Management Slide - CHAPTER 2

CHAPTER 2PLANNING

PLANNING2.1 Understand planning element and types o f planning in management2.1.1 Define planning2.1.2 Describe the objectives of planning2.1.3 Determine the importance of planning2.1.4 Identify the importance of creativity in planning2.1.5 Elaborate three types of planninga. Strategic planningb .Tactical planningc .Operational planning2.2 Elaborate planning process and problems faced2.2.1 Identify the steps in planning process.a. Setting the goalsb. Defining current situationc. Identifying assistance and resistanced. Developing a new set of goals and actione. Re-evaluating goals

Identify problems faced in preparing plansa. Managers face self conflicts in establishing goalsb. Employee refuse to accept changes in planc. Changes in environment2.2.3 Identify forces of changea. Organization structureb Technologyd. People2.2.4 Determine techniques for reducing resistance of changea. Education and communicationb. Participationc. Facilitation and supportd. Negotiatione. Coercion2.2.5 Elaborate management method to facilitate planningimplementation processa. Management method by objectivesb. Corporate planning.

Definition of Planning process of setting or establishing goals and thereafter determining ways to achieve these goals.Without planning, managers will probably fail to manage their subordinates and the organizational resources effeciently.Planning enables managers to evaluate the situation, predict future possibilities and grab the opportunities to bring success to the organization.Planning- analysing relevant current or past information, with the purpose of measuring and forecasting the future in order to achieve organizational goals.

Planning-is a process of determining how the mgmt system can move the orgniztion towards achieving its goals.Certo(1997)

Planning is a process of forming goals and taking suitable action to achieve the goals.Freeman and Gilbert (1995)

Planning is a basic process of selecting and determining suitable actions to achieve goals.Dessler(2001)Planning is an analytical process that involves the evaluation of future situations. Planning involves the development and the selection of the best alternatives to achieve a goal.Michael Scott

Planning is a process of managing all the individuals involved in the organization and the variables from the internal and external environment of the organization in order to achieve the set goals.

(a) Provide a direction-by establishing goals, employee in the organization will have the motivation and inspiration to work harder to overcome the barriers and achieve the set goals.(b) Focus on effortEach employee in an orgn has limited resources & has various methods to implement an actionSetting one common goals enables the indv to establish pririties and build commitment in utilizing limited resources effectively and efficiently.Goals are important in order to control and ensure that the organization is moving towards achieving organizational goals according to the stablished plan.

(c)Drive organizational planning and decision making- every employee in the orgn has short term and long term goals according to their position and job designation in the orgn. Therefore, setting of goals can help decisions to be made accurately in the attempt to achieve orgn. goals.(d) Evaluate the orgn. achievementGoals evaluated in a specific time frame can be used as performance standards to assist employees and managers evaluate their work performance.

(a) Identify business or investment opportunities-planning can help managers identify business opportunities, thereby increasing the organizations competitiveness. For ex; if an orgn. Wants to expand its market oversea, the org must evaluate the investment opportunities that are supported by the government and grab the incentives provided by government.(b) Identify suitable alternatives actions- Planning enables managers identifu suitable alternatives actions according to the set goals. The best alternatives can be selected and implemented.ex(c)Reduce risks- planning can reduce the risk faced by the organization in an ever changing business environment. Planning requires managers to forecast the future, makes changes, evaluate the effect of the changes and take suitable action to overcome the organizational weaknesses.Ex

(d)Save costs- Through planning, orgn can save cost as resources can be used efficiently and effectively. Ex.(e) Facilitate the achievement of goals-good planning enables the organization to achieve the set goals efficiently and effectively.(f) Provide guidance-planning is important to provide guidance on the purpose of an activity performed by an organization.(g)provide direction-planning is important to determine a direction for each manager in the organization. Through planning, managers can ascertain the tasks to be performed, ways to performed the tasks, the time frame to perform the task and the individual who is responsible for implementing the tasks.(h) facilitate coordination-planning helps manager coordinate all activities and resources needed to achieve organizational goals. Al physical resources and human resources in an organization must be combined to achieve organizational goals.

(i) Understand the environment- planning helps the orgn. Understand the business env.ex: the types of barriers that need to encounter, the competition pattern that is faced and the threat and opportunities that exist.(j) Ensure organizations do not stray from original goals.Planning can also ensure that managers do not get distracted from achieving the organizations original goals. Managers must be able to identify mistakes that have been made and take corrective action in order to achieve orgn. goals.

Creativity-conversion to a new generation of ideas and innovation of products, services or production method.

The process of creativity

(a) Generation ideas or opinions(b) Expanding the ideas opinions(c) Implementing the ideas or opinionsMethods to encourage Creativity (i) Brainstorming-methods encourage the free flow of ideas amongst group members before a decision is made.(ii) Nominal group process-each group member works individually to generate ideas b4 a discussion of ideas is made in a group.

(iii)Synectics (Gordons Technique)-the group leader tries to identify the real problem in order to take an immediate solution. Group members will have a discussion through the play method.(iv) Creative group decision making-this method is suitable if the group fails to find a solution. The objective of this method is to find a solution for the problem.

***In 5-6 member in a group. Discuss the importance of creativity in planning.

(i) Strategic planning(ii) Tactical planning(iii) Operational planning(iv) Scenario planning Mission strategic planning Goals overall objectives area objective tactical planning Division objective Department objective operational planningIndividual objective The hierarchy of Planning

(i)Strategic planning- setting long term goals and objectives for an orgn. And selecting suitable actions to allocate organizational resources in order to achieve these goals. Strategic planning is conducted for a period of more than five yearsLong term planning performed by top line managers or strategic managers.Step to be taken by top line mgr:Identify a market potentialAllocate orgn resources effecientlyUtilize resources productivelyEx.The procedures to perform strategic planning in the organization are as follows:Form the company missionEstablish a strategic planning unitDetermine the goals of the projectAnalyse the env. to detect threats and barriers that can affect the orgn plan.

(e) Develop a strategic plan (tactical and operational plans will be developed by other departments or divisions in the orgn)(f) Monitor and measure performance to ensure that orgn goals are effectively achieved.(ii)Tactical planning-is performed by middle line magr or tactical mgr to achieve goals set at the strategic level. This type of planning involves a shorter period of time, between 1 and 5 years.-the roles and contribution of each department or unit in achieving the strategic plan developed by top line manager.Tactical planning has the following characteristics:Concentrates on specific indv, activities and resources compared to the strategic planning which covers all the activities in the orgn. Ex.during festive seasonsConducted for a shorter period of time compared to the strategic planning

(iii)Involves the various functions of management.tactical planning provides guidance on how to perform activities and utilize resources in the best way possible in certain areas such as the marketing of a new product, the production of the comp.(iv) Established and implemented by middle line managers together with their executives.(iii)Operational Planning-involves a small or specific scope such as job units or individuals in the organization.Provide specific guidance on the roles and responisbilities of the relevant parties in the organization in achieving operational goals based on the implementation of the strategic and tactical planning.-This plan is develop and determined by the first line manager or operational managers based on the objectives of tactical planning.-performed for a time duration of one years or less.-short term planning

Operational planning can be divided into two types: Single use plan-refer notesProgramme project budget

Standing plan-refer notes Policies procedures rule

Differences between strategic planning, tactical planning and operational planningTime periodScope Discuss in groupLevel of goals

(iv) Scenario planning-involves rediscovering the original entrepreneurial creative throught which which is required in uncertain internal and external env. Where there are always drastic changes , and graet market uncertainty in the world. Scenario planning is the process in which creative managers invent and then consider, in depth several varied scenarios of possible future events with the objective to bring forward surprises & unexpected leaps of understanding to the event.

Identify the steps in planning process:Discuss

Setting the goalsDefining current situationIdentifying assistance and resistanceDeveloping a new set of goals and actionRe-evaluating goals

Setting goals-goals which have been set must be clear, realistic, rational, logical and have a specific time frame.Managers must identify what is desired or needed by the organization and a target performance that has to be achieved by the organization.Example.Defining the current situation-when the orgn goals are clearly established, the top-middle and first line managers will examine the current condition of the orgn and compare it with the goals that are to be achieved.Managers need to ensure, that financial resources, human & orgn information are adequate to achieve the set goals.If the setting goals are challenging and require high expenditure, managers must make the necessary changes to the planning conditions according to the orgn.financial position.Example

3. Identifying assistance and and resistance-managers must examine the internal and external orgn. Factors that can assist or hinder the process of achieving orgn. Goal. Example.Manager must find suitable alternatives, identify available support and existing barriers and determine the solution that should be taken.4. Developing a new set of plans and actions-managers will identify various alternatives actions, evaluate each alternative and select the best alternative that can be implemented.5. Reevaluating goals-if there are many barriers at a large stage and the planning is not implemented successfully, managers must set new goals or design new plans. Managers can use the nformation obtained from the re evaluation process as an indicator to develop a better plan in the future.

Managers face self conflicts in establishing goals(i)Refusal to give up old goals or alternative goals(ii) Anxiety towards failure(iii) Lack of knowledge about the organization(iv) Lack of knowledge about the environment(v) Lack of self confidence(b) Employee refuse to accept changes in plan(i)Employees are in doubt over the impact of changes(ii) Employees refuse to forego existing goals(iii) Employees know the existing weaknesses in a new plan(c)Changes in environmentChanges in eco, social, culture, customers, supplies and technologyEconomySocial and cultureCustomersSuppliersTechnology

Organizational structure change, technology change, new product change and people change(a)Organizational structure Change-structural changes involves the hierarchy of authority, goals, structural characteristics, administrative procedures and management system.Ex:Successful structural change is accomplished through a top down approach, which is distinct from science and technology change (bottom up)and new products(horizontal). The structural change is usually planned by middle and top managers.(b) Technology change-a technology change is related to the organizations production process, the way the orgn. Does it works. Technology changes are designed to make the production of a product or service more efficient.(c ) New product change- a product change is a change in the organizations product or service output. New product innovations have major implications for an organization because they often are an outcome of a new strategy and may define a new market.(d) People change-employees value, norms, attitudes, beliefs and behaviour. Change in people relate to the way employee think.Culture change relates to the organization as a whole: orgn changed its basic mind set by becoming less bureaucratic.

Education and communication-edu. is especially important when the change involves new technical knowledge or users are unfamiliar with the idea.ex:Participation-participation involves users and potential resisters in designing the change.Participation also helps managers to determine potential problems and understand the differences in perceptions of change among employees.Ex:Facilitation and Support-The visible support of top management also helps overcome resistance to change.Top management support symbolizes to all employees that change is important for the organization.Negotiation-use formal bargaining to win acceptance and approval of a desired change.Coercion-managers use formal power to force employees to change.Resisters are told to accept the change or lose rewards or even their job.

Management method by objectives-Peter Drucker (1954)-is a set of formal procedures used to develop and evaluate the achievement of common objectives by managers and their subordinates.The area of responsibility for each employee is stated clearly in the workplace. The organizations objectives are also clear. Helps managers determine the goals and targets involving managers and employees at all organizational level.Characteristics of management by objectives (MBO):(i) Goals need to be established(ii) feedback must be given for performance(iii)Participation must involved all subordinatesIn order to perform an effective MBO, an orgn needs to possess several characteristics as follows:Managers and subordinates must show high commitment towards the programme to be performedOrganizational objectives must be clear and involve the participation of managers and their subordinates.

Managers must hold discussions with their subordinates and study their dev towards achieving organizational objectivesTop line managers will set common goals while lower level management will set specific goalsManagers must be given appropriate autonomy and freedom to implement programmes. Planned programmes must be changed if necessary.Reevaluation of past performanceMODEL OF THE MBO PROCESSStep 1: Set goals Step 2:develop actions plan Step 3: Review &Corporate strategic goals Action plan evaluateDepartmental goals review Individual goals work progress

Step 4:Appraise overall performancePerformance appraisal take corrective action

Discuss the advantages and disadvantages of MBO

(b)Corporate planning is established for the whole organization.This plan is set by top mgmt after taking into account all operations and types of business conducted by the organization. Corporate planning helps managers to answer one strategic question, which business areas should we go into? The purpose of cp is to provide directions and guidance to managers on how to allocate organizational resources. Refer bookSeveral forms of general corporate planning as follows:(i)Multiple Corporate Planning-taking over of a company and creating another business.CIMB-offers multiple services whereby the main business of this bank are in the area of finance, insurance and unit trust.(ii) Joint venture corporate planning-contractual partnership between 2 or more orgn.Each partner contributes to the new orgn and at the same time maintains a separate identity. Joint venture Telekon and Celcom-offer mobile phones service to sharing cost.(iii) Stop investment corporate planning-when a company sell its business because it is no longer interested to continued the business.The business might be suffering from losses or the company has changed the corporate strategy.-Sony Ericson.

(iv) Business Unit Corporate planning-involves the department of different strategies for each business area. If an orgn has five different business, each business unit will have its own strategy.(v) Functional Corporate Planningthe development of strategies related to activities in each functional area. Each department such as the marketing department, the finance department and research department has its own functional strategies.

QUESTIONS: MULTIPLE CHOICE QUESTIONS-REFER BOOKS

Jun 20131. Managers usually face various barriers in their attempt to prepare an effective plan.List FIVE (5) reasons which cause managers tend to face self conflict when they are establishing new goals.(5m)Explain THREE(3) barriers in implementing a plan which caused by changes in the environment by giving suitable example (12m)Identify FOUR(4) characteristics of tactical planning.(8m)