Planning in management function

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Chapter 4: Essentials of Planning and Chapter 4: Essentials of Planning and Managing by Objectives Managing by Objectives

ESSENTIALS OF MANAGEMENT: ESSENTIALS OF MANAGEMENT:

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Definition of PlanningDefinition of Planning

PlanningPlanning involves selecting missions and involves selecting missions and objectives and the actions to achieve them; objectives and the actions to achieve them; it requires decision making, that is, it requires decision making, that is, choosing from among alternative future choosing from among alternative future courses of actioncourses of action

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Types of PlansTypes of PlansPlans can be classified as Plans can be classified as (1) mission or purposes, (1) mission or purposes, (2) objectives or goals, (2) objectives or goals, (3) strategies, (3) strategies, (4) policies, (4) policies, (5) procedures, (5) procedures, (6) rules, (6) rules, (7) programs, and (7) programs, and (8) budgets(8) budgets

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Types of PlansTypes of Plans

The The missionmission, or , or purpose,purpose, identifies the basic purpose or identifies the basic purpose or function or tasks of an enterprise or agency or any part of function or tasks of an enterprise or agency or any part of itit

ObjectivesObjectives, or , or goals,goals, are the ends toward which activity is are the ends toward which activity is aimedaimed

StrategyStrategy is the determination of the basic long‑term is the determination of the basic long‑term objectives of an enterprise and the adoption of courses of objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve action and allocation of resources necessary to achieve these goals these goals

PoliciesPolicies are general statements or understandings that are general statements or understandings that guide or channel thinking in decision makingguide or channel thinking in decision making

ProceduresProcedures are plans that establish a required method of are plans that establish a required method of handling future activitieshandling future activities

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Types of Plans – cont. Types of Plans – cont.

RulesRules spell out specific required actions or nonactions, spell out specific required actions or nonactions, allowing no discretionallowing no discretion

ProgramsPrograms are a complex of goals, policies, procedures, are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a employed, and other elements necessary to carry out a given course of actiongiven course of action

A A budgetbudget is a statement of expected results expressed in is a statement of expected results expressed in numerical terms numerical terms

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Steps in PlanningSteps in Planning 1. Being Aware of Opportunities1. Being Aware of Opportunities

2. Establishing Objectives2. Establishing Objectives or Goals or Goals

3. Developing Premises3. Developing Premises

4: Determining Alternative Courses4: Determining Alternative Courses

5. Evaluating Alternative Courses5. Evaluating Alternative Courses

6. Selecting a Course6. Selecting a Course

7. Formulating Derivative Plans7. Formulating Derivative Plans

8. Quantifying Plans by Budgeting8. Quantifying Plans by Budgeting

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Verifiable ObjectivesVerifiable Objectives

ObjectivesObjectives are the important ends toward are the important ends toward which organizational and individual which organizational and individual activities are directedactivities are directed

An objective is An objective is verifiable verifiable when at the end when at the end of the period one can determine whether or of the period one can determine whether or not the objective has been achievednot the objective has been achieved

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The Nature of ObjectivesThe Nature of Objectives

Hierarchy of ObjectivesHierarchy of Objectives– Key Results AreasKey Results Areas: Areas in which : Areas in which

performance is essential for successperformance is essential for success Setting objectives and the organizational Setting objectives and the organizational

hierarchyhierarchy Multiplicity of objectivesMultiplicity of objectives

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How to Set ObjectivesHow to Set Objectives

Non Verifiable ObjectivesNon Verifiable Objectives– To make a reasonable profitsTo make a reasonable profits– To improve comTo improve com– To improve productivityTo improve productivity– Develop good managersDevelop good managers

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How to Set ObjectivesHow to Set Objectives

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Guidelines for setting objectivesGuidelines for setting objectives

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Guidelines for setting objectives..contGuidelines for setting objectives..cont

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Evolving Concepts in MBOEvolving Concepts in MBO

MBO as used in this bookMBO as used in this book Management by objectivesManagement by objectives is a is a

comprehensive managerial system that comprehensive managerial system that integrates many key managerial activities in integrates many key managerial activities in a systematic manner and that is consciously a systematic manner and that is consciously directed toward the effective and efficient directed toward the effective and efficient achievement of organizational and achievement of organizational and individual objectivesindividual objectives

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Systems Approach to MBOSystems Approach to MBO

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Benefits of Management by Benefits of Management by ObjectivesObjectives

Clear goals:Clear goals: MotivateMotivate Improve managing through results-Improve managing through results- oriented oriented

planningplanning Clarify organizational roles, structures and Clarify organizational roles, structures and

the delegation of authority the delegation of authority Encourage personal commitment to their Encourage personal commitment to their own own

and organizational goals.and organizational goals. Facilitate effective controlling, measuring Facilitate effective controlling, measuring

results, and leading to corrective actionsresults, and leading to corrective actions

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Definition of the TOWS MatrixDefinition of the TOWS Matrix

The TOWS Matrix is a conceptual The TOWS Matrix is a conceptual framework for a systematic analysis that framework for a systematic analysis that facilitates matching the external threats and facilitates matching the external threats and opportunities with the internal weaknesses opportunities with the internal weaknesses and strengths of the organizationand strengths of the organization

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TOWS MatrixTOWS Matrix

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TOWS Matrix:- 4 Alternative TOWS Matrix:- 4 Alternative StrategiesStrategies

SO strategy: SO strategy: Maxi – Maxi ( Maxi – Maxi ( maximize bothmaximize both)) WO strategy: WO strategy: Mini – Maxi (Mini – Maxi (Minimize weakness)Minimize weakness)

ST strategy: ST strategy: Maxi – Mini (Maxi – Mini (Maximize _?____ )Maximize _?____ )

WT strategy: WT strategy: Mini – Mini ( Mini – Mini ( Minimize _?____)Minimize _?____)

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Business Portfolio MatrixBusiness Portfolio Matrix

One of the most important matrix that tells One of the most important matrix that tells the relationship between business growth the relationship between business growth rate and market share of any company.rate and market share of any company.

Developed by Boston Consulting Developed by Boston Consulting Group(BCG)- a world wide known Group(BCG)- a world wide known consultancy organizationconsultancy organization

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Business Portfolio MatrixBusiness Portfolio Matrix

Two dimensionsTwo dimensions– Relative competitive position (market share)Relative competitive position (market share)– Business growth rateBusiness growth rate

Four positionsFour positions– Question marks ?Question marks ?– Stars *Stars *– Cash cowsCash cows– DogsDogs

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Major Kinds of Strategies and PoliciesMajor Kinds of Strategies and Policies

Products or ServicesProducts or Services– What are some of the key questions to ask?What are some of the key questions to ask?

MarketingMarketing– What are some of the key questions to ask?What are some of the key questions to ask?

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HIERARCHY OF COMPANY STRATEGIESHIERARCHY OF COMPANY STRATEGIES

The The corporate-level strategycorporate-level strategy. Executives . Executives craft the overall strategy for a diversified craft the overall strategy for a diversified companycompany

Business strategiesBusiness strategies are developed usually are developed usually by the general manager of a business unitby the general manager of a business unit

Functional strategies.Functional strategies. The aim is to support The aim is to support the business and corporate strategies.the business and corporate strategies.

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Five Forces in Industry Analysis (Porter)Five Forces in Industry Analysis (Porter)

The competition among companiesThe competition among companies The threat of new companies entering the The threat of new companies entering the

market market The possibility of using substitute products The possibility of using substitute products

or services or services The bargaining power of suppliers The bargaining power of suppliers The bargaining power of the buyers or The bargaining power of the buyers or

customerscustomers

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Porter’s Generic StrategiesPorter’s Generic Strategies

Overall Cost Leadership StrategyOverall Cost Leadership Strategy Differentiation StrategyDifferentiation Strategy Focused Strategy (low cost or Focused Strategy (low cost or

differentiation)differentiation)

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