Download - Lecture No 3_Chapter No 4
-
8/3/2019 Lecture No 3_Chapter No 4
1/12
9/14/2010
1
PLANNINGPLANNING
Essentials of PlanningEssentials of Planning&&
Managing by ObjectivesManaging by ObjectivesChapterChapter
44
Lecture TopicsLecture Topics
Planning:Definition Purposes Benefits
Relationship of Planning & Controlling
Types of PlansComplete description of each type
Steps in Planning
Management by Objectives (MBOs)
SelectingSelectingmissionsmissionsandandobjectivesobjectivesas well asas well asthetheactionsactionsto achieve them, which requireto achieve them, which require
decision making.decision making.
PLANNINGPLANNING Expanded PlanningExpanded Planning DefinitionDefinition
Selectingmissionsandobjectivesaswell as theactionsto achieve them,
which require decision making, that is ,that is ,
all alternatives.all alternatives.
-
8/3/2019 Lecture No 3_Chapter No 4
2/12
9/14/2010
2
Planning IntroductionPlanning Introduction
The most basic of ALL functions
Most essential task of a Manager: To ensure that every one understands:
Mission
Objectives
Methods
Planning involves: Selecting missions, objectives and actions
Choosing the best among alternatives
Purposes of Planningurposes of Planning Business/ life: Things are complex & without
proper planning difficult to handle Pre- requisite
to achieve success to survive in a competitive world
It helps in: determining opportunities/ threats identification of courses of action proper utilization of resources working in an organized manner
OrganizingOrganizing
Nature of PlanningNature of Planning
MostMostimportantimportantfunctionfunction
PlanningPlanning LeadingLeading
StaffingStaffing
ControllingControlling CentralCentralrolerole: Links: Linksall otherall otherfunctionsfunctions
Benefits of PlanningBenefits of Planning
Is a pre-determined course of action
It brings orderliness
Avoids confusion
ves etter use o resources
Cuts waste
Plans are changed or modified but not abandoned
-
8/3/2019 Lecture No 3_Chapter No 4
3/12
9/14/2010
3
Benefits of PlanningBenefits of Planning
Planning leads to success.
It acts as a bridge between where we are and
where we want to be.
It hel s in savin resources mone and time.
Jobs are well coordinated thus duplication of
effort is avoided and skills and potentials are
fully utilized.
Relationship of Planning & ControllingRelationship of Planning & Controlling
Planning and Controlling are inseparable
(The Siamese Twins of Management)(The Siamese Twins of Management)
Plans provide the standards of Control
meaningless
No way for people to tell whether or not theyare going where they want to go (the task of
Controlling) unless they first know where
they want to go (the task of Planning)
Controlling
NoNodeviationsdeviations
fromfrom
Planning & ControllingPlanning & Controlling
ann ng Implementation Comparing withPlans
Corrective
Action
PlansPlans
DeviationsDeviations
Levels of PlanningLevels of Planning
Strategic planningStrategic planning: determining how to pursuelonglong--termterm goals with available resources.
Intermediate planningIntermediate planning: determining subsub--unitsunitscontributioncontribution with allocated resources
Operational planningOperational planning: determining how toaccomplish specific tasksspecific tasks with availableresources.
-
8/3/2019 Lecture No 3_Chapter No 4
4/12
9/14/2010
4
Relationship of Managerial & Planning LevelsRelationship of Managerial & Planning Levels Types of PlansTypes of Plans
1.1. Missions/Missions/ PurposesPurposes
2.2. Objectives/Objectives/ GoalsGoals
3.3. StrategiesStrategies
..
5.5. ProceduresProcedures
6.6. RulesRules
7.7. ProgramsPrograms
8.8. BudgetsBudgets
MissionMission
TheThe basic purposebasic purpose or function of anor function of an
enterprise or agency or any part of it.enterprise or agency or any part of it.
Guidelines for MissionGuidelines for Mission
A clear, formally written, and publicizedstatement that guides the organization by:
defining the organization for keystakeholders.
establishing key priorities
stating a common goal and fostertogetherness
generating enthusiasm and a can doattitude
empowering organization members.
-
8/3/2019 Lecture No 3_Chapter No 4
5/12
9/14/2010
5
ObjectiveObjective
TheThe endend towards whichtowards which
ac v yac v y s a me .s a me .
StrategyStrategy
The determination of the basic long
term objectives of an enterprise and
e a op on o course o ac on an
allocation of resources required to
achieve these goals.
PoliciesPolicies
General statementsGeneral statements oror
understandings thatunderstandings that guideguide oror
channelize thinking inchannelize thinking in decisiondecision
makingmaking..
Planning PremisesPlanning Premises
Assumptions about the
environment in which plans are to
.
-
8/3/2019 Lecture No 3_Chapter No 4
6/12
9/14/2010
6
ProceduresProcedures
Plans that establish aPlans that establish a requiredrequired
methodmethod of handling activities.of handling activities.
RulesRules
Rules spell outRules spell out specificspecific requiredrequired
actionsactions oror nonnon--actionsactions allowingallowing nono
discretion.discretion.
DosDos DontsDonts
ProgramsPrograms
AA complexcomplex of:of:
Goals, policies, procedures, rules,Goals, policies, procedures, rules,
, ,, , ,,
ResourcesResources to be employedto be employed, &, &
Other elements necessaryOther elements necessary to carryto carry
outout a given course of action.a given course of action.
BudgetBudget
A statement ofA statement of expectedexpected
resultsresults expressed inexpressed in
numerical termsnumerical terms..
-
8/3/2019 Lecture No 3_Chapter No 4
7/12
9/14/2010
7
Steps in PlanningSteps in Planning
1. Awareness of Opportunities2. Establishing Objectives3. Developing Premises4. Determinin Alternative Courses5. Comparing alternatives6.6. Selecting Best CourseSelecting Best Course7. Formulating Supportive Plans8. Quantifying Plans by Making
Budgets
Awareness of OpportunitiesAwareness of Opportunities
A real startingstarting point Look at possible opportunities in the
light of:
StrengthsStrengths
Market, Competition, Customers - Environment
Must also look at futurefuture environment
both externalexternal and internalinternal.
Setting realisticrealistic objectives depends on
this awareness.
SSTRENGTHSTRENGTHSActivities an organization doeswell or resources it control
WWEAKNESSESEAKNESSESActivities an or anization does not
SWOTSWOT AnalysisAnalysis
do well or resources it needs butdoes not have
OOPPORTUNITIESPPORTUNITIESPositive external environmental factors
TTHREATSHREATSNegative external environmentalFactors
Awareness of OpportunitiesAwareness of Opportunities
SS T R E N G T HT R E N G T H WW E A K N E SE A K N E S
OOP
P
R
T
U
N
MAXI-MAXI MINI-MAXI
Market, Competition, Customers - Environment
I
T
E
S
TTH
R
E
A
T
MAXI-MINI MINI-MINI
-
8/3/2019 Lecture No 3_Chapter No 4
8/12
9/14/2010
8
Establishing ObjectivesEstablishing Objectives
Selecting objectives for:
Entire organization & each subordinate workunit
Long Term/ Short term
Specifying expected results & indicateend- points
Organizational objectives give direction to theOrganizational objectives give direction to themajor plans, which define objectives for everymajor plans, which define objectives for every
major department and so on . !major department and so on . !
Developing PremisesDeveloping Premises
Assumptions about the environment in
which plans are to be carried out
AllAll Managers MUST agree to
assump ons
Assumptions regarding:
Forecasts
Basic Policies
Existing Plans
Anticipated Environment
Principle of Planning PremisesPrinciple of Planning Premises
The more thoroughlythoroughly individuals, charged withplanning, understand and agreeagree to utilizeconsistentconsistent planning premises the morecoordinated and realisticrealistic planning will be.
What kinds of Markets? Which Technology?What kinds of Markets? Which Technology?Volume of sales? Bank Loans? Wages rate?Volume of sales? Bank Loans? Wages rate?
Tax rates? Policies? Plans? New Plants?Tax rates? Policies? Plans? New Plants?
Raw Material? Dividend policy? ExpansionRaw Material? Dividend policy? ExpansionPlan? Long term needs? Debt servicing? ..Plan? Long term needs? Debt servicing? ..
etcetc
Determining Alternative CoursesDetermining Alternative Courses
Alternatives exists for almost allPlans
Problem their numbers to minimumforis not to find alternatives butreducing analysis and evaluation.
Preliminary examination todiscover most fruitful possibilities
-
8/3/2019 Lecture No 3_Chapter No 4
9/12
9/14/2010
9
Evaluating Alternative CoursesEvaluating Alternative Courses
Evaluate courses by examining theirstrong and weak point
Weigh them in the light of premisesand objectives
Complex courses can be evaluatedwith the help of operational research,mathematical and computing
techniques
Selecting the Best CourseSelecting the Best Course
Real Decision MakingReal Decision Making
By establishing Criteria, e.g.Criteria, e.g.:
Achieving objectives at least cost
Requiring least changes
Max RoI (Return on Investment) etc !
Backup/ Contingency PlanBackup/ Contingency Plan
Formulating Derivative PlansFormulating Derivative Plans
After Decision making:
Planning is not complete
Needs Supportive Plans for Basic
Plan
Quantifying Plans by BudgetingQuantifying Plans by Budgeting
After Decision making and Plans setting:After Decision making and Plans setting:
Final StepFinal Step Giving meaning to them
uant yuant y y convert ng nto u getsu gets
Sum Total of Income & Expenses
Balance Sheets Cash Flow Statements
Profit/ Loss Statements etc etc .
-
8/3/2019 Lecture No 3_Chapter No 4
10/12
9/14/2010
10
ObjectivesObjectives
Management by ObjectivesManagement by Objectives
Management by Objectives (MBO)Management by Objectives (MBO)
Peter DruckerPeter DruckerA famous Management Consultant
Author of 39 Books
Management by Objectives (MBO)Management by Objectives (MBO) A comprehensive management system based
on measurable participatively set objectives,that leverages the motivational power ofobjectives
World wide used by many organizations
HIERARCHY OF OBJECTIVESHIERARCHY OF OBJECTIVES
1.1. SocioSocio--EconomicEconomicPurpose (Vision)Purpose (Vision)
2.2. MissionMission
3.3. Overall objectivesOverall objectives4.4. Specific mainSpecific main
Vision/ MissionVision/ Mission
Strategic ObjectivesStrategic Objectives
objectivesobjectives
5.5. Division objectivesDivision objectives6.6. DepartmentDepartment
objectivesobjectives7.7. Unit objectivesUnit objectives
8.8. Individual objectivesIndividual objectives
Tactical ObjectivesTactical Objectives
Operational objectivesOperational objectives
MissionMission: : Board Of DirectorsBoard Of Directors
Strategic ObjectivesStrategic Objectives : Top Level ManagementTop Level Management
HIERARCHY OF OBJECTIVESHIERARCHY OF OBJECTIVES
Tactical ObjectivesTactical Objectives : Middle level Management: Middle level Management
Operational ObjectivesOperational Objectives : Supervisory or Low LevelSupervisory or Low LevelManagementManagement
-
8/3/2019 Lecture No 3_Chapter No 4
11/12
9/14/2010
11
How to Set ObjectivesHow to Set Objectives
Vision/ Mission
Overall ObjectivesBoard ofDirectors
Vision/ Mission Overall/ Specific/ Division
Top Level
Top DownTop DownApproachApproach
ectves
Division level Department/ Unit Level
ObjectivesMiddle Level
Department/ Unit levelobjectives
Individual Objectives
Lower LevelManagers
Bottom UpBottom UpApproachApproach
Characteristics of ObjectivesCharacteristics of Objectives
To be verifiable:
Quantitative
Qualitative
Simple & clearly understandable
r en
SMARTSMART
S: SpecificS: Specific
M: Measurable (Verifiable)M: Measurable (Verifiable)
A: Appropriate (Relevant)A: Appropriate (Relevant)
R: RealisticR: RealisticT: TimeT: Time--boundbound
Writing Good ObjectivesWriting Good Objectives
Writing Good ObjectivesWriting Good ObjectivesSome main points:
What specific result is to be achieved?
How the result is to be measured?
Who will be responsible for achieving theresult?
Checklist available on Page No 103
Examples : ObjectivesExamples : Objectives To make a reasonable profit To achieve RoI of 12% at the end of the current fiscal year To improve communication To issue a two page monthly newsletter beginning 1 July, 10
involving not more than 40 man-hours of preparation time. To improve productivity of the production department To increase production output by 5% by 31 Dec 10 without
additional costs while maintaining the existing qualitystandards
To develop better managers To design and conduct a 40-hour in-house Management
training program to be completed by 31 Oct, 10 withinduction of 20 managers, involving not more than 200
working hours.
-
8/3/2019 Lecture No 3_Chapter No 4
12/12
9/14/2010
12
Managerial Focus in MBOManagerial Focus in MBO
MBO managers focus on the result, not
the activity. They delegate tasks by
"negotiating a contract of goals"with
detailed roadmap for implementation.
MBO is about setting yourself objectivesand then breaking these down into morespecific goals or key results
Advantages & Disadvantages of MBOAdvantages & Disadvantages of MBO
AdvantagesAdvantages MBO programs continually emphasize what should be
done in an organization to achieve organizational goals. MBO process secures employee commitment to
attaining organizational goals. sa van agessa van ages The development of objectives can be time consuming,
leaving both managers and employees less time inwhich to do their actual work.
The elaborate written goals, careful communication ofgoals, and detailed performance evaluation required inan MBO program increase the volume of paperwork inan organization.
Main Reason of Failure of MBOMain Reason of Failure of MBO
In both the public & privatepublic & privatesector:
Absence of a fully committed and involvedtop managementtop management.
development of management objectives
ParticipativeParticipative element ignoredignored and justimplemented the AppraisalAppraisal portion of MBO
Where & When to Use MBOWhere & When to Use MBO
The MBO style is appropriate for:
Knowledge based companies
when your staff is competent.
build employees management & self-leadership skills
tap their creativity, knowledge and initiative.
Also used by CEOs of multinational
corporations (MNCs) for their countrymanagers abroad