Planning includes:

Nature and purpose of planning

o The contribution of planning to purpose and objectives

o The primacy of planning

o The pervasiveness of planning

o The efficiency of plans

Types of planning

o Purpose, mission and objectives

o Strategies and policies

o Procedures and rules

o Programs

o Budget

Steps in planning

o Awareness op opportunities

o Setting objectives

o Developing performance

o Identifying alternative courses of action

o Evaluating alternative courses

o Selecting a course

o Formulating derivative plan

o Numbrising plans by making budgets

The Planning process

Management by objectives (MBO)

o Benefits of MBO

o Weaknesses of MBO

Decision making

o Rational decision making

o Steps in decision making

Quantitative & qualitative factors

Managerial analysis

What is planning?

There are many definitions of planning. Planning may define as:

According to Fayol - "The plan of action is, at one and the same time, the result

envisaged, the line of action to be followed, the stages to go through, and the methods

to use. It is a kind of future picture wherein proximate events are outlined with some

distinctness...."

Planning is deciding in advance what is to be done. It involves the selection of

objectives, policies, procedures and programmes from among alternatives. A plan is a

predetermined course of action to achieve a specified goal. It is a statement of

objectives to be achieved by certain means in the future. In short, it is a blueprint for

action.

According to Louis A Allen - "Management planning involves the development of

forecasts, objectives, policies, programmes, procedures, schedules and budgets".

According to Theo Haimann - "Planning is deciding in advance what is to be done.

When a manager plans, he projects a course of action, for the future, attempting to

achieve a consistent, co-ordinated structure of operations aimed at the desired

results".

According to Koontz O’Donnell - "Planning is an intellectual process, the conscious

determination of courses of action, the basing of decisions on purpose, acts and

considered estimates".

1. PLANNING IS THE PRE-SELECTION:

Planning is the pre-selection of objectives and outlines the action before starting any

business.

2. ANOTHER WORDS

Planning is selection of mission, objectives and true strategies, polices programs and

procedure to achieve them.

3. SIMPLEST DIFINATION OF PLANNING:

Planning is decision making in advance.

4. ANOTHER DEFINATION:

Choosing the alternatives and making the decision is called planning.

THE NUTURE & PURPOSE OF PLANNING:

The essential nature of planning can be defined by dividing it into four Major aspects.

1. THE CONTRIBUTION OF PLANNING TO PURPOSE AND OBJECTIVE:

Every plan and all its supporting plans should contribute accomplishment of the

purpose and objectives of the enterprise. This concept an use in organized enterprise

which try to accomplishment of group purpose through deliberate cooperation.

2. THE PRAMACY OF PLANNING:

Since managerial functions like organizing, Staffing, Leading and controlling support

to the accomplishment of enterprise objectives, planning logically precedes or help

the accomplishment of all other managerial functions. Because Manager must plan on

order to know what kinds f organization relationship and personal qualifications are

needed, which method should be fild by subordinates and what kind of control is to

applied. All the other Managerial functions must be planned if they are to be

effective.

3. THE PERVASIVENESS OF PLANNING:

Planning is the function of all Managers, although the character and breadth of

planning will vary with each Managers authority and with nature of polices and plans

outlined by superiors. If Managers are not allowed a certain degree of discretion and

planning responsibility they are not truly Managers.

If we recognize the pervasiveness of planning, we can more easily understand why

some people distinguish between the “manager” and the “administrator” or

“supervisor” one manager, because of his or her authority or position in the

organization, may do more important planning than another, or the planning of one

may be more basic than that of another and applicable to a large portion of the

enterprise. However, all managers from presidents to first level supervisors plan.

Even the head of a road gang or a factory crew plans in a limited area under fairly strict rules and procedures. A principal factor in a success of supervisors at the lowest

organization level is their ability to plan.

4. THE EFFIENCY OF PLANS

Plans are efficient, if they achieve their purpose at a reasonable cost, when cost is

measured not only in terms of times or money or production but also in degree of

individual and group satisfaction.

Many managers have followed plans whose costs were greater than the revenue that

could be obtained. For example, one airline acquired certain aircraft with costs

exceeding revenues. Companies have also tried to sell products that were

unacceptable to the market. Plan can even make it impossible to achieve objects if

they make enough people in an organization this satisfied or unhappy.

TYPES OF PLANNING

The failure of some managers is inability to recognize the several types of plans. This

makes difficulty in making planning effective. Plans are classified as:-

1. PURPOSE AND MISSIONS & OBJECTIVES

This mission identifies the basic functions or tasks of an enterprise. However, an

objective is the end toward which an activity is aimed. Objectives in other words. Are

ends toward which organizational and individual activities or directed. Objectives are

the end point toward which all managerial functions, (Planning, Organizing, Leading,

Staffing, and Controlling) are aimed. Objectives form a hierarchy ranging from

individual objectives to broad aims.

2. STRATEGIES & POLICIES

Strategies and policies are the basis of operational plans and framework for plans.

Both gives direction and are closely related. The word strategy is derived from a

Greek word “STRATEGOS” meaning General. Strategies is the determination of the

basic long term objectives of an enterprise and the adoption of courses of action and

allocation of resources necessary to achieve these goals policies are general

statements or understandings that guide manager’s thinking and decision making.

3. PROCEDURE & RULES

Procedures are plans that establish a required method of handling future activities.

Briefly, procedures guide actions. Rules are those required actions or non-actions

allowing no discretion. Rules are simply called simple plans.

4. PROGRAMMS

Programs are a complex of goals, policies, procedures, rules, tasks and steps to be

taken, resources to be employed and other elements necessary to carryout a given

course of action and normally supported by capital and operating budgets.

5. BUDGET

A budget is a numerized program. It is a statement of plans and expected results

expressed in numerical terms or forms. The budget of an enterprise represents the

sum total of income and expenses with profit or surplus.

STEPS IN PLANNING

STEPS IN PLANNING
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There are eight applicable steps in planning which should be followed by managers in

connection with major programs and in any other through planning.

1. AWARENESS OF OPPERTUNITIES

An awareness of opportunities in the external environment as well as within the

organization is the real starting point for planning. All managers should take look at

future opportunities and see them clearly and completely. They should know where

they stand in light of their strengths and weakness, understand what problems they

wish to solve and why, and know what they expect to gain. Setting realistic objectives

depends on this awareness.

(i) About market (ii) About expected competition (ii) What customers wants (iv)

Awareness about their qualities and weakness

2. SETTING OBJECTIVES

The second step in planning is to establish or set objectives for the entire enterprise

and then for each subordinate work unit. Objectives specify the expected results and

indicate the end points of (i) What is to be done (ii) Where the primary emphasis is to

be placed (iii) What is to be accomplished by the network of strategies, policies,

procedures, rules, budgets and programs.

3. DEVELOPING PREMISES

The third logical step in planning is to establish planning premises. Such as forecasts,

applicable basic policies and existing company plan. The are assumptions about the

environment in which the plan is to be the carried out. It is important for all the

managers involved in planning to agree on the premises.

Forecasting is important in premising: What kind of markets will be there? What

volume of sales? What prices? What products? What technical developments? What

cost? Etc

4. INDENTIFYING ALTERNATIVE COURSES OF ACT

ION

The forth step in planning is to search and examined alternative courses of actions.

The planner must usually make preliminary examination alternative courses to

accomplish the goal.

5. EVALUATING ALTERNATIVE COURSES

After determining alternative courses and examining their strong and weak points, the

next step is to evaluate the alternatives. That which alternative will give the best of

meeting goals at the lowest cost and highest profit in a given period.

6. SELECTING A COURSE

Selecting an alternative is the real point of decision making. This is the point at

which the plan is adopted. After identifying and evaluatin

g alternative the manager

has to decide one best alternative or several alternative courses of action.

7. FORMULATING DERIVATIVE PLANS

The seventh step in planning is formulating derivative plans. When a decision is made

next step is to formulate a supporting plan, such as to buy equipment, materials, hire

and train workers and develop a new product.

8. NUBERISING PLANS BY MAKING BUDGETS

After decision making and formulating plans the final step in planning is to

numberise decision and plan by converting them into budgets. The overall budgets of

an enterprise represent the sum total of income and expenses with resulting profit.

Budgets are important thing in planning process.

STEPS IN PLANNING

THE PLANNING PROCESS

A rational approach to goal achievement planning is a rational approach to

accomplishing objectives. The process can be shown by figure.

Progress, time, critical planning, premises

In this diagram, progress (toward more sales, higher profits, lower costs, and so forth)

is on the vertical axis, and time is on the horizontal axis. Here x indicates where we

are (at to or time zero) and y where we want to be at future time (at tn). In short, we

are at ax and want to go to y. often we do not have all the data, but we start planning

anywhere. We may even have to start our planning study at x (at t-n). the line x y is

the decision path.

If the future work completely certain, the line x y would be relatively easy to draw.

Because we cannot forecast or consider everything, we try to develop our path x to y

in light of the most critical premises.

The essential logic of planning applies regardless of time interval between TO and

TN, weather it is five minutes or twenty years. If the time span is long, premises may

be unclear, goals may be more difficult to achieve and other planning complexities

may be great.

MANAGEMENT BY OBJECT (MBO)

MANAGEMENT BY OBJECT (MBO)
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Management by objectives (MBO) is now practiced all over the world. Yet, despite

its wide applications, it is not always clear what is meant by MBO. Some says that it

is an appraisal tool; other sees it is a motivational technique; still others consider

MBO a planning and control device. In other words, definitions and applications of

MBO differ widely. MBO process consists of setting goals at the highest level of the

organization, clarifying the rules of responsible persons for achieving the goals. Some

still define MBO in a very narrow, limited way.

BENEFITS OF MBO

There are four benefits of MBO.

1. MBO IMPRVOES MANAGEMENT:

All the objectives of management by objective can be summarized by saying that it

results in greatly improved Management. objective can not be establish without

planning.MBO force Managers to think about planning for results.MBO also requires

that Managers think about the way from which they will accomplish results. They

will think about need of assistance to achieve the objectives.

2. MBO CLASSIFY ORGANIZATION

MBO classify the organizational roles and structure. It force managers to delegate

authority according to the results they expect.

3. MBO INCOURAGE PERSONAL COMMITMENTS;

One of the great advantages of management by objective is that it encourages people

to commit themselves to their goals. Because of MBO people can understand their

area of discretion, there authority, the part in setting their objectives.

4. MBO DEVLOPES EFFECTVE CONTROL

MBO help people to develop effective control. As MBO guides in setting result

oriented planning. It is also guides people to develop effective control towards the

accomplishment of the goals.

WEAKNESSES OF MANAGEMENT BY OBJECTIVES

With all its advantages, MBO has a number of weaknesses. There are several

weakness of MBO.

1. MBO FALIURE TO EXPLIAN PHILOSPHY MBO

As MBO emphasis self-control and self direction therefore sometimes managers fail

to explain the philosophy of MBO to their subordinates. Managers often fail to

explain about MBO that it is? How it works? Why it is being done? What part in

performance appraisal? How participants can benefits?

2. MBO FAILURE TO GIVE GUIDE LINES FOR GOAL SETTING

One of the weaknesses of MBO is that it fails to give guide line for goal setting to

managers. Managers need planning premises and knowledge of major company

polices. People must have some assumptions about future. They should have some

understanding about objectives affecting their areas of operations. They should know

about objectives and programes.MBO fails to give guideline to Managers.

3. DIFFICULTY OF SETING GOALS

Truly verifiable are difficult to set. MBO difficult and verifiable goals.

4. EMPHASIS ON SHORT TIMES GOALS

In most MBO programs, managers set goals for the short term for yearly or quarterly.

Emphasis on short term goals lead to danger more expensiveness as of the longer

range.

5. DANGER OF INFLAXIBILITY

In MBO program managers often hesitate to change objectives. Change in objective

can affect results. So in MBO managers often hesitate to know flexibility.

OTHER WEAKNESSES

There are some other dangers and difficulties in MBO.

1- There may be a danger of overuse of quantitative goals or low gradation of

important goals.

2- Difficulty in applying goal oriented planning.

3- Difficulty of converting broad objective into subordinate objectives.

4- Difficulty in measuring performance.

5- Difficulty in providing feedback.

6- Difficulty in setting long-range objectives and planning.

7- Difficulty in adjusting to the fast changing environment

DECISSION MAKING

Decision making is defined as the selection of course of action from among

alternative. It is the core of planning. A plan cannot be said to exist unless a decision

has been made.

Managers sometimes see decision making as their central job because they must

constantly choose what is to be done, who is to do it and when, where and how it will

be done. Decision making is the part of planning and everyone’s daily living.

RATIONAL DECISION MAKING;

It is the rational decision making that goals cannot be attain without action.

People acting or deciding rationally are attempting to reach some goal that cannot be

attained without action. They must have a clear understanding of alternatives. Thy

must have ability and information to analyze and evaluate alternatives in order to

achieve goals. Finally they must have desire to come the best solution by selecting

alternative.

STEPS IN DECISION MAKING

There are three steps in decision making.

1- THE SEARCH FOR ALTERNATIVES.

The first steps of decision making are to develop alternatives. There are almost

always alternatives to any course of action. If we think of only one course of action,

clearly we have not thought hard enough.

The ability to develop alternatives is often as important as being able to select

correctly from among them. One of the other hand ingenuity research and common

sense will often unearth so many choices that all of them cannot be evaluated. The

manager needs help in this situation, and this help can be solved by decision making.

2- EVALUATION OF ALTERNATIVES.

When an appropriate alternative has been found, the next steps in planning one best

alternative to achieve the goals. There are three ways of evaluated decision making.

1- QUANTITIVE AND QUALITIVE FACTOR

Quantitative factor can be measured in numerical terms. This factor is vary important

but the success of the venture would be endangered qualitative factors were ignored.

Qualitative factor are those that are difficult to measure numerically such as the

quality of labor relations, the risk of technological change etc.

2- MANAGERIAL ANALYSIS

In evaluating alternatives managerial analysis is very important. Marginal analysis

can be used in comparing factors other then costs and revenue. For example to find

the best output of a machine, inputs could be varied against outputs until the

additional input equals the additional output.

3- COST EFFECTIVENESS ANALYSIS

Cost effectiveness analysis seeks the best ratio of benefits and costs. For example

finding the least costly way of reaching objectiveness is a technique for choosing the

best plan.

SELECTING AN ALTERNATIVE

During the selection among the alternatives, managers can use three basic approaches

(1) Experience (2) Experimentations (3) research and analysis.

Bases for selecting from among alternatives

EXPERIENCE

Reliance on past experience plays a larger part in decision making to some extent,

experience is the best teacher. The very fact that managers have reached there

position appears to justify their past decisions. Moreover, the process of thinking

problems through making decisions and seeing programs succeed or fail.

EXPERIMENTATION

One way of deciding among alternatives is to try one of them and see what happens.

Experimentation is often used in scientific theory. The experimental technique can be

most expensive, especially if a program requires heavy expenditures firm cannot

afford to attempt several alternatives.

RESEARCH AND ANALYSIS

One of the most effective techniques for selecting from alternatives is research and

analysis of decisions. This approach means solving problems by first comparing it. It

is pencil and paper approach to decision making