assessment should have the subsequent characteristics:
(i) Substantiation:
Managers who are accountable for corporate functions must explain how resources and activities devoted to their function provide support to the achievement of the corporate priorities and functional targets.
(ii) Measure of Success.
Managers accountable for corporate functions must quantifiably measure the success in meeting goals identified in their functional guidance.
(iii) Foresight:
Managers should be in a position to identify developing gaps and risks faced in their respective functional areas, alongside recommendations to refill those gaps and risks.
iv. Proactive and Reactive Planning:
Classification of planning into proactive and reactive is based on the organisation’s response to environmental dynamics. Planning is an open system approach and is affected by environmental factors which keep it up changing continuously. However, organisations response to those changes differs. based on these responses, planning could also be either proactive or reactive.
Proactive Planning:
It is based on the anticipation of the future outcomes and state of affairs that might affect the working of the organisation. Such a planning has got to be broad based, highly flexible and creative by nature.
The organisation that favours this type of planning often anticipates the future and takes necessary steps before the happening of the events. In India, companies like Reliance Industries, Hindustan Lever etc., have adopted this approach and their rate of growth has been much faster than others.
Reactive Planning:
As the name suggests, this type of planning isn't in the anticipation of the future but becomes active only the matter is confronted or has already occurred. this is merely the corrective action that's taken. This approach of planning is beneficial in an environment which is fairly stable over a long period of time.
v. Formal and Informal Planning:
Formal Planning exists in the formal hierarchy of the organisation and is usually carried out in the stepwise process. it's according to the pre expressed policies and the rules of the organisation. This type of planning is completed at a large scale and relies on the logical thinking. the planning process that's adopted is documented, and regular.
Informal Planning is typically carried out in very small organisations where the formal organisation structure may or might not exist. The planning is typically intuitive in nature and is short termed. Since the environment for smaller organisations isn't complex, they do reasonably well with informal planning process.
vi. Automated Planning:
Automated planning and scheduling may be a branch of AI that concerns the Realisation of strategies or action sequences, typically for execution by intelligent agents, autonomous robots and unmanned vehicles. This sort of designing is generally found within the technologically advanced organisations.
CONCEPT
More than everything else, the capacity to make sound, convenient choices separates a fruitful director from a non-effective. It is the obligation of chiefs to settle on excellent choices that are acknowledged and executed in an ideal style. By all accounts the choices should be firm, guessed, unforeseen, adaptable, improved, affecting, intuitional, non-critical, objective, operational one. One of the main elements of a director is to take choices. Whatever an administrator does, he does through management.
DECISION MAKING PROCESS
Identify the decision: The initial phase in creation the correct choice is perceiving the issue or opportunity and choosing to address it. Decide why this choice will have any kind of effect to your clients or individual representatives.
Gather information: Next, it's an ideal opportunity to accumulate data so you can settle on a choice dependent on realities and information. This requires making a worth judgment, figuring out what data is applicable to the current choice, alongside how you can get it
Identify Alternatives: Once you have an away from of the issue, it's an ideal opportunity to distinguish the different arrangements available to you. All things considered, you have various alternatives with regards to settling on your choice, so it is essential to concoct a scope of choices.
Weight of evidence: In this progression, you should assess for attainability, agreeableness and allure to realize which option is ideal. It very well might be useful to search out a confided in second feeling to increase another viewpoint on the current issue.
Choose among alternatives: When it's an ideal opportunity to settle on your choice, be certain that you comprehend the dangers associated with your picked course. You may likewise pick a mix of options since you completely handle all significant data and expected dangers.
Take action: Next, you should make an arrangement for execution. This includes recognizing what assets are required and picking up help from workers and partners.
Review decision: A frequently ignored yet significant advance in the decision making cycle is assessing your choice for adequacy. Ask yourself what you progressed admirably and what can be improved next time.
The term corporate planning denotes planning activities for the whole enterprise.
The basic focus of corporate planning is to determine the long-term objectives of the organisation as an entire .then to get plans to attain these objectives taking into mind the likely changes within the external environment (macro level). Corporate planning is usually carried out at the top level of management.
“Corporate planning includes the setting of objectives, organizing the work, people and systems to enable those objectives to be attained, motivating through the planning process and thru the plans, measuring performance then controlling progress of the plan and developing people through better decision making, clearer objectives, more involvement and awareness of progress.” —David Hussey
Hussey has given a broad definition of corporate planning. It covers various functions of management besides defining planning. Corporate planning is that the total planning activities in the organisation and not the entire management functions.
“Corporate Planning is the continuous process of creating present risk taking decisions systematically and with the greatest knowledge of their futurity; organizing systematically the efforts needed to carry out these decisions, and measuring expectations through organised, systematic feedback.” —Peter Drucker
The corporate planning activities are carrying out at the top level. they're important for the success of the whole organisation. the highest management is liable for the formulation of such plans and is prepared according to the inputs that are given to them either from the environment or the lower levels in the organisational hierarchy. The plans are generally long term and are broad based.
The corporate planning is of two types:
i. Strategic Planning
ii. Operational Planning
Strategic Planning consists of the method of developing strategies to reach a defined objective. It sets the long-term direction of the organisation during which it wants to proceed in future. according to Anthony it are often defined as the “process of selecting the objectives of the organisation, on changes on these objectives and on the policies that are to control the acquisition, use and disposition of these resources.”
An assessment of available resources is made at the top and then things are planned for a period of time of upto 10 years. It basically deals with the entire assessment of the organisation, strengths capabilities and weaknesses and an objective evaluation of environment is formed for future pursuits.
Examples of strategic planning in an organisation may be; planned growth rate in sales, diversification of business into new lines, sort of products to be offered then on. Strategic planning also involves the analysis of various environmental factors specifically with reference to how organisation relates to its environment.
The strategic planning may be carried out serial of steps that include the
1. Specifying Missions and Objectives.
2. Elaborate Environmental Scanning.
3. Strategy Formulation.
4. Strategy Implementation
5. Evaluation and Control
Strategic planning is of prime importance for any organisation as they might specify the other decisions that require to be taken.
II. Operational or Tactical Planning:
Operational planning, is also called tactical or short-term planning, usually, covers one year approximately. Operational planning involves the conversion of strategic plans into detailed and specific action plans. These plans are designed to sustain the organisation in its products Operational planning is done at the middle or lower level of management Operational planning are often defined as follows:
“Operational planning is that the process of deciding, the most effective use of the resources already allocated and to develop an impact mechanism to assure effective implementation of the actions so that organisational objectives are achieved.”
An Operational plan is an annual work plan:
It narrates short term business strategies; it explains how a strategic plan will be put into operation (or what portion of a strategic plan will be put into operation (or what portion of a strategic plan are addressed) during a given operational period (fiscal year).
These plans are to support strategic plans whenever some difficulty is faced in its implementation. Any changes in internal organisation or external environment need to be met through tactical plans.
For examples, there's sudden change in prices of products, difficulty in procuring raw materials, unexpected moves by competitors; tactical plans will help in meeting such unforeseen situations. The success of tactical plan depends upon the speed and adaptability with which management acts to fulfill sudden situation.
Operational planning is concerned with the efficient use of resources already allocated and with the development of a control mechanism to make sure efficient implementation of the action in order that business objectives are attained.
Strategy formulation refers to the process of choosing the most appropriate course of action for the realization of organizational goals and objectives and thereby achieving the organizational vision. The process of strategy formulation basically involves six main steps. Though these steps do not follow a rigid chronological order, however they are very rational and can be easily followed in this order.
- Setting Organizations’ objectives - The key component of any strategy statement is to set the long term objectives of the organization. It is known that strategy is generally a medium for realization of organizational objectives. Objectives stress the state of being there whereas Strategy stresses upon the process of reaching there. Strategy includes both the fixation of objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider term which believes in the manner of deployment of resources so as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors which influence the selection of objectives must be analyzed before the selection of objectives. Once the objectives and the factors influencing strategic decisions have been determined, it is easy to take strategic decisions.
2. Evaluating the Organizational Environment - The next step is to evaluate the general economic and industrial environment in which the organization operates. This includes a review of the organizations competitive position. It is essential to conduct a qualitative and quantitative review of an organizations existing product line. The purpose of such a review is to make sure that the factors important for competitive success in the market can be discovered so that the management can identify their own strengths and weaknesses as well as their competitors’ strengths and weaknesses.
After identifying its strengths and weaknesses, an organization must keep a track of competitors’ moves and actions so as to discover probable opportunities of threats to its market or supply sources.
3. Setting Quantitative Targets - In this step, an organization must practically fix the quantitative target values for some of the organizational objectives. The idea behind this is to compare with long term customers, so as to evaluate the contribution that might be made by various product zones or operating departments.
4. Aiming in context with the divisional plans - In this step, the contributions made by each department or division or product category within the organization is identified and accordingly strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic trends.
5. Performance Analysis - Performance analysis includes discovering and analyzing the gap between the planned or desired performance. A critical evaluation of the organizations past performance, present condition and the desired future conditions must be done by the organization. This critical evaluation identifies the degree of gap that persists between the actual reality and the long-term aspirations of the organization. An attempt is made by the organization to estimate its probable future condition if the current trends persist.
6. Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of action is actually chosen after considering organizational goals, organizational strengths, potential and limitations as well as the external opportunities.
Concept of Strategic Planning
Strategic planning is a process and thus has inputs, activities, outputs and outcomes. This process, like all processes, has constraints. It may be formal or informal and is typically iterative, with feedback loops throughout the process. Some elements of the process may be continuous and others may be executed as discrete projects with a definitive start and end during a period. Strategic planning provides inputs for strategic thinking, which gteguides the actual strategy formation. Typical strategic planning efforts include the evaluation of the organization's mission and strategic issues to strengthen current practices and determine the need for new programming.[2] The end result is the organization's strategy, including a diagnosis of the environment and competitive situation, a guiding policy on what the organization intends to accomplish, and key initiatives or action plans for achieving the guiding policy.[3]
Michael Porter wrote in 1980 that formulation of competitive strategy includes consideration of four key elements:
- Company strengths and weaknesses;
- Personal values of the key implementers (i.e., management and the board);
- Industry opportunities and threats; and
- Broader societal expectations.
The first two elements relate to factors internal to the company (i.e., the internal environment), while the latter two relate to factors external to the company (i.e., the external environment).[4] These elements are considered throughout the strategic planning process.
The executives by goals (MBO) is presently polished the world over. However, regardless of its wide application, it isn't in every case clear what is implied by MBO. Some actually consider it an evaluation apparatus, others consider it to be a persuasive strategy; still, and others consider MBO and arranging and control gadget. The idea of 'The board by Objectives' (MBO) was first given by Peter Drucker in 1954 (The Practice of Management'). The board by goals (MBO) is a complete administration framework dependent on quantifiable and participative set destinations. MBO is presently generally drilled everywhere on the world. In any case, regardless of its enormous scope application, the importance of MBO isn't yet in every case clear. To certain individuals, it is an evaluation device; others think about it as a persuasive procedure, while others view it as an instrument of arranging and control. The exhaustive administrative framework that coordinates many key administrative exercises in an orderly way and that is intentionally coordinated toward the compelling and effective accomplishment of authoritative and individual goals.
1. Define Organizational Goal: Goals are basic issues to hierarchical adequacy, and they fill various needs. Which must all be fittingly overseen and various types of directors must be associated with defining objectives. The objectives set by the bosses are starter, in light of an examination and judgment concerning what can and what should be cultivated by the association inside a specific period.
2. Define Employees Objectives: After creation sure that representatives directors have educated regarding relevant general targets, systems and arranging premises, the administrator would then be able to continue to work with workers in setting their destinations. The administrator asks what objectives the representatives accept they can achieve in what time-frame, and with what assets. They will at that point examine some primer musings about what objectives appear to be achievable for the organization or office.
3. Continuous Monitoring Performance and Progress: MBO measure isn't just fundamental for making line administrators in business associations more powerful yet in addition similarly significant for checking the exhibition and progress of workers. Recognizing insufficient projects by contrasting execution and pre-set up targets. Utilizing zero based planning. Applying MBO ideas for estimating individual and plans. Planning long and short-range targets and plans. Planning a sound hierarchical structure with clear, obligations and management authority at the suitable level.
4. Performance Evaluation: Under this MBO cycle execution audit is made by the investment of the concerned chiefs.
5. Providing Feedback: The dutiful fixings in a MBO program are nonstop input on execution and objectives that permit people to screen and address their own activities. This ceaseless input is enhanced by occasional proper evaluation gatherings in which bosses and subordinates can audit progress toward objectives, which lead to additional criticism.
6. Performance Appraisal: Regular audit of worker execution inside associations. It is done at the last phase of the MBO cycle.
Environment Analysis
Organisations are open system of management that constantly interacts with their environment. Environmental analysis is the study of organizational environment to identify and indicate those environmental factors that can significantly influence organizational operations and managers strategic decision making. It is thinking about the unthinkable, and it is seeing new insights rather than extrapolation. Environmental analysis is the discerning (seeing and understanding well) of those aspects of the environment, which shall have the greatest influence on the organisation’s ability to achieve its objectives. Such a discerning is made within and with the help of a framework provided by the knowledge of the organisation’s goals and the existing strategy of the organisation.
Environment Diagnosis
Environment diagnosis is an exercise attempted to identify the factors of causes in the environment that affect the function of an organisation and use such identification as a base for developing plans or strategic to improve or maximize the dynamism and effectiveness of the organisation. Environment analysis is a tool of environmental diagnosis.
Environmental Diagnosis Analysis and Diagnosis
The purpose of environment analysis and diagnosis is to identify the ways in which changes in various organizational factors may directly and indirectly influence the organisation and management. Managers commonly perform environment analysis in order to understand different activities and happenings inside and outside their organisation and thereby increase the chances of framing sound and effective organisations and managerial strategies by coping with the probable demands of the environment.
Environmental analysis is required due to its needs and importance for the following reasons:
1. Environmental factors are primary impact makers on corporate strategy of organisations.
2. Such analysis helps in anticipating opportunities and to plan alternative responses to those opportunities.
3. It helps in determining threats and developing an early warning system to prevent threats to the organisation or to determine the risks that may be faced by organisation in its future operations.
4. It helps to identify those adjustments or adaptations, which are required for greater accomplishment of organizational objectives.
5. It is sort of SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis which helps in deciding about the rights course of action for managerial to successfully negotiate with the prevalent circumstances around the organisation in order to ensure its survival, growth and development.
6. Environmental information strengthens the planning process and strategy formulation.
Environmental analysis is well accepted and recognized as an essential ingredients of strategic management. It may, however be noted that the behaviour of the environment may be predictable, partially predictable or unpredictable. Further, the predictable or partially predictable behaviour may be controllable, partially controllable or uncontrollable. Moreover the environment may be homogeneous or diversified and stable or changing.
Environmental Influences on Organisation and Management
Environmental factors affect an organisation in two ways
(i) They set the limits or constraints over its functioning,
(ii) They provide opportunity and challenges. The factors themselves act as limits, which are sometimes visible and at other moments, invisible. The environment provides opportunities by way of markets for new products, etc and challenges in the form of competitors etc. We daily find in newspaper headlines about government’s new regulations, competitors, new schemes, consumer revolts, anti pollution activities of the community, trade union, strikes and so on. To deal with these groups is an integral part of all manager’s job. Such a job becomes more important the higher a manager rises in managerial hierarchy.
References:
- “Principles of Business Management” by Dan Voich and Daniel A. Wren
- “Principles of Business Management” by Dr. S. C. Saksena
