The Nature and Purpose of Planning

The Nature and Purpose of Planning

Types of PlanPurposes or missionsObjectivesStrategiesPoliciesProceduresRulesProgramsBudgets

Purposes or MissionsMission or purpose identifies the basic function or task of an enterprise or agency or of any parts of it.

ObjectivesObjectives or goals are the ends toward which activity is aimed they are the results to be achieved.-they represent not only the end point of planning but the end toward which organizing, staffing, leading, and controlling are aimed.

StrategiesStrategies usually has a competitive implication, managers increasingly use it to reflect broad areas of an enterprise operation.

Three definitions of the most common usages of the term Strategies:

general programs of action and deployment of resources to attain comprehensive objectivesthe program of objectives of an organization and their changes, resources used to attain these objectives and policies governing the acquisition, use, and disposition of these resourcesthe 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

PoliciesPolicies - also are plans in that they are general statements or understandings which guide or channel thinking in decision making

ProceduresProcedures - are plans that establish a required method of handling future activities- they are guides to action, rather than to thinking, and they detail the exact manner in which certain activities must be accomplished

RulesRules spell out specific required actions or nonactions, allowing no discretion- usually the simplest type of plan

ProgramsPrograms are a complex of goals, policies, procedures, rules task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action; they are ordinarily supported by budgets

BudgetsBudget is a statement of expected results expressed in numerical terms- it may be referred to as a numberized program

STEPS IN PLANNING

BEING AWARE OF OPPORTUNITYIn light of: The market Competition What customers want Our strengths Our weaknessesSETTING OBJECTIVES OR GOALS

Where we want to be and what we want to accomplish and whenCONSIDERING PLANNING PREMISES

In what environment internal or external will our plans operate?IDENTIFYING ALTERNATIVES

What are the most promising alternatives to accomplishing our objectives?COMPARING ALTERNATIVES IN LIGHT OF GOALS SOUGHTWhich alternative will give us the best chance of meeting our goals at the lowest cost and highest profit?CHOOSING AN ALTERNATIVE

Selecting the course of action we will pursueFORMULATING SUPPORTING PLANS

Such as plans to: Buy equipment Buy materials Hire and train workers Develop a new product NUMBERIZING PLANS BY MAKING BUDGETSDevelop such budgets as: Volume and price of sales Operating expenses necessary for plans Expenditures for capital equipment

Being Aware of Opportunities not strictly a part of the planning process, an awareness of opportunities in the external environmentEstablishing Objectives this is to be done for the long term as well as for the short rangeDeveloping Premises the third logical step in planning is to establish, circulate, and obtain agreement to utilize critical planning premises such as forecasts, applicable basic policies, and existing company plans.

The major principle of planning premises is this: The more thoroughly individuals charged with planning understand and agree to utilize consistent planning premises, the more coordinated enterprise planning will be.4. Determining Alternative Courses the fourth step in planning is to search for and examine alternative courses of action, especially those not immediately apparent5. Evaluating Alternative courses evaluating the alternatives by weighing them in the light of premises and goals

6. Selecting a Course this is the point at which the plan is adopted the real point of decision making.7. Formulating Derivative Plans When a decision is made, planning is seldom complete, and a seventh step is indicated. Derivative plans are almost invariably required to support the basic plan8. Numberizing Plans by Budgeting the overall budgets of an enterprise represent the sum total of income and expenses, with resultant profit or surplus, and budgets of major balance sheets items such as cash and capital expenditures

Objectives

Objectives were defined as the important ends toward which organizational and individual activities are directed

IE PROCESS OF MANAGING BY OBJECTIVES

Enterprise ObjectivesPlanning PremisesKey result areasAppropriate OrganizationSuperiors ObjectivesAvailable needed resourcesSuperiors preliminary recommendation of objectives for subordinateSubordinates preliminary statement of objectivesAgreementSubordinates ObjectivesSubordinates ongoing performanceFinal performance by subordinate

How to set objectivesQuantitative and Qualitative objectivesExamples of Nonverifiable and Verifiable Objectives

Nonverifiable ObjectivesVerifiable Objectives1. To make reasonable pathTo achieve a return on investments of 12% at the end of the current fiscal year2. To improves communicationTo issue a two-page monthly newsletter beginning July 1, 1991, involving a not more working hours of preparation of time3. To improve productivity of the production departmentTo increase production output by 5% by December 31, 1991, without additional costs and while maintaining current quality level4. To develop managersTo design and conduct a 40 hr in house program on the fundamentals of management5. To install a computer EyeTo install computerized control system in the production department by December 31, 1991

Setting Objectives in GovernmentFrederic V. Malek a former special assistant to the President and one of the driving forces in the implementation of MBO in the federal government. He stated If the executive branch of government is to be managed effectively, it clearly needs a system for setting priorities, pinpointing responsibility for their achievement, requiring follow-through, and generating enough feedback that programs can be monitored and evaluated from the top.

Improving the operation of the federal government, and other governments as well, requires:Identifying ineffective programs by comparing performance against pre-established objectives Using zero-based budgetingApplying MBO concepts for measuring individual performancePreparing short- and long range objective and plans

5. Installing effective controls6. Designing sound organization structures with clear responsibilities and decision-making authority at appropriate levels7. Developing and preparing government officials for managerial responsibilities

Guidelines for Setting ObjectivesSetting objective is indeed a difficult task - it requires intelligent coaching by the superior and the extensive practice by the subordinate

Benefits and Weaknesses of Management by Objectives and some recommendations

Benefits of Management by Objectives

:CHECKLIST FOR MANAGER S OBJECTIVES:

Dear Business Executives! Please fill in the following Performa, to have Your Self-Evaluation for FREE !N.B: If The Objectives Meet The Criteria, Tick Mark( + ), if not, Mark ( - ).1. Do the objectives cover Main Features of your Job? ( )2. Is the List of objectives appropriate, as required? ( )3. Are the objectives verifiable? ( )4. Do the objectives indicate:a) Quality, ( )b) Quantity, ( )c) Time, ( )d) Cost ( )5. Are the objectives challenging?6. Do objectives have appropriate Ranking & weighing? ( )7. Does the set objectives also include:a) Improvement objectives, ( )b) Personal Development objectives, ( )8. Are the objectives co-ordinated with those of other Managers& organizational units? ( )9. Have you communicated objectives to all who needed to be informed? ( )10. Are the short term-objectives, consistent with the long term Aims? ( )11. Are assumptions underlying the objectives clearly identified? ( )12. Are the objectives expressed clearly & are fully explained to them? ( )13. Do the objectives provide for timely feedback, so that you can takeany necessary corrective measures, if required? ( )14. Are your resources & authority sufficient to achieve the objectives? ( )15. Have you given the individuals, who are expected to accomplishobjectives, a chance to suggest? ( )16. Do your subordinates have control over aspects, for which they areassigned the responsibility? ( )

Clarification of OrganizationManagers trying to clarify organizational roles and structure

Encouragement of personal commitmentOne of the great advantages of management by objectives is that it encourages people to commit themselves to their goals.

Development of Effective Controls Aid in developing effective controls

Weaknesses of Management by ObjectivesA system of management by objectives has a number of weaknesses.

Failure to teach the Philosophy Of MBO.Managers who would put it into practice must understand and appreciate good deal about it

Failure to give guidelines to goal settersManagement by objectives, like any other kind of planning, cannot work if those who are expected to set goals are not given needed guidelinesDifficulty of Setting GoalsGoal setting may not be much more difficult that any other kind of effective planning, although it will probably take more study and work to establish verifiable objectives.

Emphasis on short-gun goalsIn most MBO programs, managers set goals for the short term, seldom for more than a year and often for a quarter or lessDanger of inflexibilityManagers often hesitate to change objectives

Other dangers

Strategies, Policies and Planning Premises

The Nature and Purpose Of Strategies and PoliciesStrategy The term strategy (which is derived from the Greek word strategos, meaning general) has been used in different ways. PolicyA general statements or understanding which guide managers thinking in decision making.

The Need for Operational Planning: TacticsTo be effective, strategies and policies must be put into a practice by means of plans, increasing in detail until they get down to nuts and bolts of operationsTacticsThe action plans through which strategies are executed.

The Strategic Planning ProcessInputsEnterprise ProfileEnterprise Profile is usually the starting point fordetermining where the company is and where it should go.Orientation of Top ManagersThe enterprise profile is shaped by people, especially top managers and their orientation is important for formulating the strategy.

Purpose and ObjectivesThe purpose and the major objectives are the end points toward which the activities of the enterprise are directed.External EnvironmentThe present and future external environment must be assessed in terms of threats and opportunities.Internal EnvironmentThe firms internal environment should be audited and evaluated in respect to its resources and its weaknesses and strengths in research development, production, operations, procurement, marketing and products and services.

Alternative StrategiesStrategic alternatives are developed on the basis of an analysis of the external and internal environment.Evaluation and Choice of StrategiesThe various strategies have to be carefully evaluated before the choice is made.Medium- and Short-Range Planning, Implementation and ControlMust be considered during all phases of the process. Control- must also be provided for monitoring performance against plansFeedback- shown by the loops in the model

Consistency and ContingencyThe last aspect of the strategic planning process is testing for consistency and preparing for contingency plans.

Major Kinds Of Strategies And PoliciesGrowthGrowth strategies give answers to such questions as these: How much growth should occur? How fast? Where? How should it occur?

FinanceEvery business enterprise and, for that matter, any nonbusiness enterprise must have a clear strategy for financing its operations

OrganizationOrganizational strategy has to do with the type of organizational pattern an enterprise will usePersonnelThere can be many major strategies in the area of human resources and relationships.Public RelationsStrategies in this areas can hardly be independent; they must support other major strategies and efforts.

Products or Services A business exists to furnish products or services. The key questions in this area are:What is our business?Who are out customers?What do out customers want?How much will our customer buy and at what price?Do we wish to be a product leader?Do we wish to develop out own new products?What advantages do we have in serving customer needs?How should we respond to existing and potential competition?How far can we go in serving customer needs?What profits can we expect?What basic form should our strategy take?

MarketingMarketing Strategies are designed to guide managers in getting products or services to customers and in encouraging customers to buy.