Organizational Process (1): PLANNING

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Planning is the process of deciding in advance what is to be done, how it is to be done, where, when and whom.

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Planning is fundamentally a mental predisposition to do things in an orderly way, to think before and to act in the light of the fact rather than of guesses.

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a) Planning is good – oriented b) Planning is future oriented c) Planning is an mental exercise involves

creative thinking d) Planning is a primary function e) Different planning is required for

different levels of organisation (Pervasiveness)

f) Planning is Continuous g) Planning aims at efficiency

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i) Make objectives clear ii) Helps the organisastion a right path iii) It reduces risks and uncertainty iv) It improves efficiency of operation v) It provides the basis of control vi) It facilitate decision making vii) Effective co-ordination

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i. Assumptions not fully reliable ii. The condition under which plans are

implemented may differ from assumed conditions.

iii. Availability of time is a limiting factor for planning

iv. Cost involved in planning v. Mental attitude

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a. Principles of contribution to objectives b. Principles of Pervasiveness c. Principles of Limiting factor d. Principles of Flexibility e. Principles of Navigational change

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a. Long range Plan b. Short range Plan c. Strategic Planning d. Operational Planning e. Functional Planning

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SWOT Analysis

Oppurtunity

Threats

Strengths

Weakness

Acronym for Strengths, Weaknesses, Opportunities, and Threats.

Technique is credited to Albert Humphrey who led a research project at Stanford University in the 1960s and 1970s.

Planning tool used to understand Strengths, Weaknesses, Opportunities, & Threats involved in a project / business.

Technique that enables a group / individual to move from everyday problems / traditional strategies to a fresh perspective.

What is SWOT Analysis?

• SWOT is a business or strategic planning technique used to summarise the key components of your strategic environments.

SWOT analysis (strengths, weaknesses, opportunities, and threats analysis) is a framework for identifying and analyzing the internal and external factors that can have an impact on the viability of a project, product, place or person.

SWOT is a summary of your

Strengths

Weaknesses

Opportunities

Threats

Internal

External

Strengths and Weaknesses are considered internal factors---meaning you as the business owner can control them. How you manage or market the business controls whether it is a strength or weakness

Opportunities and Threats are considered

external factors---meaning you have little control over them. It is your job as a business owner to respond appropriately .

Strengths - internal attributes and resources that support

a successful outcome.

Weaknesses - internal attributes resources that work

against a successful outcome.

Opportunities - external factors the project can capitalize

on or use to its advantage.

Threats - external factors that could jeopardize the

project.

STRENGTHS Characteristics of the business or a team that give it an advantage over others in the industry.

Positive tangible and intangible attributes, internal to an organization.

Beneficial aspects of the organization or the capabilities of an organization, which includes human competencies, process capabilities, financial resources, products and services, customer goodwill and brand loyalty.

Examples -, Well-known brand name,, Lower costs [raw materials or processes], Superior management talent, Better marketing skills, Good distribution skills, Committed employees.

WEAKNESSES Characteristics that place the firm at a disadvantage relative to others.

Detract the organization from its ability to attain the core goal and influence its growth.

Weaknesses are the factors which do not meet the standards we feel they should meet. However, sometimes weaknesses are controllable. They must be minimized and eliminated.

Examples - Limited financial resources, Limited distribution, Higher costs, Out-of-date products / technology, Weak market image, Poor marketing skills, Limited management skills.

OPPORTUNITIES Chances to make greater profits in the environment - External attractive factors that represent the reason for an organization to exist & develop.

Arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable.

Organization should be careful and recognize the opportunities and grasp them whenever they arise. Opportunities may arise from market, competition, industry/government and technology.

Examples - Rapid market growth, Changing customer needs/tastes, New uses for product discovered, Economic boom, Sales decline for a substitute product .

!

THREATS

External elements in the environment that could cause trouble for the business - External factors, beyond an organization’s control, which could place the organization’s mission or operation at risk.

Arise when conditions in external environment jeopardize the reliability and profitability of the organization’s business.

Examples - Entry of foreign competitors, Changing customer needs/tastes, Rival firms, adopt new strategies, Increased government regulation, Economic downturn.

How to conduct SWOT Analysis?

Tips & Exercise

EXAMPLE

Mc Donald’s SWOT Analysis

WEAKNESSES

• High training costs due to high turnover. • Not much variation in seasonal products . • Quality concerns due to franchised operations. • Focus on burgers / fried foods not on healthier options for their customers.

• Community oriented • Global operations all over the world • Cultural diversity in the foods • Excellent location • Assembly line operations.

STRENGTHS

INTERNAL

• Marketing strategies that entice people from small children to adults. • Lawsuits for offering unhealthy foods. • The vast amount of fast food restaurants that are open as competition.. • Down turn in economy affecting the ability to eat that much.

THREATS

• Opening more joint ventures. • Being more responsive to healthier options. • Expanding on the advertising on being more socially responsible • Expansions of business into newly developed parts of the world.

OPPORTUNITIES

EXTERNAL

Tips & Exercise

Mc Donald’s SWOT Analysis

S-O W-O S-T W-T

Strategies

Otherwise known as:

S-O or Maxi-Maxi strategy

Using a strength to maximise an

opportunity

W-O or Mini-Maxi strategy

Improving capability to

maximise an opportunity

Otherwise known as:

S-T or Maxi-Mini

strategy

Minimising a threat with

a strength

Otherwise known as:

W-T or Mini-Mini strategy

Minimising weaknesses and

threats at same time

(often last choice)

Otherwise known as:

Mission statement a declaration of an organization’s “reason for

being.” answers the pivotal question “What is our

business?” essential for effectively establishing objectives and

formulating strategies

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Mission statement reveals what an organization wants to be and

whom it wants to serve Also called a creed statement, a statement of

purpose, a statement of philosophy, a statement of beliefs, and a statement of business principles

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1. To ensure unanimity of purpose within the organization

2. To provide a basis, or standard, for allocating organizational resources

3. To establish a general tone or organizational climate

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4. To serve as a focal point for individuals to identify with the organization’s purpose and direction

5. To facilitate the translation of objectives into a work structure

6. To specify organizational purposes

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First, a good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity.

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Second, a mission statement needs to be broad to reconcile differences effectively among, and appeal to, an organization’s diverse stakeholders

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We aspire to make PepsiCo the world’s (3) premier consumer products company, focused on convenient foods and beverages (2). We seek to produce healthy financial rewards for investors (5) as we provide opportunities for growth and enrichment to our employees (9), our business partners and the communities (8) in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity (6).

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Dell’s mission is to be the most successful computer company (2) in the world (3) at delivering the best customer experience in markets we serve (1). In doing so, Dell will meet customer expectations of highest quality; leading technology (4); competitive pricing; individual and company accountability (6); best-in-class service and support (7); flexible customization capability (7); superior corporate citizenship (8); financial stability (5).

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Procter & Gamble will provide branded products and services of superior quality and value (7) that improve the lives of the world’s (3) consumers. As a result, consumers (1) will reward us with industry leadership in sales, profit (5), and value creation, allowing our people (9), our shareholders, and the communities (8) in which we live and work to prosper.

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At L’Oreal, we believe that lasting business success is built upon ethical (6) standards which guide growth and on a genuine sense of responsibility to our employees (9), our consumers, our environment and to the communities in which we operate (8).

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Definition: According to Lereitner : Decision Making is a process of identifying

and choosing alternative courses of action in a manner appropriate to the demand of the situation

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According to Peter Drucker: Whatever Manager does, he does through

Decision Making

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Figure 7.4

1. Marginal Theory : This theory stresses an profit maximization

2. Psychological Theory : This theory stresses on customer satisfaction

3. Mathematical Theory: This theory arrives decision making using models like Linear Programming, Probability etc.

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1. Correctness of Decision 2. Timing of Decision 3. Effective Communication of Decisions 4. Participation in Decision Making 5. Decision Environment 6. Implementation Decision

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1. Linear programming : It is based on the assumption that there exist a linear relationship between the variables.

For Example: With the help of linear equation, optimum

combination of cost, time and utilization of time can be compared. The main object of this techniques is to either maximize benefit or to minimizes cost

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This statistical device is based on the assumption that certain things are likely to happen in future depending on assumed probabilities. Ex. Pay-off matrices, Decision trees.

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It is based on the assumption that although delays are costly, eliminating them may be even more costly. This techniques may be used in service organisations hospitals and banks

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For example : Instead of studying and analyzing transportation system of Chennai in a real life, its models can be prepared and real solution can be simulated to it

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The project evaluation and review techniques (PERT) and critical path method (CPM) are used for planning, monitoring and implementing a project

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It is a graphic method used for identifying the alternatives and risk and outcome associated with each alternatives

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Definition : According to Haimann “Delegation” of

authority merely means granting authority to subordinate to operate within prescribed limits

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1. Assignment of Duties 2. Granting of Authority 3. Creating of Responsibility

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Sales Manager

Sales Manager

Sales Officer

Branch Manager

It is the obligation of a subordinate to report back to his superior that the job entrusted to him has been successfully completed

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According to Henri Fayol “Every thing which goes to increase the subordinates” roles is decentralisation, every thing which goes to decrease it is centralisation”

In centralised administration, the staff depend on the top management for guidance on all matters. An organisation is said to be decentralised where managers at middle and lower levels are given the authority to take decision on matters relating to their functions.

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For Example : An organisation having

branches in different cities may be centralised. Similarly, a company may be decentralised even things all its officer are located in one building.

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