Management Principles

&
Practices
Unit-2
 Meaning of Planning
• Planning involves selecting mission and objectives as well as the
actions to achieve them, which requires decision-making; that is,
choosing a course of action from among alternatives.
• According to Koontz and O’Donnell, “Planning is deciding in
advance what to do, how to do it, when to do it and who is to do it”.
• Planning bridges the gap from where we are to where we want to
go.
 Meaning of Planning
(Based on Futurity)
• According to Allen, “Planning is trap laid down to capture the
future”.
• According to Koontz, “ Planning is deciding in advance what is to
be done in future.”
• According to Haimann, “Planning is informed anticipation of future.”
• According to R. L. Ackoff, “Planning is ‘anticipatory’ decision-
making”.
 Meaning of Planning
(As a Thinking Function)
• According to Alford and Beatty, “Planning is a thinking process, an
organized foresight, a vision based on fact and experience that is
required for intelligent action”.
Close Relationship of Planning and Controlling
 Features of Planning
• Planning is goal oriented – All plans arise from objectives.
• Planning is primary function
• According to Koontz, “Planning provides the basic foundation from which all
future management functions arise”.
• Planning is all pervasive – It is required at all managerial levels.
• Planning is a mental exercise – It requires imagination, foresight and sound
judgment.
• Planning is a continuous process
 Features of Planning conti..
• Planning involves choice – It involves choice among various alternative course of
action.
• Planning is forward looking
• Planning is flexible
• According to Koontz and O’Donnell, “Effective planning requires checking on events
and forecasts and the redrawing of plans to maintain a course towards a designed
goal”.
• Planning is an integrated process – It integrates plans of all levels.
• Planning includes efficiency and effectiveness dimensions
Planning Questions
 Types of Plans
1. Mission or purposes
2. Objectives or goals
3. Strategies
4. Policies
5. Procedures
6. Rules
7. Programs, and
8. Budgets
 Types of Plans
1. Mission or Purposes
• The basic function or tasks of an enterprise or agency or any part of it.
• Examples:
• Business - Production & distribution of goods and services.
• State highway department – Designing, building and operating a system.
• Courts – Interpretation of laws and their application.
• University – Teaching, research, and providing services to the community.
• DuPont mission – “Better things through chemistry”
• Google’s mission –”To organize the world’s information and make it universally accessible and
useful”
 Types of Plans
2. Objectives or Goals
• The ends towards which activity is aimed.
• They represent not only the end point of planning, but also the end
toward which organizing, staffing, leading, and controlling are
aimed.
• Goals may be qualitative, objectives tends to be mainly
quantitative.
 Types of Plans
3. Strategies
• The determination of basic long-term objectives of an enterprise
and the adoption of courses of action and allocation of resources
necessary to achieve these goals.
• Example: Mcdonald’s Entry Strategy in India is to customized
their marketing strategies based on the cultural, economical and
sociopolitical factors.
 Types of Plans
4. Policies
• General statement or understandings that guide or channel thinking in decision-
making.
• Examples:
• Policies of hiring only university-trained engineers.
• Encouraging employees.
• Promoting from within.
• Setting competitive prices.
• “Ford Motor Company” has a long tradition of beings guided by a policy of
making low-cost, simple, affordable cars.
 Types of Plans
5. Procedures
• Plans that establish a required method of handling future activities.
• Examples:
• Company policy may grant vacations; procedures established to implement this
policy will provide for scheduling vacations to avoid disruption of work.
• “Western university” outlines three steps for its appraisal process:
1. Setting performance objectives
2. Performing a mid year review of the objectives and
3. Conducting a performance discussion at the end of the period
 Types of Plans
6. Rules
• Spell out specific required actions or non-actions, allowing no
discretion.
• Example: “No smoking” is a rule that allows no deviation from a
stated course of action.
• “General Dynamics”, one of the largest defense contractor has
made few rules like; workers have to prepare and sign their own
time cards. And employees are not allowed to accept gifts.
 Types of Plans
7. Programs
• 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.
• Example: Program to acquire a $400 million fleet of jets or a five-
year program to improve the status and quality of its thousands of
supervisors.
 Types of Plans
8. Budgets
• A statement of expected results expressed in numerical terms.
• It may called a “quantified plan”
 Steps in Planning
1. Being aware of opportunities

2. Establishing objectives or goals

3. Developing premises

4. Determining alternative courses

5. Evaluating alternative courses

6. Selecting a course

7. Formulating derivative plans

8. Quantifying plans by budgeting

Steps in Planning/Planning Process
 Planning Hurdles For the $2,500 Nano Car

 Since the planning of the Nano, costs have risen.

 The factory is behind schedule.
 The car’s introduction comes at a time when TATA Motors’s
earnings fell in the mid 2008.
 Perhaps the greatest obstacle is the land disputes.
 Approaches of Planning
1. Top-down approach
• In most family-owned enterprises, authority and responsibility for planning is
centralized at the top.
2. Bottom-up approach
3. Composite approach
• Top management offers guidelines, sets boundaries and encourages the middle and
lower level executives to come out with tentative plans.
4. Team approach
• The job of planning is assigned to a team of managers having requisite experience in
various functional areas.
 Principles of Planning
(Proposed by Koontz)
1. Principle of contribution to objectives
2. Principle of primacy of planning
3. Principle of pervasiveness of planning
4. Principle of flexibility
5. Principle of periodicity
6. Principle of planning premises
7. Principle of limiting factor
 Importance of Planning
1. Planning provides directions
2. Planning provides a unifying framework
3. Planning is economical
4. Planning reduces the risks of uncertainty
5. Planning facilitates decisions making
6. Planning encourages innovation and creativity
7. Planning improves morale
8. Planning facilitates control
 Limitations of Planning
• Rigidity
• Costly and time consuming
• Employee resistance
• False sense of security
• Managerial deficiencies
• Planning prevents innovations
• External Limitations
• Difficult to predict
• Projected too far into the future
• Environmental turbulence
• Emergency situations
 Effective Planning
(Proposed by Koontz)
1. Climate
2. Top management support
3. Participation
4. Communication
5. Integration
6. Monitoring
 Learning Organization
• An organization in which everyone is identifying and solving
problems, enabling the organization to continuously experiment,
improve and increase its capability.
 Six Rules of Planning in Learning Organization

1. Strong mission
2. Stretch goal
3. Learning environment
4. Vital information
5. Improvement; a ways of life
6. Planning still starts and stops at the top
 Forms of Planning
1. Long-Range Planning (LRP)
2. Short-Range Planning/Operational Planning
3. Strategic Planning
4. Tactical OR Coordinative/Intermediate Planning
5. Formal Planning
6. Informal Planning
7. Functional Planning
8. Corporate Planning
9. Proactive Planning
10. Reactive Planning
 1. Long-Range Planning (LRP)
• A planning that covers many years and affects many departments or divisions of an organization in a
major way.
• Example: LRP is common in stable industries such as steel, utilities and automobiles.
• Step - I – Estimation of situation.
• Step – II – Defining goals.
• Steps – III – Estimation of current position.
• Step – IV – Identification of strength and weakness of company.
• Step – V – Development of programme for LRP.
• Step – VI – Placing LRP into work.
 2. Short-Range/Operational Planning
• A planning that covers a span of one year or less.
• Usually made in a specific and detailed manner.
• The primary concern is efficiency rather than effectiveness.
• Examples: Market plans, production plans and financial plans.
 3. Strategic Planning
• A general planning that outlines decisions of resource allocation,
priorities and action steps necessary to reach strategic goals.
 4. Tactical OR Coordinative Planning
• Tactical planning is less detailed than the short-range planning.
• This is concerned with implementation of strategic planning by
coordinating the work of different departments.
• Coordinative planning helps in shifting the gears, whenever pitfalls
occur.
 5. Formal Planning
• A written record to identify what the organization intends to do,
within a time frame.
• It is prepared after a careful evaluation of all the factors that have a
bearing on organizational functioning.
• It is systematic and rational.
 6. Informal Planning
• It does not offer a written record.
• It carried out without direction.
• It encourages managers to evade responsibility.
• It should be followed as an exception rather than a rule.
 7. Functional Planning
• It is a unit planning.
• It deals with areas such as production, marketing, finance,
manufacturing in an isolated manner.
• The impact of internal as well as external factors may not be fully
taken care of.
 8. Corporate Planning
• A comprehensive planning that outlines the broad objectives of a
company as whole and develops plans to achieve those objectives.
• It has both, micro as well as macro focus.
• It is integrative in nature.
• It takes a long term view.
• It tries to strike a balance between organizational resources and
environmental changes.
 9. Proactive Planning
• In it managers challenge the future, anticipating future
contingencies and get ready with alternative routes for unforeseen
circumstances.
• It often tied to a time-frame.
• Proactive planning makes managers alert and sensitive.
 10. Reactive Planning
• The organization merely reacts to external events as and when
they arise.
• It may proved to be costly.