Principles of managememt

PLANNING
Learning outcomes
• importance of planning
• organisational goals, types of plans
• time frames of planning
• responsibilities for planning
• the planning process
What is planning?
“Systemic development of action programmes aimed at reaching agreed business
objectives by the process of analysing, evaluating and selecting among the
opportunity which are foreseen” (Jones:1974)

Definition of planning: A process of establishing aims and objectives

and choosing a course of action to ensure that objectives are achieved.

Where we are now, where we want to go, how we get there

Why is planning important?
• framework for all subsequent management functions- gives the
company a sense of direction

• bridges the gap between where the organisation currently is and

where it would like to be

• helps to reduce uncertainty

• sets the scene for the type of business that will be conducted and the
strategy that will be followed

• comes before all other management functions – before an organisation

can staff, lead and control it has to identify its objectives and how to
reach them
Why is planning important?
• most basic - and often - most important of management functions
• involves selecting from alternative future courses of action for (i)
whole enterprise, and (ii) every department (incl. every employee)
• the purpose plans=> to facilitate the accomplishment of objectives
• precedes all other managerial functions
• Fail to Plan? Plan to Fail…
Plans and goals
Plans and goals
If planning is “The attainment of organizational goals ….” need to start
with organisational goals

Goals
• guidance and a unified direction for people in the organisation
• strong affect on the quality of other aspects of planning
• source of motivation for employees
• effective mechanism for evaluation and control of the organisation
 Goals
Purposes of Goals

Guidance and Promotion of Source of Evaluation

unified direction good planning motivation and control
Goals
By Level
Mission statement: a statement of an organization’s fundamental
purpose.
• Strategic goals: set by top management → broad, general issues
• Tactical goals: set by middle managers → focus on how to operationalize
actions for strategic goals (= Bite size chunks)
• Operational goals: set by lower-level managers to achieve tactical goals

By Area
• goals set for different functional areas e.g. goals for Sales & Marketing,
Operations, Finance etc.

By time frame
• long-term, medium-term, or short-term time frames + open-ended
Goals to plans
Plans should specify:
 Goals  Objectives “What will you do?”

 Course of action  Strategies “How will you do it?”.

 When it will be done Time dimension

Types of plans
Purpose or mission • What’s our business, what should it be?

Objectives • What must be done to achieve our mission?

• General program of action to achieve our
Strategies objectives
• General statements / understandings which
Policies: guide thinking and action in decision making
• Detail the exact manner in which certain
Procedures activity must be accomplished
• Require specific action to be taken / not
Rules taken
Programmes • Goals, policies, procedures, rules

Budgets • Quantitative expressions of plans

Types of plans
Purpose or mission

Objectives Strategic
Strategies

Policies:
Tactical
Procedures

Rules

Programmes
Operational
Budgets
Types of plans: Strategic plans

We will look at Strategic plans in more detail later …

Types of plans: Tactical plans
Tactical planning is an organised sequence of steps designed to execute
strategic plans

• e.g. Coca Cola’s strategic plan was to maintain dominance of the soft drink
market.
• a threat to reaching that goal was the bottlers that packaged their product.
• to counteract this threat and ensure the strategic plan was reached, Coca
Cola developed a tactical plan.

• Tactical plan – CC bought several of the large independent bottlers and

combined them into one large bottling company
Types of plans: Tactical plans
Developing tactical plans Executing tactical plans
• Recognize and understand • Evaluate each course of action
overarching strategic plans in light of its goal
and tactical goals • Obtain and distribute
• Specify relevant resource and information and resources
time issues • Monitor horizontal and vertical
• Recognize and identify human communication and integration
resource commitments of activities
• Monitor ongoing activities for
goal achievement
Types of plans: Operational plans
• derived from tactical plans and provide granular levels of details that
specify precisely how the tactical plans will be reached
• narrowly focused and have a short time horizon
Types of plans: Operational plans
Plan Description

Single-use plan Developed to carry out a course of action not likely to

be repeated in the future
Program Single-use plan for a large set of activities
Project Single-use plan of less scope and complexity than a
program

Standing plan Developed for activities that recur regularly over a pe-
riod of time
Policy Standing plan specifying the organization’s general
response to a designated problem or situation
Standard operating procedure Standing plan outlining steps to be followed in particu-
lar circumstances
Rules and regulations Standing plans describing exactly how specific activi-
ties are to be carried out
Types of plans
Planning
Strategy : “Be No. 1 in the Irish Market”

Tactical Plan=>specifies precisely how this will be

achieved
• activities to be undertaken
• target dates
• use of human resources

Operational plans=> day to day plans, on the ground

situations, short term plans to achieve the tactical plans.
Types of plans: Contingency plans
• organisations also undertake contingency planning
• developing alternative plans should the existing plans be disrupted by
an unexpected event
Contingency => determination of alternative courses of action to be
taken if an intended plan is unexpectedly disrupted or rendered
inappropriate
• help managers to cope with uncertainty and change
• generation of alternative courses of action should unexpected events
occur in the business environment (Froot et al, 1994)
• contingency planning depends on the ability of the organisation to
correctly identify and predict alternative scenarios (Foster, 1993)
Time
The Time Dimension of Planning
• based on the principle of commitment
• planning must provide sufficient time to fulfill the managerial commitments
involved.

Long-range Plans
• cover present and future strategic issues; normally extend beyond five years
in the future

Intermediate Plans
• usually cover from 1 to 5 years and parallel tactical plans
• are the principal focus of organizational planning efforts

Short-range Plans
• have a time frame of one year or less
• include action plans and reaction (contingency) plans
Who
Strategic Plans
3+ Years
Senior Strategic Direction /
Management Mission & Objectives

Tactical Plans
Middle Management 1-3 Years
Roles & Responsibilities

Operational Plans
Front-Line Management Up to 1 Year
Targets / Budgets
Who
Who Sets Goals?
• all managers should be involved in the goal-setting process.
• responsibility for goal setting should correspond to the manager’s level

Managing Multiple Goals

• in large organisations it’s common to experience conflicts or contradictions
among goals e.g. low cost v’s high quality
• to avoid this, managers must sometimes engage in Optimizing
• optimizing allows managers to balance / reconcile conflicting goals
Who has the skills?
Think back to the different skills at different levels of management …
Some challenges for managers when
planning …
BARRIERS SOME SOLUTIONS..

Inappropriate goals Understanding the purposes of

goals and planning
Improper reward system
Communication and participation
Dynamic and complex
environment Consistency, revision, and
updating
Reluctance to establish goals
Effective reward system
Resistance to change
Constraints
Planning process
Planning Process
 Planning Process
1: Define Corporate Objectives
• objectives set for all the major functions of the organisation
• sum-up what business the organisation intends to be in for the foreseeable
future
• objectives must be clarified and documented so that they can be understood
by those involved in the planning process
The objective of a company many just be money ….
Profit maximisers:
◦ Organisations that aim is to make the highest possible profit
◦ This aim is connected to all other objectives

Profit satisfiers:
◦ Organisations that only seeks sufficient profits to allow it to fulfil other aims, eg.
invest in new production or to allow the owner to have a good lifestyle
Planning Process
2: Analysis: Internal and external
• company must analyse its internal strengths and weaknesses in relation
to the external opportunities and threats that confront it
• analysing internal strengths and weaknesses in relation to the external
opportunities and threats = SWOT Analysis
SWOT=> planning framework which helps an organisation to identify its
internal strengths and weaknesses and its external opportunities and
threats
Capitalise on its internal strengths and respond to external threats
Planning Process
3: Revise objective
• based on internal/external analyses the company’s unique competitive
advantage should be clear => unique product, quality of service
• to develop a leading edge usually requires a revision of previously
defined objectives
4. Develop Strategic Plan
• company develops a list of strategies which will form the basis of the
final corporate plan
◦ Strategies aimed at securing actions to fulfil objectives
◦ Strategies aimed at ensuring resources are available to support these actions
 Planning Process
5. Develop Tactical Plan
• deals with current operations, medium term orientation
• involves interpretation of strategic plan
• formulated for every function or business unit within the organisation
• tactical plans for production =>To improve productivity + To improve
communications

6. Implement Operational Plans

• short term planning of day-to-day function=> guide immediate action
• short term orientation => operational plans for production = To increase productivity
by 10% by 01/06/22 + to issue a 3 page monthly newsletter to all staff by 30/09/22
• effective implementation means providing the necessary resources, motivating staff
and holding regular meetings to review how targets are being met
Planning Process
7: Feedback
• regular meetings with staff provide the basis for feedback to all levels
of the organisation on how effective the planning process has been
• plans must be constantly monitored and revised if necessary
• it is this process that links the management functions of planning and
control!