Its about Planning in Technology Managent

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Technology Management
Lecture # 5
Planning

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Lecture contents
• Planning
• Strategy formulation
• Strategy formulation tools & techniques
• Decision making
• Steps in decision making

3. (c) Arfan Anjum 3
Planning
What many managersWhat many managers
fail to recognize is thatfail to recognize is that
effective planning is goodeffective planning is good
investment & is lessinvestment & is less
costly to organizationcostly to organization
than no planning at all.than no planning at all.

4. What is the Essence ofWhat is the Essence of
Planning Functions?Planning Functions?
• A set of related steps byA set of related steps by
which managementwhich management
determinesdetermines
– What is to be doneWhat is to be done
– How it will be doneHow it will be done
• A set of related steps byA set of related steps by
which managementwhich management
determinesdetermines
– What is to be doneWhat is to be done
– How it will be doneHow it will be done

5. The Importance of PlanningThe Importance of Planning
Why is Planning SoWhy is Planning So
ImportantImportant??
Why is Planning SoWhy is Planning So
ImportantImportant??
ToTo
coordinatecoordinate
effortsefforts
ToTo
coordinatecoordinate
effortsefforts
To prepareTo prepare
for changefor change
To prepareTo prepare
for changefor change
ToTo
developdevelop
managersmanagers
ToTo
developdevelop
managersmanagers
To developTo develop
performanceperformance
standardsstandards
To developTo develop
performanceperformance
standardsstandards

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Nature & Importance of Managerial PlanningNature & Importance of Managerial Planning
• Who should be involved in planning in anWho should be involved in planning in an
organization?organization?
• All managers must plan.All managers must plan.
• Planning is an intellectual activity & aPlanning is an intellectual activity & a
major component of managerial task.major component of managerial task.

7. PlanningPlanning
• So where do we start?So where do we start?
• By DefiningBy Defining
– Organizational objectives or goalsOrganizational objectives or goals
• Then what?Then what?
– Establish overall strategy for achievingEstablish overall strategy for achieving
these goals.these goals. And then what?And then what?
– Develop a comprehensive hierarchy ofDevelop a comprehensive hierarchy of
plans to integrate & coordinateplans to integrate & coordinate
activitiesactivities
• So where do we start?So where do we start?
• By DefiningBy Defining
– Organizational objectives or goalsOrganizational objectives or goals
• Then what?Then what?
– Establish overall strategy for achievingEstablish overall strategy for achieving
these goals.these goals. And then what?And then what?
– Develop a comprehensive hierarchy ofDevelop a comprehensive hierarchy of
plans to integrate & coordinateplans to integrate & coordinate
activitiesactivities

8. What is the Focus of Planning?What is the Focus of Planning?
• PlanningPlanning focuses on future,focuses on future, ““What”What” is to beis to be
accomplished andaccomplished and “How”“How”??
• What means:What means:
– Objectives for futureObjectives for future
• How means:How means:
– Appropriate means & strategies for achievingAppropriate means & strategies for achieving
these objectives.these objectives.

9. OutcomeOutcome
• Outcome of planning function is aOutcome of planning function is a
planplan, which is, which is
• A written document that specifiesA written document that specifies
courses of action that the firm willcourses of action that the firm will
take with available resourcestake with available resources

10. Levels of Plans
•Standing PlansStanding Plans that provide ongoing guidance forthat provide ongoing guidance for
performing recurring activitiesperforming recurring activities
•PolicyPolicy A general guide that specifies that broadA general guide that specifies that broad
parameters within which organization members areparameters within which organization members are
expected to operate in pursuit of organizational goals.expected to operate in pursuit of organizational goals.
•““Service”Service” A document specifying the behaviors thatA document specifying the behaviors that
will maintain the gold standard of service, for instance,will maintain the gold standard of service, for instance,
employees are urged to maintain positive eye contactemployees are urged to maintain positive eye contact
and use the proper vocabulary with guests (e.g., “Goodand use the proper vocabulary with guests (e.g., “Good
Morning,” “Certainly, ‘l”ll be happy to, “ and “MyMorning,” “Certainly, ‘l”ll be happy to, “ and “My
pleasure”)pleasure”)

11. Levels of PlansLevels of Plans
•ProcedureProcedure A prescribed series of related steps to beA prescribed series of related steps to be
taken under certain recurring circumstances. Well-establishedtaken under certain recurring circumstances. Well-established
and formalized procedures are often called standard operatingand formalized procedures are often called standard operating
procedures (SOPs).procedures (SOPs).
•RuleRule A statement that spells out specific actions to be takenA statement that spells out specific actions to be taken
or not taken in a given situationor not taken in a given situation

12. Issues in PlanningIssues in Planning
1.1. Being aware of OpportunitiesBeing aware of Opportunities
2.2. Establishing ObjectivesEstablishing Objectives
3.3. Determining Alternative CoursesDetermining Alternative Courses
4.4. Evaluating Alternative CoursesEvaluating Alternative Courses
5.5. Selecting a Course of actionSelecting a Course of action
6.6. Formulating Derivative PlansFormulating Derivative Plans
7.7. Numberizing Plans By BudgetingNumberizing Plans By Budgeting
1.1. Being aware of OpportunitiesBeing aware of Opportunities
2.2. Establishing ObjectivesEstablishing Objectives
3.3. Determining Alternative CoursesDetermining Alternative Courses
4.4. Evaluating Alternative CoursesEvaluating Alternative Courses
5.5. Selecting a Course of actionSelecting a Course of action
6.6. Formulating Derivative PlansFormulating Derivative Plans
7.7. Numberizing Plans By BudgetingNumberizing Plans By Budgeting

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Major components of planning
• Some use the term “goal” interchangeably with
“objective”. Others consider “goal” to be a broader
term, encompassing a longer term horizon, and
use “objective” to refer to more narrow targets and
shorter time frames.
• We will use both the terms interchangeably for the
sake of simplicity.

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Major components of planning
• Whereas a goal is a future end result that an
organization wants to achieve, a plan, normally a
written document, is the means devised for
attempting to reach a goal
• Essentially, the planning process builds on the
mission of the organization, the organization’s
purpose or fundamental reason for existence.

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Components of planning
• A Mission Statement is broad declaration
of the basic, unique purpose and scope of
operations that distinguish the
organization from others of its type.

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THE OVERALL PLANNING
PROCESS
MissionMission GoalsGoals PlansPlans
Goal Attainment
(organizational
Efficiency &
Effectiveness)
Goal Attainment
(organizational
Efficiency &
Effectiveness)

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Planning stages
• Strategic planning
• Strategy formulation
• Strategy formulation tools & techniques
• Swot analysis
• Decision making

18. Strategic- Planning
• It involves decisions made by top
management.
• Involves ultimate allocation of large
amounts of resources such as money, labor,
or physical capacity.
• Has significant long term impact.
• Focuses on organization’s interaction with
external environment.

19. Strategic Planning
• Strategic planning includes
those activities that involves
defining an organization’s
mission, setting its objectives,
& developing strategies to
enable it to operate successfully
in its environment.

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Linking present & future with
strategic plan
StrategicStrategic
planplanPresentPresent FutureFuture

21. Strategic Planning
Strategic
Planning
Making decisions about the
long-term goals and
strategies of an organization
Strategic Goals
Major targets or end results that relate to the long-
term survival, value, and growth of the
organization
Strategy
A pattern of actions and resource allocations designed to achieve
the goals of the organization

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ANALYZING COMPETITIVE
ADVANTAGE
• Strategic Planning is concerned with the development
and implementation of means by which firms can
achieve superior long-run financial performance.
• Firms achieve such returns either by making
themselves more attractive to customers or by
producing at lower cost while not making themselves
less attractive to customers – this process is described
as a search for competitive advantage.

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ANALYZING COMPETITIVE
ADVANTAGE
Elements of Competitive Advantage
Sources of Advantage
•Superior skills
•Superior Resources
Performance Outcomes
•Satisfaction
•Loyalty
•Market share
•Profitability
Potential Advantages
•Superior customer value
•Lower relative costs
Investment of Profits
to Sustain Advantage

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SWOT ANALYSIS
Strengths
Weaknesses
Opportunities
Threats
COMPETITIVE
ADVANTAGE

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• Environmental Scanning & SWOT Analysis -
assess the firm’s external and internal environments to
identify strengths, weaknesses, opportunities and threats.
• One technique for assessing a firm’s strengths and
weaknesses is the value chain - which is a breakdown of
the firm into its important activities - production,
marketing, human resource management, and the like - to
enable corporate strategists to identify the firm’s
competitive advantages and disadvantages.
ENVIRONMENTAL SCANNING
AND SWOT ANALYSIS

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• The assessment of firm’s strengths and
weaknesses is essentially a two-stage process;
– In the first stage, we ask for what dimensions does a
firm need to assess its strengths and weaknesses?
– The second stage involves the application of
measurement approaches to those dimensions identified
as “critical” in the first stage.

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• Research and Development (Innovation).
– Technical Resources
• Technological ability, patents
– Key People
– Financial Resources
• Internally generated
• Outsourced and Government supplied

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• Production (Manufacturing).
– Cost Structure
• Experience
• Process
• Efficiency
• Access to raw material
– Product Quality
– Flexibility
– Workforce skills, attitudes and motivation
– Capacity

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• Finance
– Access to Capital
• From operations,
• From parent and
• From net short-term assets
– Ability to use both Debt and Equity
• Organization (Management).
– Organizational Structure
– Key People
• Loyalty

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• Organization (Management).
– Quality of Planning Process
– Knowledge of Business
– Speed of Response
– Culture

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• Marketing Skills
– Customer Orientation
– New Product Development
– Marketing Research
– Reputation
• Brand name
• Quality
– Advertising
– Sales Force
– Customer Service
– Product Line Breadth

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• Relations with External Entities
– Customer Loyalty
– Retailers
– Distributors
– Banks
– Political Figures

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• The number of dimensions on which relative strengths
and weaknesses could potentially be assessed is as large as
the number of ways on which firms can differ.
• Does a firm need to be superior to its competitors on all
(or even most) of these dimensions to gain competitive
advantage? Clearly the answer is no.
• Firms with different competitive advantages coexist in a
variety of industries.

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DIMENSIONS FOR ASSESSING
STRENGTHS AND WEAKNESSES
• A single dimension of superiority, however, may not be
quite enough. Studies have found that firms tend to
exercise between four and five dimensions of competitive
advantage.
• Critical or key success factors have been described as the
handful of skills and resources that will exert the most
leverage on positional advantage and performance
outcomes. These must be managed obsessively to ensure
success. Poor performance on these factors will almost
certainly mean failure.

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Planning tools &techniques
• Many tools & techniques can be used at all
planning stages. Some of these are
– Value analysis
– Market analysis
– Gap analysis
– Financial analysis
– Group decision making

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Value analysis
• Driving forces in the business are itemized and
analyzed.
• Activities that add value, such as manufacturing,
R&D, marketing etc needs to be analyzed and
identified.
• Customer satisfaction is highest on the list of
value analysis.
• Customer satisfaction surveys conducted on the
behalf of the company by an independent
organization.
• Critical success factors should be identified and
high performance should be given in those areas.

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Market analysis
• Analysis of many different markets-related
factors that affect the products and services
provided by the organizations.
• The aim is to identify market niches and
new opportunities.
• Key is Competitor analysis it should be
broken into many areas.
• Another factor is competitive advantages.

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Market analysis
• Analysis areas are
• Finance & control
• Manufacturing
• Processes
• Alliances
• Marketing aspects
• Customer relationships
• Supplier relationships
• Sales & distribution
• Another key market analysis is benchmarking
• It will high light the strengths and weaknesses and
the way to improve.

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Gap analysis
• Technique for identifying the difference between
the aims of the organization and expected results.
• The difference between aims and expected results
is the gap which organization needs to fulfill.
• The aims are future plans and expected results are
outcome based on the current plans.
• Gap analysis can be done in many areas. Profits,
technological advancements, customer
satisfactions etc.
• Gap analysis deals with corporate aims, expected
results, size of gap, method of filling the gap.

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Financial analysis
• Several tools exists for financial analysis.
• Rate of return, payback period assessment,
profitability, balance sheets internal & external
audits.
• Enables company to determine its financial
position.
• Company can review its Budgeting, funding, and
can improve its cost control by using financial
analysis.

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Group decision making
• Decision making by a group is often more
effective than by individuals.
• Different points of view are developed,
debated, analyzed, refined and finally
accepted by the group.
• This technique take up considerable
organizational resources and requires
participants with good analytical skills.

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Plan implementation
• Final steps in strategy formulation are to define actions,
allocate these within the organization and measure results.
• Various goals set in strategic planning can be considered
to be long term, medium term and short term.
• Long term goals are few and are of general nature. For
example increasing market share by 5%.
• Medium term goals are more than long term but less than
short term goals, for example the goal to develop two new
products to increase the market share by 5%.
• Short term goals are more specific and cover actions like
define product to meet market requirements, agree
budgets, prepare manufacturing plans, select technologies
to use.

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Plan implementation
• Plan needs to be communicated to all levels within the
organization.
• In the form that is meaning full to each level, showing
their relevance and contribution towards it.
• Management by objectives MBO is effective
technique for this.
• All strategic plans should have high elements of
change, efforts are needed that the change should be
accepted by all levels.
• If the staff is involved in the decision making process
than there will be less resistance in accepting the
change.

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MBO
• Established technique for implementation of company’s
plans.
• It ensures that management at all levels is committed to
same goals. The steps are,
• Org goals are set by the executives with involvement of
others within the org.
• Objectives are agreed for all levels within the org, all the
levels set their objectives to meet the main objective.
• Progress is monitored against each objective, necessary
changes are made if required.
• Individuals are appraised against their objectives and
feedback provided.
• Reward is usually associated with attainment of the
objective.

45. Steps in the MBO
1. Develop overall organizational goals
2. Establish specific goals for various dept,
subunits, and individuals
3. Formulate action plans
4. Implement plans and maintain self-control
5. Review progress periodically
6. Appraise performance