for entrep students

1. Planning & Types of PlansPlanning & Types of Plans

2. L E A R N I N G O U T L I N EL E A R N I N G O U T L I N E
Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.
What Is Planning?What Is Planning?
• Define planning.Define planning.
• Types (Levels) of PlanningTypes (Levels) of Planning
• Strategic PlanningStrategic Planning
• Intermediate PlanningIntermediate Planning
• Operational PlanningOperational Planning
• Planning Process/ ProcedurePlanning Process/ Procedure
• Barriers to Effective PlanningBarriers to Effective Planning
• Planning PremisesPlanning Premises
• ForecastingForecasting
• Key to PlanningKey to Planning

3. What Is Planning?What Is Planning?
• PlanningPlanning
 Planning is the primary function of management.Planning is the primary function of management.
 It focuses on the future course of action.It focuses on the future course of action.
 A primary managerial activity that specifies the objectivesA primary managerial activity that specifies the objectives
to be achieved in future and selects the alternative courseto be achieved in future and selects the alternative course
of action to reach defined objectives. Thus, it involves:of action to reach defined objectives. Thus, it involves:
 Defining the organization’s goalsDefining the organization’s goals
 Establishing an overall strategy for achieving those goalsEstablishing an overall strategy for achieving those goals
 Developing plans for organizational work activities.Developing plans for organizational work activities.

4. What Is Planning?What Is Planning?
•““Determination of future course of actions in advance”Determination of future course of actions in advance”
•It is the blue print of action and operation.It is the blue print of action and operation.
•Planning is intellectual process which is concerned withPlanning is intellectual process which is concerned with
deciding in advance what, when, why, how, and who shalldeciding in advance what, when, why, how, and who shall
do the work.do the work.

5. Definitions:Definitions:
• ““Generally speaking, planning is deciding in advance what isGenerally speaking, planning is deciding in advance what is
to be doneto be done””
-W H Newman-W H Newman
•““Planning is deciding in advance what to do, how to do, whenPlanning is deciding in advance what to do, how to do, when
to do and who is to do it. Planning bridges a gap between fromto do and who is to do it. Planning bridges a gap between from
where we are to where we want to go”where we are to where we want to go”
-Harold, Koontz and O’Donnel-Harold, Koontz and O’Donnel
•““Planning is that function of manner in which he decides inPlanning is that function of manner in which he decides in
advance what he will do. It is a decision making process of aadvance what he will do. It is a decision making process of a
special kind, its essence is futurity.”special kind, its essence is futurity.”
-Hayness and Massie-Hayness and Massie

6. Why Do Managers Plan?Why Do Managers Plan?
• Purposes of PlanningPurposes of Planning
 Provides directionProvides direction
 Reduces uncertaintyReduces uncertainty
 Minimizes waste and redundancyMinimizes waste and redundancy
 Sets the standards for controllingSets the standards for controlling
• Benefits of planningBenefits of planning
 Goal FocusGoal Focus
 Minimize UncertaintyMinimize Uncertainty
 Improve efficiencyImprove efficiency
 Facilitates to ControlFacilitates to Control
 Innovation and CreativityInnovation and Creativity
 Better CoordinationBetter Coordination
 Ensures CommitmentEnsures Commitment
 Aid to Business SuccessAid to Business Success
 Brings SystematizationBrings Systematization
REDUNDANCY<===> अतितिरिरिक्ततिरा

7. How Do Managers Plan?How Do Managers Plan?
• Elements of PlanningElements of Planning
 Goals (also Objectives)Goals (also Objectives)
 Desired outcomes for individuals, groups, or entireDesired outcomes for individuals, groups, or entire
organizationsorganizations
 Provide direction and evaluation performance criteriaProvide direction and evaluation performance criteria
 PlansPlans
 Documents that outline how goals are to be accomplishedDocuments that outline how goals are to be accomplished
 Describe how resources are to be allocated and establishDescribe how resources are to be allocated and establish
activity schedulesactivity schedules

8. Types of PlansTypes of Plans

9. Types of PlansTypes of Plans
• Strategic PlansStrategic Plans
 Apply to the entire organization.Apply to the entire organization.
 Establish the organization’s overall goals.Establish the organization’s overall goals.
 Seek to position the organization in terms of itsSeek to position the organization in terms of its
environment.environment.
 Cover extended periods of time.Cover extended periods of time.
• Operational PlansOperational Plans
 Specify the details of how the overall goals are to beSpecify the details of how the overall goals are to be
achieved.achieved.
 Cover short time period.Cover short time period.

10. Types of Plans (cont’d)Types of Plans (cont’d)
• Long-Term PlansLong-Term Plans
 Plans with time frames extending beyond three yearsPlans with time frames extending beyond three years
• Short-Term PlansShort-Term Plans
 Plans with time frames on one year or lessPlans with time frames on one year or less
• Specific PlansSpecific Plans
 Plans that are clearly defined and leave no room forPlans that are clearly defined and leave no room for
interpretationinterpretation
• Directional PlansDirectional Plans
 Flexible plans that set out general guidelines, provideFlexible plans that set out general guidelines, provide
focus, yet allow discretion in implementation.focus, yet allow discretion in implementation.
DISCRETION<===> िविचारशीलता

11. Exhibit 7–3Exhibit 7–3 Specific Versus Directional PlansSpecific Versus Directional Plans

12. Types of Plans (cont’d)Types of Plans (cont’d)
• Single-Use PlanSingle-Use Plan
 A one-time plan specifically designed to meet theA one-time plan specifically designed to meet the
need of a unique situation.need of a unique situation.
• Standing PlansStanding Plans
 Ongoing plans that provide guidance for activitiesOngoing plans that provide guidance for activities
performed repeatedly.performed repeatedly.

13. Establishing Goals and Developing PlansEstablishing Goals and Developing Plans
• Traditional Goal SettingTraditional Goal Setting
 Broad goals are set at the top of the organization.Broad goals are set at the top of the organization.
 Goals are then broken into sub-goals for eachGoals are then broken into sub-goals for each
organizational level.organizational level.
 Assumes that top management knows best becauseAssumes that top management knows best because
they can see the “big picture.”they can see the “big picture.”
 Goals are intended to direct, guide, and constrain fromGoals are intended to direct, guide, and constrain from
above.above.
 Goals lose clarity and focus as lower-level managersGoals lose clarity and focus as lower-level managers
attempt to interpret and define the goals for their areasattempt to interpret and define the goals for their areas
of responsibility.of responsibility.

14. Exhibit 7–4Exhibit 7–4 The Downside of Traditional Goal SettingThe Downside of Traditional Goal Setting

15. Exhibit 7–7Exhibit 7–7 Planning in the Hierarchy of OrganizationsPlanning in the Hierarchy of Organizations

16. Contemporary Issues in PlanningContemporary Issues in Planning
• Criticisms of PlanningCriticisms of Planning
 Planning may create rigidity.Planning may create rigidity.
 Plans cannot be developed for dynamicPlans cannot be developed for dynamic
environments.environments.
 Formal plans cannot replace intuition and creativity.Formal plans cannot replace intuition and creativity.
 Planning focuses managers’ attention on today’sPlanning focuses managers’ attention on today’s
competition not tomorrow’s survival.competition not tomorrow’s survival.
 Formal planning reinforces today’s success, whichFormal planning reinforces today’s success, which
may lead to tomorrow’s failure.may lead to tomorrow’s failure.

17. Establish objectives
Develop Strategies
Determination of
premises
Determination of
alternatives
Evaluation of
alternatives
Selecting a course
of action
Formulation of
derivative plans
Implantation of
plans
Reviewing the
planning process
How does a manager Plan?
Planning Process:

18. Analyze OpportunitiesAnalyze Opportunities
• Not a step of Planning, It is pre-step of planning.Not a step of Planning, It is pre-step of planning.
• Essential to make a successful plan.Essential to make a successful plan.
• SWOT analysisSWOT analysis
Setting objectivesSetting objectives
• First and real starting point of planning.First and real starting point of planning.
• Management has to define objectives in clear manner byManagement has to define objectives in clear manner by
considering organizational resources and opportunitiesconsidering organizational resources and opportunities
because abecause a minor mistake in setting objectives mightminor mistake in setting objectives might
affect in implementation of plan.affect in implementation of plan.
• Objectives must be specific, clear and practical.Objectives must be specific, clear and practical.
• They should be time bound and expressed in numericalThey should be time bound and expressed in numerical
terms.terms.

19. Determination of premisesDetermination of premises
• Premises are the assumptions about the future in which thePremises are the assumptions about the future in which the
planning is implemented.planning is implemented.
• They provide environment and boundaries for theThey provide environment and boundaries for the
implementation of plan in practical operation.implementation of plan in practical operation.
• These premises may be tangible and intangible and external.These premises may be tangible and intangible and external.
(a)(a) Tangible and intangible:Tangible and intangible: Tangible premises involveTangible premises involve
capital investment, unit of production, units sold, cost per unit,capital investment, unit of production, units sold, cost per unit,
time available etc. Similarly, intangible premises involvetime available etc. Similarly, intangible premises involve
employees moral, goodwill, motivation, managerial attitude,employees moral, goodwill, motivation, managerial attitude,
etc.etc.
(b)(b) IInternal and external:nternal and external: Internal premises involveInternal premises involve
money, materials, machines and managements. In the similarmoney, materials, machines and managements. In the similar
manner, external factors involve competitors strategy,manner, external factors involve competitors strategy,
technological change, government policy, social and culturaltechnological change, government policy, social and cultural
beliefs etc.beliefs etc.

20. Determination of alternativesDetermination of alternatives
• It is essential to identify all the possible hiddenIt is essential to identify all the possible hidden
alternatives. The information about alternativealternatives. The information about alternative
courses of action may be obtained from primarycourses of action may be obtained from primary
and secondary sources. There must be searchand secondary sources. There must be search
for the best alternative. The management mustfor the best alternative. The management must
develop alternatives through the support ofdevelop alternatives through the support of
experienced and intellectual experts inexperienced and intellectual experts in
management sectors.management sectors.

21. Evaluation of alternativesEvaluation of alternatives
• Evaluate the alternatives from their expectedEvaluate the alternatives from their expected
cost and benefits. This is the logical step tocost and benefits. This is the logical step to
evaluate each alternative from its plus andevaluate each alternative from its plus and
minus points.minus points.
• Each alternative is studied and evaluated inEach alternative is studied and evaluated in
terms of some common factors such as risk,terms of some common factors such as risk,
responsibility, planning premises, resources,responsibility, planning premises, resources,
technology etc.technology etc.
Selecting a course of actionSelecting a course of action

22. Formulation of derivative plans:Formulation of derivative plans:
• It is essential to formulate action or derivativeIt is essential to formulate action or derivative
plans for each step of work and to allplans for each step of work and to all
departments of the organization. These actiondepartments of the organization. These action
plans involve formulation of policies, rules,plans involve formulation of policies, rules,
schedule and budget to complete definedschedule and budget to complete defined
objectives. Thus, formulation of derivative plansobjectives. Thus, formulation of derivative plans
is an essential step in planning process. It isis an essential step in planning process. It is
difficult to implement main plan withoutdifficult to implement main plan without
formulation of derivative plan.formulation of derivative plan.

23. Implantation of plansImplantation of plans
• Without this step, other this procedure of plan will remainWithout this step, other this procedure of plan will remain
as paper work.as paper work.
• This step brings all the procedure of plan into action.This step brings all the procedure of plan into action.
• For implementation plan, management has to take someFor implementation plan, management has to take some
steps such as to communicate with subordinates whosteps such as to communicate with subordinates who
initiate to plan into action; provide necessary instructioninitiate to plan into action; provide necessary instruction
and guidance; make arrangement of all resources likeand guidance; make arrangement of all resources like
materials, machines, money, equipments etc; makematerials, machines, money, equipments etc; make
timely supervision and control over subordinates.timely supervision and control over subordinates.
Reviewing the planning processReviewing the planning process

24. Terms to KnowTerms to Know
• PlanningPlanning
• GoalsGoals
• PlansPlans
• Stated goalsStated goals
• Real goalsReal goals
• FramingFraming
• Strategic plansStrategic plans
• Operational plansOperational plans
• Long-term plansLong-term plans
• Short-term plansShort-term plans
• Specific plansSpecific plans
• Directional plansDirectional plans
• Single-use planSingle-use plan
• Standing plansStanding plans
• Traditional goal settingTraditional goal setting
• Means-ends chainMeans-ends chain
• MissionMission
• Formal planningFormal planning
departmentdepartment

25. 25
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