SRE 211 PLANNING

LECTURE 4
KELELLO MOEKETSE
Main Principles of Planning
Strategic Planning
Tactical Plan
Operational Plan
INTRODUCTION

• Managers engage in planning and goal formulation.

• Small organizations managers plan informally compared to
those in larger organizations.
• Despite the importance of planning as a management func-
tion, it offers both pros and cons to organizations that have
to survive in the modern business environment that is con-
stantly changing.
• On the one hand, planning offers a focus for all activities in
the organization.
• On the other hand, planning may create too much rigidity
and may not be able to accommodate changes that occur
in the business environment.
Continuation…..
Examples:
• Airlines must plan to ensure that they match the demand for specific
flights, but their plans should be flexible enough to accommodate unex-
pected changes such as adverse weather conditions, strikes by disgrun-
tled workers, and a shortage of fuel at certain destinations.

• Strikes/marches at institutions of higher learning.

• Taxi/Bus/Train strikes or delays.

Cont…
• The strategic plan serves as the focal point for all other plans and
goals; the strategic plan must be cascaded down into medium-term
tactical plans and goals, translating into short-term operational plans
and goals.

• A hierarchy therefore depicts these three types of plans and goals.

• Planning and goal formulation are concerned with what the organiza-
tion has to do and how it is to be done.
 NATURE OF PLANNING

• Planning is the Primary function while Organising,

Leading and Controlling are secondary functions.
• Goals are formulated.
• Attainment of goals-roles.
• Determines leadership styles.
• Tasks of all managers, however, kinds of plans differ
at different levels.
• Concept of effectiveness.
• Critical skills; Management & leadership, health and
safety issues, and technical skills.
Cont…
• Planning forces managers to set clear goals and to be proactive – and
not reactive – in pursuing these goals. It forces management to consider
possible changes that may occur and then prepare timeously for these
changes.
• Planning ensures that managers and workers focus their efforts on the
attainment of the same goals. Sound plans are also essential when
monitoring the progress of an organisation towards goal attainment.
• Actual results can be measured against clearly stated goals and
deviations from the goals can be identified and rectified timeously.
• Managers also need to plan for possible strikes by workers, water shortages,
electricity outages (loadshedding), potential mal-functioning of machinery, a
shortage in supplies, late deliveries of supplies, and so on. Many more reasons can
be cited to emphasise the importance of planning for organisations in South Africa
and the rest of Africa.
• However, the above should convince the critics of planning of the importance of
this management function in organisations.
Changes in the Environment

Structuring the Organisation.

Determining what kind of

people we need.
Necessary for
Plans (Goals)

Determining how we should

lead them.

By furnishing standards of
Control.
 KINDS OF ORGANISATIONAL STRATEGIC PLANS

TOP
MANAGEMENT

MIDDLE MANAGEMENT

LOWER / FIRST LINE MANAGEMENT

CHARACTERISTICS

• Extended time frame

• Focus on the entire organization
• Reconciling the organization’s resources with threats and
opportunities
• Focus on creating and maintaining competitive advantage
• Synergy

Attempt is not to outline in-depth and in detail how the org

accomplishes goals.
 KINDS OF ORGANISATIONAL TACTICAL PLANS

TOP
MANAGEME
NT

MIDDLE
MANAGEMENT
LOWER / FIRST LINE
MANAGEMENT

CHARACTERISTICS
• Primarily with people and action to implement the
strategic plans.
• Focus could be on functional areas such as marketing,
HR etc.
• Synergy is NB!
• All these plans should be congruent (i.e.) the plans
should
contribute to the attainment of organizational goals.
 KINDS OF ORGANISATIONAL OPERATIONAL PLANS

TOP
MANAGEMENT

MIDDLE
MANAGEMENT

LOWER / FIRST LINE

MANAGEMENT

CHARACTERISTICS
• Developed by middle-level and lower managers.
• Focused on short-term goals.
• 2 basic ops plans i.e. single-use plans & standing
plans.
• Single-use plans are used for non-recurring activi-
ties
e.g. big programs.
• Standing plans are used for recurring activities.

To formulate realistic ops plans, managers need clear

guidance from strategic and tactical plans.
 IMPORTANCE OF PLANNING

• Assessment of internal and external forces.

• Develop a sense of direction and purpose.
• Identifying the factors that affect the organization.
• Encouraging participation and cooperation.
• Establishment of priorities.
• Anticipates the future.
• Reduce risks.
• Understanding circumstances contributing to past
successes or failures.
• Ensuring the availability of adequate resources.
• Establishing performance standards.
• Developing “what if” scenarios.
STEPS IN THE PLANNING PROCESS
Step 1: Identify Changes that Consider future opportunities in light of the
necessitate planning changing market, customers, competition,
own strengths and weaknesses.
Step 2: Establishing Goals Consider where you want to be, what you
want to accomplish and when you want to
accomplish it.
Step 3: Drawing up Premises Consider external and internal environment.

Step 4: Developing various Consider the most promising alternatives in

course of action terms of your goals
Step 5: Evaluating various Consider which alternative is most viable
courses of action
Step 6: Selecting a course of Choose an alternative
action
Step 7: Formulate derivative Formulate supporting plans
plans
Step 8: Budgeting Consider future sales and expenses
 TIME-FRAME FOR PLANNING

• The reason for the different time frames has to do with the future
impact of the decisions that these managers currently make.

• The decision to plan a new town entails an investment of billions

of Rands that will take decades to recoup and deal with the future
impact of decisions.

• Top MMT usually make plans that commit resources for long
periods
Cont…
LONG-TERM PLANS:
• Focuses on the future.

• Time frame is considered long-term.

• Strategic planning focuses on the future and extends be-

yond the organization’s current realities.

• The time frame that it covers can be considered as long-

term. The period for strategic planning varies from one
organization to the next as was stated in a previous para-
graph.

• The time frame for strategic plans should take into ac-
count variables such as the stability of the relevant indus-
try and turbulence in the business environment.
Cont…

INTERMEDIATE PLANS:
• Refers to medium-term plans carried out by middle MMT
for various functional depths to realize tactical goals
derived from strategic goals.
• Form the nucleus of the planning activities.
• Medium-term plans refer to the medium-term planning
carried out by middle management for the various
functional departments in the organization.
• This includes planning for the research and development,
marketing, financial, operations, human resources,
administration, and other functions.
• Medium-term plans are components of long-term goals
and plans that focus on the contribution that the different
departments must make to help implement the strategic
plan.
Cont…

SHORT-TERM PLANS:

• Concerned with periods no longer than 1 yr.

• Developed by lower MMT to achieve the operational goals.
• Concerned with the day-to-day activities of an org and the allocation of
resources to fulfill certain aims.
• Short-term (or operational) plans are concerned with periods of no longer
than a year.
• They are developed by lower management to achieve the operational
goals.
• Short-term plans are concerned with the day-to-day activities of an orga-
nization and the allocation of resources to particular individuals by partic-
ular projects, budgets, and so on, to fulfill certain aims.
• In a takeaway restaurant the scheduling of workers for the different shifts
will be considered an operational plan.
 BARRIERS TO EFFECTIVE PLANNING

• The biggest mistake is to assume that the environ-

ment will remain constant.
• MMT on shaky ground if he/she does not have in-
sight into technology affecting the org, customer
preferences, legislation etc
• MMT must have a clear understanding of what re-
sources an can utilise to attain the mission and
goals.
• MMT needs to understand the goals of their own
and other sub-units
• Concentrating of proven plans and neglecting fu-
ture plans will lead to downfall.
 BARRIERS TO EFFECTIVE PLANNING

• Reluctance to establish goals for sub-units = barriers

• MMT may not understand the principles of formulating
plans.
• Lack of confidence in their abilities
• Fear of failure
• Resistance to change
• Neglect planning due to day-to-day activities
• High cost of planning.
 GUIDELINES FOR EFFECTIVE PLANNING

• Stress the importance of planning to everyone

• MMT should realize the limitations of planning
• The role of lower and functional managers play
should not be overlooked
• Communication plays a vital role in planning
• Planning should constantly be revised and updated
• Contingency planning may be very useful in a turbu-
lent environment
 PLANNING TOOLS: FORECASTING

• Projection of conditions expected to prevail in the fu-

ture by making use of both past and present info
• Sales forecasting: predicting future sales
• Technological forecasting: predict what future tech-
nologies are likely to emerge and when they are
likely to become economically feasible
• Resource forecasting: projects future needs for hu-
man, financial, physical, and information resources
• Economic forecasting: focuses on things like inflation
rates, interest rates and effect they would have
on the org
• Market forecasting: forecast possible new legislation
that might affect the org
 PLANNING TOOLS: BUDGETING

• Deals with the future allocation and utilization of

various resources
• Typically thought of in financial terms
• Translate plans into quantitative terms
• Serves as a control mechanism
• Budgets help managers coordinate resources and
help
define standards
• Facilitate performance evaluations of managers and
units
• Zero-based budgeting
 PLANNING TOOLS: SCHEDULING AND MONITORING

• GANTT CHART: graphic planning control method in

which a project is broken up into tasks
• Estimates how much time a task will take and how
long to complete the entire project
• Is depicted on a horizontal axis
• Managers can monitor the progress of the project by
comparing actual progress with planned progress
• PERT: Programme Evaluation and Review Technique
• Uses a network to plan projects involving numerous
activities, events, time and critical path.
PROPERTIES OF WELL FORMULATED GOALS

• SMART???
• Specify: goals should be specific
• Flexibility: allow for goals to be modified
• Measurability: goals are quantifiable
• Attainability: Goals should be realistic and attainable
• Congruency: attainment of one goal should not pre-
clude
the attainment of another
• Acceptability: Collaborative effort
PROCESS OF GOAL SETTING

• Who sets goals in an org?

• Centralised goal setting
• Decentralised goal setting
• Top-down approach
• Bottom-down approach
• Combination
Thank you!