Organizational Goal

Setting and Planning

Chapter 4
Planning
Planning is an intellectual process, of formulating
goals, identifying activities to be undertaken to attain
these goals, choosing the means to achieve the goals,
and finally attain the goals.

Planning is deciding in advance what to do, when to

do, how to do and who is to do it. Planning bridges the
gap between where we are today, where we want to be
in future. It makes possible things to occur which
would not otherwise occur.
Planning
It is proactive action to figure out future course of
action to be followed.
 Planning
Planning may be broadly defined as a concept of
executive action that embodies the skill of anticipating,
influencing, and controlling the nature and direction of
change. – McFarland

It incorporates four elements:

Evaluating environmental forces and organizational
resources
Establishing a set of organizational goals
Developing strategies and plan to achieve the stated goals.
Formulate a decision- making process.
 Steps in planning process:
Analyzing environment for opportunities: Understanding the present context
of both internal and external environment for determining SWOT.

Establish goals: What is to achieved? What is to be accomplished?

Identify planning premises: They are assumption about the future

environmental factor on which the present planning is based. Information
from environmental analysis is required to determine the anticipated future
environment.

Identify alternatives: Every possible course of action is to be carefully studied

and analyzed. Only most likely possibilities should be taken into consideration.

Test practicability of alternatives: In this phase the selected alternatives are

tested on the basis of its strength and weakness, and which best addressed the
coming environmental trends to achieve the organizational objective.
Steps in planning process:
Select and announce the final plan: It is the final step to
select the best alternative form the test and make is ready
for putting into action.

Put plans into action, implement plan: After selecting the

alternative put plan into action.

Evaluate the action and whole planning process: If any

deviation occurs while implementing, planning
documents helps in rectifying the errors. Even whole
process might be needed to review sometimes to adjust
with large change in the environment.
Importance of planning:
Provides Direction:
Integrates management functions:
Reduces uncertainties:
Resource allocation:
Resource use efficiency:
Basis for control/ standard for measurement:
Basis for managing changes/ Adaptive responses:
Minimizes impulsive and arbitrary decisions:
Characteristics of planning:
Focus on Goal: planning basic objective is to attain goal. So, it defines all
course of action to achieve the organizational goals.

Primary Function: As it coordinates all other managerial function. It

provide base of framework for other function of management.

Pervasive Activity: All level of mangers carries planning function.

However planning depends upon the level of management or on the
nature and scope of work.

Future oriented: it defines future course of action to meet uncertainty

form environment. It provides blueprint for future operation.

Continuous Activity: Planning is continuous never ending process

because it is directly dependent upon environment, which is dynamic in
nature.
Characteristics of planning:
Intellectual Work: planning require more intelligence ability to
analyze the information and derive a best course of action.

Flexible: Plans should be adjustable to meet the contingencies

from the environment. Plans must have capacity to flexible
adjustment to meet the goals.

Efficiency and Economy: planning helps to efficiently use the

scarce resource, which bring economic beneficial situation for the
organization.

Actionable: It helps to determine such activities which can be

immediately put into action when time of implementation comes
and can be adjusted according to the changing environment.
Hierarchy of plans:
Vision: They are the non specific but emotional
motivational guidance for entire organization.

Mission: It is the purpose or the philosophy that will

drive it over a long period of time.

Goals: Are developed to achieve mission. It is the

specific target where management wants to reach.
Hierarchy of plans:
Objectives: It is a specific statement to achieve the goals
on the next few months or a year at the most. It must be
smart, measurable, attainable, rewarding, and timed.

Strategy: it is action the organization intends to use to

achieve the objectives. It defines the activities and the
allocation of resources for those activities.

Programmes, budgets, and priorities: programmes are

ranked according to their importance. And budgets give
the fair idea about the amount of money to be invested in
implementing the plan.
The Planning system
Methods of planning:
Top –down planning: When all the goals and plans are
formulated by the higher level management with very
little involvement of the lower level staff.

Bottom-up planning: Also called decentralize

planning, active participation of the lower level staffs
in defining the goals and plans.

Composite planning: It is the combine approach both

top- down and bottom-up planning methods.
Methods of planning:
Team planning: a cross functional team of mangers having
experience in various functional areas is selected by
management to prepare a plan, the developed plan is
submitted to top management for approval.

Management by objectives (MBO):

It is concerned with collaborative goal setting by manager and
subordinate, seeking to maximize internal motivation.
The lower level work out their plans and mechanism to
evaluate in combine effort of individual subordinates and
finally sent to higher levels for consideration.
MBO thus, focus employee participation, commitment in
planning and control their work. It ultimately leads to increase
in self-motivation and self-control to their work.
 Types of Plan:
On basis of level:
Strategic plans:
It focuses on reaching strategic goals, so it is also called grand
plan. It is developed at the corporate level and view total
organization.
The plan involves developing long-term strategies and goals. Their
basic motive is to match internal strength and weakness with the
change in the external environment.

Tactical plans:
 It translates broad strategic goals and plans to specific goals and
plans.
These plan focus at the functional area, so middle level manger are
responsible for developing tactical plan.
It aim to achieve the important actions that a unit must take to
fulfill is parts of the broad strategic plan.
 Types of Plan
On basis of level:
Operational plan:
It focuses on specific process and procedures at the
lower level of the organization, usually having short
term motive.
It is developed to translate the tactical objective to
specific operational activities. They are routine task to
carry out day to day activities.
 Types of Plan
On basis of time frame:
Long Range plan: a plan with a planning horizon of five
years or more.

Intermediate plan: a plan with a planning horizon for one

to five years.

Short Range plan: a plan with a planning horizon for not

more than one year.

Rolling plan: a plan which runs for a period of time and is

updated regularly for the same period
 Types of Plan
On the basis
Standing of use:
plans:
STANDING PLANS are used over and over again because
they focus on organizational situations that occur
repeatedly.
Standing plans are often policies, procedures and programs
developed to ensure the internal operations of a given
business are operating smoothly.
Standing plans are developed once and then modified to
suit the business' needs as required
 Types of Plan
On the basis of use:
Single use plan:
SINGLE USER PLANS are used only once, or at most, couple of
times, because they focus on unique or rare situations within
the organization.
A single-use plan in a business environment focuses to one-
time project or event that has one specific goal or objective.
The length of a single-use plan differs greatly depending on
the project in question, as a single event plan may only last one
day while a single project may last weeks or months.
Single-use plans consist of budgets, programs and a
description of the employees who will be contributing to
the single-use plan in question.
Strategic planning
Strategic planning is comprehensive plan to identify
the best approach or strategy for achieving
organizational goals.

 It addresses three main areas: distinctive competence

(something in which organization does exceptionally
well), scope (range of market in which organization
will compete), and resource deployment (how will it
distribute resources across areas in which it competes).
Strategic planning
It involves review of external and internal forces that
lead to specific opportunity and threat facing the
organization to define the strategy, or direction, and
making decisions on allocation of resources to develop
strategy.

Strategic management: a comprehensive and ongoing

management process aimed at formulating and
implementing effective strategies; it defines way of
approaching the business opportunities and challenges.
Strategic planning
There are five phases in strategic planning:
Situation analysis:
Formulation of mission, goals , and objectives:
Strategy formulation:
Strategy implementation:
Strategic control:
 Situation analysis:
Planning starts with situation analysis which helps to study past events,
understand current trends, and attempts to forecast future trends.

The two methods are:

Environmental scanning:
It is the method of acquiring information and analyzing trends emerging in
the environment. OR monitoring and evaluation of information from the
organization internal and external environment which are used for
defining future courses of action. Steps in environmental scanning are:

 Identify potentially relevant environmental changes:

 Monitoring the nature and direction of change.

 Forecasting the probability of impact:

 Developing and implementing strategic response

 Situation analysis
SWOT analysis:
It was developed by Albert Humphrey. This analysis help to make optimal match
between the external opportunities and threats, with the organizational strength and
weakness. The matching of the internal and external environment is essential for
developing appropriate strategy.

 It involves specifying the objective of the business venture or project and identifies
the internal and external factors that are favorable and unfavorable to achieve that
objective.

It focuses on:

 Strengths: characteristics of the business, or project team that give it an advantage over others
 Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative
to others
 Opportunities: external chances to improve performance (e.g. make greater profits) in the
environment
 Threats: external elements in the environment that could cause trouble for the business or
project
Analysis of SWOT Matrix
Analysis of SWOT Matrix
S-O strategies pursue opportunities that match the company’s strengths. These are the
best strategies to employ, but many firms are not in a position to do so. Companies will
generally pursue one or several of the other three strategies first to be able to apply
Strengths-Opportunities strategies.

 W-O strategies overcome weaknesses to pursue opportunities. Your job is to match

internal weaknesses with external opportunities and list the resulting Weaknesses-
Opportunities strategies 

 S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability
to external threats. Your job is to match internal strengths with external threats and list
the resulting Strengths-Threats Strategies

 W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it
susceptible to external threats. Your job is to match the internal weaknesses with external
threats and record the resulting Weaknesses-Threats Strategies
Tools to aid in strategic planning:
Forecasting: Process of predicting the future scenario which may affect the organization.

Quantitative technique
Network technique: process to plan and control the time and
cost of project (e.g., PERT and CPM techniques)
Flow chart: process of determination of relation between task
components and work simplification.
Gantt chart: process of estimation and relation of activities and
time require to complete them.
Breakeven analysis: process of determining the point where cost
equals revenue(BEP=FC/(S-VC)
Linear programming:
Simulation: process of presenting to hypothetical situation or a
real situation model to solve a real life problems
Tools to aid in strategic planning:
Forecasting: Process of predicting the future scenario which may affect the organization.

Qualitative technique:
Informed judgment
Scenario Analysis
Delphi method
Organizational goals
Organizational goals are the ultimate end point
towards which all the activities are focused. It is the
reason for the existence of the organization.
Achievements of goals are critical to organizational
success and effectiveness.
Purpose or Function of goals:
Gives direction to managers:
Gives support in perfect organizing:
Serve as a standards:
Assisting to acquire right type of human resources:
Provide job direction and security to employee:
Provides guidance and unified direction:
supports other aspects of planning:
Serve as source of motivation to employees:
Provide effective mechanism for evaluation and
control:
Types of organizational Goals:
Organization establish many different type of goals by level
(top, middle, and lower), area (marketing, finance, operation
etc.), and time (short, middle, long term) frame. They are:
Mission: a statement of organization fundamental purpose.
Strategic goals: A goal set by and for top management of the
organization, focuses of board and general issues. (Like profit
making, product development, resource allocation, etc.)(5- 10
years)
Tactical goals: a goal set by and for middle level managers of
the organization. Focus to operationalize actions necessary to
achieve the strategic goals.(1-3 years)
Operational goals: a goal set by and for lower level managers
of the organization. To focus to meet the tactical goals.
Types of organizational Goals:
By area Area: organizations also set goals for different
areas.
By time frame: Time frame: organizations also set
goals across different time frames.

Long term
Intermediate term
Short term – (action plan & reaction plan) May be
explicit or open-ended
Planning process in Organization.
Types Of Objectives:
Within the organization there are three levels of objectives:
strategic objective, tactical objectives, and operational
objectives.
Strategic objective: A broadly defined objective that an
organization must achieve to make its strategy succeed.
Tactical objectives: The results that major divisions and
departments within the organization intend to achieve are
defined as tactical objectives.
Operational objectives: The specific results expected from
departments, work groups, and individuals are the operational
objectives.
 
Organizational goals
Who sets goals?
All managers should be involved in the goal setting process.
Each manager has responsibilities for setting goals that correspond
to their level.

Managing Multiple Goals

When setting goals organizations sometimes experience conflicts
or contradictions among goals.
Conflicts are addressed through the use of the Optimizing
concept:
Optimizing: balancing and reconciling possible conflicts among
goals.
Strategic Objective
A broadly defined objective that an organization must achieve to make its strategy
succeed.
Strategic objectives are, in general, externally focused and (according to the
management guru Peter Drucker) fall into eight major classifications: (1) Market
standing: desired share of the present and new markets; (2) Innovation:
development of new goods and services, and of skills and methods required to
supply them; (3) Human resources: selection and development of employees; (4)
Financial resources: identification of the sources of capital and their use; (5)
Physical resources: equipment and facilities and their use; (6) Productivity:
efficient use of the resources relative to the output; (7) Social responsibility:
awareness and responsiveness to the effects on the wider community of the
stakeholders; (8) Profit requirements: achievement of measurable financial well-
being and growth.

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