5/10/2012

CHAPTER 2
Planning

Planning defined
The process of outlining the activities that are necessary to

achieve the goals of the organization.

A plan
A blueprint for action that prescribes the activities necessary for

an organization to realize their goals.

Purpose of Planning
The purpose of planning is simple to ensure that the

organization is both effective and efficient in its activities.

5/10/2012

The Importance of Planning

The purpose of planning is simple to ensure that the

organization is both effective and efficient in its activities.

1. 2.

3.
4. 5. 6.

Helps to determine what are companys opportunities Planning enables company to identify the course of action Without planning much will be left out Through plan, resources are efficiently and effectively utilized, resulting in saving resources. When we plan we know what are we really expected and becoming more meaningful. It helps to achieve goals and reduces overlapping activities

The Importance of Planning

Planning can provide effective utilization of available facilities. 8. Planning helps managers to become confident and aggressive leader can cope with all the problems. 9. Planning guides management thinking to future desirable activities and what must be done to attain goals.
7.

5/10/2012

Goals and Controls

Goals
Provide a clear, engaging sense of direction and specify what is

to be accomplished
Control
Monitor the extent to which goals have been achieved and

ensure the organization is moving in the right direction.

Planning as a Linking Mechanism

GOALS

Provide a clear, engaging sense of direction and specify what is to be accomplished

5/10/2012

Planning as a Linking Mechanism

GOALS
Provide a clear, engaging sense of direction and specify what is to be accomplished.

CONTROL
Monitor the extent to which goals have been achieved and ensure the organization is moving in the right direction

Planning as a Linking Mechanism

GOALS CONTROL

PLANS

Relationship among goals , plans and controls

5/10/2012

Benefits of Planning
Better coordination Focus on Forward Thinking Participatory Work Environment More Effective Control System

Where Should Planning Begin?

Top-Down Planning
Planning efforts begin with the board of directors and top executives of the firm.

Planning is initiated at the lowest level in the organization

Bottom-Up Planning

5/10/2012

Advantages of Each Approach

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.

Strategy/ Strategic Planning

A comprehensive plan for accomplishing an organization

goals and objectives. [strategy]

Strategic planning is the process by which an organization makes decisions and takes actions that affect its long-run performance.

5/10/2012

Strategy/ Strategic Planning

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 market. The resulting comprehensive plan that provides overall direction for the organization.

Level of Planning
In general, most organization engage in both :

1. Strategic Planning

2. Operational Planning

5/10/2012

Planning in the Hierarchy of Organizations

Strategic Planning Top Executives Middle-Level Managers Operational First-Level Managers Planning

The Purpose of Strategic Planning

To move the organization from where it is to where it wants to be.

5/10/2012

Levels of Strategic Planning : Planning Focus What business should we Corporate be in?

Business Functional

How do we compete in our existing lines of business? How do we implement our corporate and business strategies

Levels of Strategic Planning : Participants Board of directors and topCorporate level executives

Business Functional

Top-level executives and managers within the business unit Mid-level managers and lower-level managers

5/10/2012

Levels of Strategic Planning : Scope & Time Horizons Broad strategies 5 to 10 Corporate year time horizon

Business Functional

More specific strategies 1 to 5 year time horizon

Very specific strategies 1 to 2 year time horizon

Functional Strategic Planning

Functional strategy specifies activities necessary to

implement the organizations corporate and business strategies

Operations R&D Financial Human resource management Marketing

10

5/10/2012

Mission Statements

A statement of an organizational fundamental purpose

Importance of Mission Statement

1. It sets the strategic direction of an organization

Why we are here and where are we going 2. It provide a foundation for the development of business strategy 3. It determines how well it serves the organizational stakeholders : individuals and group directly affected by an organizational and its accomplishment.

11

5/10/2012

Developing a Mission Statement

Concise and meaningful It must describe the three primary aspect of an organization

Its primary product or services 2. Its primary targets markets 3. Overall strategy for ensuring long term success
1.

It must become a natural part of the organization. Embodied in the minds, habits, attitudes and decisions of everyone in the company everyday.

Types of Organizational / Operational Plan

Critical element in effective planning Aim at achieving goals Narrowly focused, have relative short term and involved

lower level manager Two types of organizational plan :

Single-Use Plan 2. Standing Plans
1.

12

5/10/2012

Types of Organizational / Operational Plan

Single- Use Plan
It is develop to carry out a course of action not likely to be repeated in the future. There are 3 types :
Program 2. Project 3. Budget
1.

Types of Organizational / Operational Plan

Single-Use plan 1. Program
Single-used plan for large set of activities
2. Project Single-used plan for less scope and complexity than program. May be part of broad program OR a self contained singleused plan. 3. Budget Statement of financial resources set aside for a specific activities in a given period of time.

13

5/10/2012

Types of Organizational / Operational Plan

Standing Plan
It is develop for activities that recur regularly over a period of time. There are 3 types :
Policies 2. Standard operating procedure 3. Rules and Regulations
1.

Types of Organizational / Operational Plan

Standing Plan
1.

Policies
Standing plan that specifies the organizations general response to a designated problem OR situation

2.

Standard operating procedure

Standing plan that outlines the steps to be followed in a particular circumstances

3.

Rules and regulations

Standing plan that describe exactly how activities are to be carried out

14

5/10/2012

END OF CHAPTER 2
Write by : Nurfaizah Sahimi

15