1. Topic 3
Planning in the Contemporary
Organization

2. Planning Defined
The process of outlining the activities that are
necessary to achieve the goals of the
organization.
What is planning?
Planning is a particular kind of decision
making that addresses the specific future that
managers desire for their org.

3. • Planning is not a single event but an on
going process that reflects and adapts to
changes in the environment
• Planning is a process of setting goals and
designing strategies to achieve these goals.
Purpose of planning
• The purpose of planning is simple - to
ensure that the organization is both
effective and efficient in its activities.
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4. Planning as a Linking Mechanism
GoalsGoals ControlControlPlansPlans
Relationship among goals,
plans, and controls

5. The link between
planning and control
• 1.Control cannot takes place unless a
plan exists.
• 2.A plan has little chance of success
unless some efforts are made to
monitor its progress
• The need for planning exists at all
levels and increases at higher levels.
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6. The benefits of planning
• 1Clearly defines responsibilities
• 2.Create a participatory working environment
• 3.Better coordination
• 4.Better control of activities
• 5.Encourage forward thinking
• 6.Better Coordination
– Planning provides a foundation for the coordination
of a broad range of organizational activities.
– A plan helps to define the responsibilities of
individuals and work groups and helps coordinate
their activities.
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7. Benefits of Planning
• Focus on Forward Thinking
– The planning function forces managers to
think ahead and consider resource needs
and potential opportunities or threats that
the organization may face in the future.
• Participatory Work Environment
– Successful planning requires the participation
of a wide range of organizational members.
This creates a more participatory work
environment.

8. Benefits of Planning
A participatory work environment is good for
two reasons:
The organization
benefits by having
access to a broad
base of experience
and knowledge in
the planning process.
The organization
benefits by having
access to a broad
base of experience
and knowledge in
the planning process.
Organizational
members are more
likely to “buy in” to a
plan that they have
helped develop.
Organizational
members are more
likely to “buy in” to a
plan that they have
helped develop.

9. Benefits of Planning
• More Effective Control System
– An organization’s plan provides a foundation for
control. A plan provides a mechanism for
ensuring that the organization is moving in the
right direction and making progress toward
achieving its goals.

10. Barriers to effective
planning
1.Managers reluctance to establish goals
e.g fear of failure,lack of knowledge,
lack of confidence
2.Employees resistance to change e.g
uncertainty about the cause and effect
of change
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11. Overcoming barriers to planning
• 1.Involve employees in decision
making
• 2.Tolerate a diversity of view
• 3.Encourage strategic thinking
• 4.Communicate the importance of
planning
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12. The cost of planning
• A) Managerial time
• B) Delay in decision making
• Managerial Time
– Done properly, the planning process
requires a substantial amount of
managerial time and energy.
• Delay in Decision Making
– Planning can result in delays in decision
making, which must be weighed against the
importance of speed in response time.
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13. Weighing the Benefits Against the
Costs of Planning
In the final analysis, managers plan because
planning leads to higher performance.
Planning also helps managers cope with the
many complex situations they face.
Contingency planning
Require the development of two or more plans,
each of which is based on a different set of
condition
Contingency planning is impt.in a rapidly
changing environment (hyperchange)

14. Where Does Planning Start?
Top-Down Vs. Bottom-Up
Planning
Top-Down Planning
Planning efforts begin
with the board of
directors and top
executives of the firm.
Bottom-Up Planning
Planning is initiated at
the lowest level in the
organization.

15. Where Does Planning Start?
• Top-Down Planning
– The advantage is that the top managers, who
are the most knowledgeable about the firm as
a whole, drive the development of the plan.
• Bottom-Up Planning
– The primary advantage is that the people
closest to the operating system, customers,
and suppliers drive the development of the
plan.

16. Where Does Planning Start?
• Which Approach is Better - Top-Down or
Bottom-Up?
– Top-down planning works best when success is
dependent upon the ability to make high-level
organizational changes in response to general
threats and pressures.
– A bottom-up approach works best when success is
dependent upon sensitivity to customer needs
and demands.

17. Basic steps in Planning
• Step 1-Establish the goals
• Step 2-Define the present situation
• Step 3-Determine aids and barriers
• Step 4-Develop a set of action
programs
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18. Step 1 Establish the goals
• The importance of goals:
• 1.Provide a sense of direction
• 2.Focus effort
• 3.Guide plans and decisions
• 4.Evaluate progress
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19. Step 2. Define the present
situation
• A) The internal situation e.g
products, promotion, distribution,
manufacturing, etc
• B) The external situation e.g
competition,economic,politic,
technology, culture,etc
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20. Step 3.Identify aids and barriers
• Conduct a “SWOT” analysis--Strength,
weaknesses, opportunities and threats
analysis.
Step 4.Developing action programs
• Develop a detail program specifying what
is to be done, who is responsible ,where,
when and how the tasks will be managed
and coordinated.
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21. Strategic Versus Operational Planning
In general, most organizations engage in
both strategic and operational planning.
Although strategic and operational
planning differ in a number of ways, they
are also interrelated.

22. Strategic versus operational plans
• Strategic planning is a process of
developing a strategic fit between
the firm’s objectives, resources
and its environment.
• Operational plans provide details as to
how the strategic plans will be
accomplished.
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23. Five elements to compare strategic
and operational plans
• 1.Level of conduct :S.P-Top mgt, O.p-Lower
mgt
• 2.Time:S.P-Long term, O.P-Short term
• 3.Regularity: S.P-Continuous and
irregular,O.P-fixed time schedule
• 4.Subjective values :S.P-Greater subjective
values, O.P-Specific
• 5.Nature of the problem :S.P-Unstructured,
O.P-Structured
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24. Levels of strategy
• 1.Corporate level strategy
• 2.Business unit strategy
• 3.Functional level strategy
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25. Strategic Planning
• Strategic Planning
– Is the process by which an organization makes
decisions and takes actions that affect its long-
run performance.
– A strategic plan is the output of the strategic
planning process. Strategic plans define both
the markets in which the firm competes and
the ways in which it competes in those
markets.

26. Strategic Planning
The purpose of strategic planning is
to move the organization from where
it is to where it wants to be.
Today Vision for the Future

27. Strategic Planning
Levels of strategic planning
and their focus:
Corporate Business
Defines how
each of the
firm’s business
units will
operate in its
market arena.
Addresses the
question, “What
business should
we be in?”
Functional
Specifies the
specific activities
necessary to
implement the
firm’s corporate
and business
strategies.

28. Strategic Planning
Levels of strategic planning
and their participants:
Corporate Business Functional
Board of
directors and
top-level
executives
Top-level
executives and
managers within
the business unit
Middle-level
managers and
lower-level
managers

29. Strategic Planning
Levels of strategic planning, the specificity of
their strategies, and their time horizons:
Corporate Business Functional
Broad strategies
5-10 year time
horizon
More specific
strategies than
the corporate
level
1-5 year time
horizon
Very specific
strategies
1-2 year time
horizon

30. Strategic Planning
• Functional Strategic Planning
– Functional strategic planning leads to the
development of functional strategy.
• Functional strategy specifies the operations, R&D,
financial, human resource management, and
marketing activities necessary to implement the
organization’s corporate and business strategies.

31. Strategic Planning
• Customizing the Strategic Planning Process
– In general, a successful planning process must
fit the organization's focus on creating value
for its customers and its shareholders.
– In other words, it must be customized for the
organization based on its specific and unique
needs.

32. Strategic Planning as a Process
Strategy
formulation
Strategy
formulation
Strategy
implementation
Strategy
implementation
Strategic
analysis
Strategic
analysis
Strategic
control
Strategic
control
Feedback

33. Mission statement
• A broad statement specifying the
co.lines of business and what it want
to achieve in the larger environment.
• E.g “To meet the challenges of
tomorrow to become a better bank”
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34. Characteristics of good mission statement
• 1.Market oriented
• 2.Realistic
• 3.Specific
• 4.Distinctive competencies
• 5.Motivating
• 6.Vision
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35. Operational Planning
• Operational Planning
– Focuses on determining the day-to-day activities
that are necessary to achieve the long-term goals
of the organization.
– Operational plans
• Are more specific than strategic plans, address shorter-
term issues, and are formulated by the mid- and lower-
level managers who are responsible for the work
groups in the organization.
• Operational plans can be categorized as standing or
single-use plans.

36. Standing Plans
• Standing Plans
– Are designed to deal with organizational issues
or problems that recur frequently.
– Standing plans include policies, procedures,
and rules:
• Policies - general guidelines that govern how
certain organizational situations will be addressed.
• Procedures - are more specific and are designed to
give explicit instructions on how to complete a
recurring task.
• Rules - provide detailed and specific guidelines for
action.

37. Single-Use Plans
• Single-Use Plans
– Are developed to address a specific
organizational situation.
– Single-use plans include programs, projects,
and budgets:
• Programs - govern a relatively
comprehensive set of activities that are
designed to accomplish a particular set of
goals.
• Projects - direct the efforts of individuals or
work groups toward the achievement of
specific, well-defined objectives.

38. Single-Use Plans
• Single-Use Plans
– Budgets - specify how financial resources
should be allocated.
Management by Objectives
A method for developing individualized plans
which guide the activities of individual
members of an organization.

39. Contingency Planning
Contingency planning requires the
development of two or more plans, each of
which is based on a different set of strategic or
operating conditions that could occur.
When is Contingency Planning Needed?
Contingency planning is necessary in business
environments that change rapidly and in
unpredictable ways.Contingency planning is
useful when a firm’s effectiveness is dependent
on a particular set of business conditions.

40. Barriers to Effective Planning
• Demands on the Manager’s Time
• Ambiguous and Uncertain Operating
Environments
• Resistance to Change

41. Overcoming the Barriers to Planning
• Involve Employees in Decision Making
– Input from all levels of a firm is essential for
successful planning.
• Tolerate a Diversity of Views
– Diverse views lead to a broader assessment of
organizational problems and opportunities.
• Encourage Strategic Thinking
– Effective strategic thinking can be developed
through training and practice.

42. Precursors of Effective Planning
Slide 1 of 2
• Recognize and communicate the
importance of planning in achieving
organizational success.
• Understand and appreciate the relationship
between strategic and operational
planning.
• Involve those responsible for implementing
the plan in the planning process.

43. Precursors of Effective Planning
Slide 2 of 2
• Look to contingency planning as a means of
maintaining flexibility in rapidly changing
business environments.
• Utilize technology to enhance the
effectiveness and efficiency of the planning
process.
• Remove the barrier to planning at the work
group and individual levels.
• Reward those who think strategically and
follow through with operational planning.