Management Planning Function

The Planning Function

• Planning is a dynamic process of making decisions today about future actions.
• It involves selecting choices among various alternatives.
• Planning bridges the gap between the current situation and desired future state.
• It is an activity that helps managers determine what they want to achieve and how to achieve it.
• Planning answers six fundamental questions concerning any intended activity:
  • What (the goal or goals)?
  • When (the timeline for completion)?
  • Where (the location of the activities)?
  • Who (the individuals responsible)?
  • How (the specific steps or methods)?
  • What resources are needed?

Nature of Planning

• Planning's purpose is to facilitate the attainment of organizational objectives.
• Planning precedes all other managerial functions to ensure their effectiveness.
• Planning is a universal function of all managers.
• Planning is integral to effective managerial success.
• Planning relies on accurate information from various environmental sources.

Importance of Planning

• Planning provides direction and a sense of purpose by focusing employees on specific targets and important outcomes.
• Planning reduces uncertainty by anticipating future states (economic, market, technological, etc.)
• Planning addresses "what-if" scenarios, preparing for potential changes or problems.
• Planning provides a foundation for control mechanisms by establishing standards.
• Planning fosters understanding of interconnectedness within an organization (one area impacts others).
• Planning fosters organizational efficiency by improving resource utilization.
• Planning facilitates cooperative and coordinated efforts by establishing objectives and means of achievement.
• Planning provides guidelines for decision-making through benchmarks and performance measurement.
• Planning specifies necessary steps to achieve organizational goals.

Limitations of Planning

• Planning can be risky due to future uncertainties and inadequate data.
• Planning can be challenging due to rapid changes in technology and customer preferences.
• Planning can be costly and time-consuming (requiring financial, human, and physical resources).
• Planning is affected by external factors (economic, political, social).

Organizational Objectives

• Objectives are the important ends guiding organizational and individual efforts.
• Objectives are essential for planning, providing direction for all managerial actions.
• Departments and the overall firm can have distinct objectives.

Nature of Objectives

• Objectives are predetermined and stated in advance.
• Objectives should be clear, specific, measurable, and expressed numerically when possible.
• Objectives should specify a defined timeframe.
• Objectives must be adaptable to adapt to environmental changes.
• Objectives exist in a hierarchy (strategic, tactical, and operational).

Benefits of Objectives

• Objectives provide a basis for evaluating all managerial functions.
• Objectives act as guidelines and boundaries to employee activities, focusing activities (what should and should not be done).
• Objectives motivate employees by providing clear targets.
• Objectives provide criteria for measuring performance and controlling activities.

The Planning Process

• Planning involves a series of interrelated steps without rigid boundaries.
  • Step 1: Establishing objectives - specifying desired outcomes; analyzing present conditions; anticipating future conditions.
  • Step 2: Developing premises - evaluating external and internal factors (SWOT).
  • Step 3: Determining alternative courses of action - developing options.
  • Step 4: Evaluating alternative courses of action - assessing costs and benefits.
  • Step 5: Selecting a course of action- choosing the best option.
  • Step 6: Formulating derivative plans - creating sub-plans.
  • Step 7: Numbering plans by budgeting - converting plans to budgets and establishing standards.
  • Step 8: Implementing the plan - executing the plan.
  • Step 9: Controlling and evaluating results - monitoring progress; evaluating outcomes; adapting as needed.

Types of Plans

• Plans can be classified by scope/breadth, time dimension, and use/repetitiveness:

Scope/Breadth Dimension:

• Plans are differentiated by management level where they are formulated.
• Plans are categorized into strategic, tactical, and operational plans.

Time Dimension:

• Plans are categorized based on their timeframe:
  • Long-range (five years or more)
  • Medium-range (one to five years)
  • Short-range (one year or less)

Use/Repetitiveness Dimension

• Plans are classified into standing plans (used repeatedly) and single-use plans (for unique situations): -Standing plans: - Policies (broad guidelines) - Rules (specific instructions) - Procedures (step-by-step instructions)

  -Single-use plans: - Programs (complex activities for long-term objectives) - Projects (limited scope activities for specific objectives) - Budgets (financial plans outlining expected outcomes)

Characteristics of a Good Plan

• Objectivity: Focus on organizational goals.
• Futurity: Accurate forecasting of future events.
• Flexibility: Adaptability to changing conditions.
• Comprehensiveness: Adequate guidance without hindering initiative.
• Simplicity and clarity: Easy understanding and implementation.
• Contingency planning: Developing alternative plans for unforeseen scenarios.

-Planning Staff: Support for top-level managers in developing plans.