Topic Five

Planning
 Expected Learning Outcomes
• Define the term planning
• Explain the importance of planning and its
relationship with other managerial functions
• Differentiate the planning responsibilities
• List and discuss the basic planning process
• Discuss the major barriers to effective
planning
• Discuss the aids to successful planning
 Planning Defined
• Planning involves selecting missions and
objectives and deciding on the actions to
achieve them; it requires decision making that
is choosing a course of action among
alternatives.
• Planning is preparing for tomorrow today
• It is the activity that allows managers to
determine what they want and how to get it.
 Planning Defined
• Planning answers six basic questions in regard
to any intended activity
– What, when, where, who, how and how much
 Planning Defined
• The what question- focuses on the goals, the
things or states of being we do not now have.
• The question of when- timing
• The where issue- place where the plans will be
executed.
 Planning Defined
• The question of “who”- specific people
• “How” involves methods for reaching short-
and long term goals
• “How much” is concerned with the
expenditure and resources.
 Importance of Planning
• The primary management function
– Planning is the primary management function.
– It sets stage for resource acquisition and focus of
energy for the entire organization.
– Managers determine goals of the organization or
work group and develop overall strategies to
achieve them.
– Provides direction and common sense of purpose
for the organization.
 Importance of Planning
– It helps to determine the operations and how
these will affect the organization before
commitments are made.
• imagine a business owner approaching a bank loan
officer with a request for a start up business loan
without having a plan?
• Is it possible? If your answer is absolutely no, you have
recognized that planning places everything else in
perspective.
 Importance of Planning
• Impact on other management functions
– Planning occurs before organizing, staffing, leading
and controlling.
– Planning generates goals and sets the foundation
for organizing of resources and activities to
achieve the goals.
– Planning provides the guidelines for directing the
employees and for what is communicated to
them.
 Importance of Planning
– Planning provides the foundation for the control
function, because it specifies what is to be
accomplished and provides a standard for
measuring progress.
 Importance of Planning
• Ability to adjust
– Planning allows managers to adjust the
organization to he environment instead of merely
react to it.
– The company can see clearly the future, hence a
good development of objectives.
• Can you imagine the consequences of a football team
not having a game plan?
 Importance of Planning
– Planning increases the possibility of survival in
business by minimizing the risks inherent in the
future.
 Importance of Planning
• Unified framework of plans
– The results of an organization’s plans and planning
process provide for unified framework for the
accomplishment of the organization purpose.
– If a managerial pyramid with its three levels of
management is used as a model for the planning
process the results should be a hierarchy of plans;
– Let us begin with the three levels of management
Importance of Planning
 Importance of Planning
• The plans for each level from bottom should
fit into each other.
– E.g. Top managers has developed its element of a
plan ( objective) for the total organization. Let us
assume to become the nation’s most profitable
producer of children’s shoes.
– With this foundation the middle managers should
plan for the functional areas of production and
sales.
 Importance of Planning
• What could be the possible objective ( plan)
for the middle level management in
– Sales department?
– Production department?
 Importance of Planning
• Proposed answer
Sales department Production department

To seek all To manufacture

potential sources the highest
of profitable sales quality product
at the lowest
possible cost.
 Importance of Planning
• What could be the possible objective ( plan)
for the first line management in
– Sales department?
– Production department?
 Importance of Planning
• Proposed answer
Sales department Production department

To obtain 200 new To lower

profitable accounts production costs
by 10%
 The Importance of Planning
• The outcome – a coordinates hierarchy of
plans.
• What happens if an individual manager
chooses not to plan within this framework?
Types and uses of plans
Top level management
• Strategic planning ( big picture)

Middle level Management

• Tactical plan ( implementation)

First Level Management

Primarily Operational Planning
 Strategic Plans
• This is one concerned with the entire operation.
• It requires multi level involvement
• Top management develops the directional
objective for the entire organization; then
develops compatible objectives and plans to
achieve them.
• As planning process moves down the
organization, he topics of the objectives and
measures of success become more specific.
 Strategic Plans
• Strategic plans look ahead over the next, two,
three, five or even more years.
 Strategic Plans
• The strategic plan begins with an organization
mission.
 Strategic Plans
• A mission is a clear statement about why the
organization exists.
• It holds the key to everything else that will or
should happen within the organization
• Mission Vs Vision?
 Strategic Plans
• Vision- where an organization wants to be in
the future
 Tactical Plans
• Tactics are means needed to achieve a
strategy, to activate it and make it work.
– E.g. your strategic plan is to achieve a degree, your
tactical plans will include successfully completing a
series of courses.
 Tactical Plans
• This is concerned with what middle level units
within each division must do, how they must
do it, and who will be responsible for doing it.
• These are concerned with shorter time frames
and narrower scopes than strategic plans.
 Tactical Plans
• They usually span one year or less and
represent the short term efforts required to
reach long term goals, one after another, until
the strategic objective is reached.
– E.g. a coach’s strategic plan for victory over an
opponent depends on the individual tactical plans-
the plays to be used, players to be inserted in
various situations, the tactics of the defensive
response and so on.
 Operating Plans
• An operating plan is that a manager uses to
accomplish her or his job responsibilities.
• It can be;
– Single- use
– Continuing or an on going plan.
 Operating Plans
• Single-use plans- apply to activities that do not
recur or repeat.
• Once the activity is accomplished, the plan is
no longer needed.
• Examples of singe use plans;
– A program
– A budget
 Operating Plans
• A program is a single- use plan.
• It deals with who, what, where, when, how
and how much for an activity.
• Once a program’s goals are achieved, that
program ceases to influence organizational
behavior.
 Operating Plans
• A budget is a single use plan for predicting
sources and amount of income and how it is
to be used.
• Budget may cover any length of time, but
usually prepared for one year framework.
• When its time period ends, the budget loses
its value as planning or control device.
• However, it might have historical value.
 Operating Plans
• Continuing or on going plans are usually made
once and retain their value over the years,
undergoing periodic revisions and updates.
• Every plan that repeats or is continuously in
place in an organization is classified as an on
going plan.
• Examples;
– Policy, procedure, rules
 Operating Plans
• A policy- is an example of an on going plan.
• It provides a broad guidelines for managers to
follow when dealing with important areas of
decision making.
• Policies are usually general statements about
the ways in which managers should attempt to
handle routine management responsibilities.
 Operating Plans
• A procedure is the set of step by step
directions in which activities or tasks are to be
carried out.
• Procedures exist for preparing budgets,
getting people paid, handling routine clerical
tasks, preparing business correspondence and
so on.
 Operating Plans
• A rule is an going, specific plan for controlling
human behavior and conduct at work.
• Rules are do and don’t statements put in place
to promote safety of employees and the
uniform treatment of employees.
 Planning Process
• The basic planning concept answers four
questions;
– What do we want to do?
– Where are we in relation to that goal?
– Which factors will help or hinder us in reaching
the goal?
– What alternatives are available to us to reach the
goal, and which one is the best?
 Operating Planning Process
• Setting objectives
• Analyzing and evaluating the environment
• Determining alternatives
• Evaluating the alternatives
• Selecting the best solution
• Implementing the plan
• Controlling and evaluating the results
 1.Setting objectives

• Deciding on a target for the energies and

efforts of the organization or its subunit.
• The objectives should arise from the purposes
of the organization (its mission) and therefore
differ by type of organization, state of
development of the company, overall
philosophy of management and the level of
organization at which the objectives are set.
 Setting objectives
• Some typical examples;
– During the next five years, the company will
produce 10% return on investment ( top level)
– To produce the highest quality good at the lowest
possible cost ( middle level production
department)
– To reduce turnover by 10% ( first level)
 Setting objectives
• Managers should consider the following when
developing objectives;
– SMART
– Specific
– Measurable
– Achievable
– Relevant
– Time frame
 2.Analyzing and evaluating the
environment
• Once the objectives are established, the
manager needs to evaluate the present
situation and analyze the organizations
environment.
– Where are we now?
– What are the limitations in the environment?
– what resources do we have or are we lacking?
– Are there any external factors that can influence
the objectives and their accomplishment?
Analyzing and evaluating the environment

• A manager should analyze both internal and

external environment.
 3. Determining the Alternatives
• Alternatives are courses of action that are
available to a manager to reach a goal.
• In developing alternatives, a manager should
try to create many roads to the objective as
possible.
– E.g your objective is to have the most modern
equipment available on the market.
– What are the possible alternatives to achieve this
objective?
 Determining the Alternatives
• You might;
– Purchase the most modern equipment available
– Rent the equipment
Each alternative will achieve the same objective, but
which is the best for your situation?
 4. Evaluating the Alternatives
• Each alternative needs to be evaluated to
determine which best achieves the objectives.
• A manager must construct a list of advantages
(benefits) and disadvantages (costs) for each
alternative.
• What factors should be considered?
– Amount of resources, time
– Get Tshs value estimate cost of each alternative.
 4. Evaluating the Alternatives
• In addition to financial factors, consider how
the effects of each alternative to the
organization.
 5. Selecting the best solution
• The analysis of each alternative's should result in
one course of action that appears better then the
others.
• If no alternative emerges clearly the best,
consideration should be given to combining parts
or the entire content of two or more alternatives.
• Whatever the course chosen, it should be the
one that gives you the most advantages and the
fewest serious disadvantages.
 6. Implementing the plan
• After the optimum alternative has been
selected, the manager needs to develop an
action plan to implement it.
• The manager must decide these issues;
– Who will do what?
– By what date will the tasks be initiated and
completed?
– What resources, both human and material, will be
available for the process?
 6. Implementing the plan
– How will the plan be evaluated?
– What reporting procedures are to be used?
– What type and degree of authority will be granted
to achieve these ends?
 Controlling and evaluating the results
• The manager must monitor the progress
• Evaluate and report results
• Make any necessary modifications.
 Making plans effective
• What can managers do to increase the
potential for success?
 Making plans effective
• Identify the potential barriers to successful
planning and work to overcome them.
 Planning Barriers
• Inability to plan
• Improper planning process
• Lack of commitment to the planning process
• Improper information
• Focusing on the present at the expense of the
future
• Too much reliance on the planning
department.
 Planning Barriers
• Concentrating only the controllable variables
(concentrating on the things and events within
their powers to control)
 Aids to Planning
• As much information as possible
• Multiple sources of information
• Involvement of others in the planning process
 Food for Thought!

Why is abbreviated such

a long word?