1

UNIT -3
PLANNING
Definition
2


According to Harold Koontz and O Donnell Planning
is deciding in advance what is to be done in future.
Plan Bridges the gap between where we are and
where we want to go.
Approaches to Planning
3
Planning decides the objectives, goals, and course of action in advance
and the methods of implementing and achieving the plans. Planning
aims at achieving the goals more economically and accurately. The
some of the approaches of planning are.

Primary Planning

Contribute to objectives

Intellectual Activity

Higher Efficiency (Efficiency is the ratio between input and output)

Flexibility(Planning should proact and react to the environmental
change)

Consistency( Planning should be in consistence with the strengths of
the firm and opportunities provided by external environment)


Types of Plans
4
A strategy is defined as an organizations activities and plans
designed to match organizations objectives with its mission and
to match organizations mission to its environment in an efficient
manner
1) Strategic Plan
Strategic plan is a comprehensive, unified and integrated
plan of total organization.

Strategic plans are formulated and implemented to achieve
strategies.

Normally strategic plans are formulated by top level
management of an organization.

Normally strategic plans cover long-range of time horizons.
5
2) Tactical Plans

Tactical plans are a set of procedures for translating broad
strategic goals and plans into specific plans and goals that are
relevant to distinct portion of the organization.

Tactical plans aim at achieving tactical goals and implement a
particular segment of the companys plan.

Tactical plan provide detailed action based on the strategy for a
particular department.

These plans cover shorter time horizon and middle level managers
mostly deals with these plans



6
3) Operational Plan

Operational plans are normally designed by the lower level
managers based on the tactical plans

Operational plans are course of actions that are to be carried out
day to day activities.

4) Long range Plans

Long range plans normally deals with strategic plans covering 2 to
10 years and above


7
6) Intermediate Term Plans
Intermediate term plans mostly deals with tactical plans normally
covering one to two years.

Intermediate plans focus on a particular aspects of long term plans

7) Short Term Plans
Short Terms Plans covers the time horizon upto one year

Planning in Dynamic Environment
8
The Steps in Planning

1) Being Aware of Strengths and opportunities
2) Establishing the objective and goals
3) Developing the premises
The next is getting acceptance from the employees regarding
planning premises like forecast, policies. Forecast is an
important planning premises which include
What will be the population?
What new market will emerge?
What will be the new product?
What will be the supply of the competitor
What will be the future price?
What will be the salary levels of the employees?
What will be the new trends of the financial market?


9
4) Determining alternative course
5) Evaluate alternative course
6) Selecting course
7) Formulating Derivative plans
8) Budgeting
Organizational Design
10
Organizational design is the process of systematic and logical
grouping of activities, delegation of authority and responsibility
and establishing working relationships that will enable both the
company and employee to realize their mutual objective

Steps in Organizational Design

1) The first step in organizational design is analysis of present and
future circumstances and environmental factors

2) The next step deals organizational analysis which is a base for
organizational design.

3) The organization analysis include an analysis of the following
aspects.
11
1) External Environment (Social, Technical, Economic, International
& Natural)
1) Overall aim and purpose of the enterprise( Survival, growth, Profit
maximization, & Wealth Maximization)
2) Objectives ( Specific aims or targets to be achieved)
3) Activities ( assessment of work being done and what need to be
done if the company is to achieve its objective)
4) Decisions (to be taken across and horizontal and vertical
decisions)
5) Relationships ( from the view point of communication)
6) Organizational Structure (Group of activities, Span of Management
& Management Levels)
7) Job Structure ( Job Design, Job analysis, Job Description, Job
Specification etc)
8) Organization Climate (work atmosphere of the enterprise)
9) Management Style (Laiseez-faire, autocratic, democratic)
10) Human Resource ( Availability of Human Resource)
Organizational Structure
12
Organizational Structure is an established pattern of relationships
among the component parts of an organization.

Formal organization is a group of people working together
cooperatively, under authority towards goals that mutually benefit
the employees and the organization.

Informal Organization can be viewed as a shadow organization. It
rises naturally, spontaneously from the interactions of the people.
13
Vertical / Tall Organization
Top
bottom
Tall organizational structure is one
which has many levels of hierarchy.

In these organizations, there are
usually many managers, and each
manager has a small span of control
they are in charge of only a small group
of people.

Tall structures tend to be more
complicated and complex, and may be
slower to respond to market changes
than organizations where managers
have a larger span of control.
14
Flat / Horizontal Organizational Structure
Approaches to Organizational
Structure
15
1) Entrepreneurial Structure

2) Functional Organizational Structure

3) Product Organizational Structure

4) Geographical Organizational Structure

5) Decentralized Business unit

6) Strategic business unit

7) Matrix Organization

8) Team Structure

9) Virtual Organization


Entrepreneurial Structure
16
Generally the small businesses when they are started consist of
Owner Manager alone or also few employee.

These types of organization do not require an organizational chart
and formal assignment of responsibilities
Owner cum
Manager
Employee
Owner cum
Manager
Manufacturing Manager Marketing Manager
Employee Employee
The business growth results in expansion
of organizational structure both vertically and
horizontal.
The entrepreneurial organizational
structure with expansion is shown below fig.,
Functional Organization Structure
17
Functional Organizational structure is the most widely used
structure.
Each functional department consist of those jobs in which
employees perform similar jobs at different levels.
Managing Director
General Manager
Chief
Production
Manager
Chief
Marketing
Manager
Chief
Finance
Manager
Chief HR
Manager
Chief
Manager
R&D
Production
Manager
Manager
Engineering
Manager
Quality
Control
18
Advantages
Permits centralized control of strategic results
Very well suited for structuring a single business
Promotes in-depth functional expertise
Enhances operating efficiency where tasks are routine and
repetitive
encourages collaborative work
Disadvantages
The horizontal diversification of the business reduces the
efficiency of the functional structure.
The departmental member may see the activities from the narrow
viewpoint of the department rather than the total organization.
Poses problems of functional coordination
Can led to interfunctional rivalry and conflict
Effective only in stable environment
Results in slower response to change


Product Organization
19
Activities are divided on the basis individual products, product
lines, services are grouped into department.
All important functions like Marketing, production, finance, HR are
contained within each department.
Managing
Director
General
Manager
Manager
Bicycles
Manager
Motor Cycles
Manager
Scooters
Manager
Cars
20
Advantages
Appropriate for organization with multiple products
Improves coordination across functions
Move decision close to the problem
Release Managing Directors time
Clarifies Profit/Loss Accountability

Disadvantages
Result in inconsistent decision from one department to another
Results in duplication of equipment and personnel
Encourages dysfunctional competition for resources
Emphasis departmental rather than organizational goal.
Geographical Organization Structure
21
Companies operating in various geographical regions of the
country and / or world, structure their organizations based on
geographical structure

The activities or functions are grouped into departments based on
the activities performed in the geographical area.

Each geographical unit include all functions required to produce
and market the product in a particular geographical area.

Advantages
Product and services are better designed to the climatic and
cultural need of specific geographical area.
A geographical structure allows a firm to respond to the technical
need of different international area
This structure enables a company to adapt to varying legal system
prevalent in the area.
22
Disadvantages
There would be duplication of equipment and facilities
Difficulty in maintaining consistent company image/reputation
from area to area when area managers exercise much strategic
freedom .
Results in inconsistence decisions from one region to another
Emphasis regional rather than company goals
Decentralized Organization
Structure
23
Managing Director
General Manager
Chief Manager
Business
A
Chief Manager
Business
B
Chief Manager
Business
C
Corporate Level Manager
Marketing, Production, Finance, Human Resource and R&D
Marketing
Manager
Finance
Manager
Production
Manager
Manager
HR
Manager
R & D
24
Advantages
Diversification is generally managed by decentralized decision
making and delegating authority and responsibility to a manager at
each business unit.
Each business unit should be managed by an entrepreneurially
oriented and capable general manager who is delegated with
authority to formulate and execute business strategy
Each profit operates as stand alone profit centre

Disadvantages
The major problem of this type of organization structure is
absence of mechanism for coordinating related activities across
business unit.

Strategic Business Unit
25
A single chief executive cannot control a number of decentralized
units of broadly diversified company

The business can be effectively controlled, if the related business
are grouped into a strategic units and an efficient and senior
executive is delegated with authority and responsibility for its
management.

A strategic business unit is a grouping of business subsidiaries
based on some important strategic elements common to each.
26
Managing Director
General Manager
Group Manager
SBU
1
Group Manager
SBU
2
Group Manager
SBU
3
Corporate Level Manager
Marketing, Production, Finance, Human Resource and R&D
Strategically Related
Business Units
Strategically Related
Business Units
Strategically Related
Business Units
27
Advantages
Reduction of the corporate headquarters' span of control
The structure permits better coordination between division with
similar mission, products, market , technology
It helps allocate corporate resources to areas with growth
opportunities.
Business units are organized based on the strategically relevant
method.

Disadvantages
The first disadvantage is that corporate headquarters become
more distinct from the division.
Conflicts between /among the strategic business unit manager for
greater share of corporate resources can be dysfunctional
28
Matrix Organization Structure
Matrix organization structure is a combination of functional and
project organizational structure.

Both the functional and project manager exercise authority over
organizational activities in a matrix structure.

A hierarchy organization is where one person manages direct
reports and those reports manage direct reports in a cascading
responsibility.

Cross functional teams work with shared responsibility for both
projects and traditional tasks.


29
30
Advantages
The company can have the advantages of both project type of
the organizational structure and functional organization structure.
Functional personnel are paid for their service whenever, they
are used by project managers.
This structure is flexible
The lower level functional employees are highly motivated and
satisfied with their jobs as they are involved in decision making.
Each project manager is the in-charge of the unit

Disadvantages
In view of the two forms associated in this structure, they are
characterized by the conflict between the functional manager and
project manager.
Functional employee experience stress by working in matrix
structure
Reporting two bosses create ambiguity and role conflict.
31
Virtual Organization
A virtual organization or company is one whose members
are geographically apart, usually working by computer e-
mail and groupware while appearing to others to be a
single, unified organization with a real physical location.

Characteristics
1) Flexi Work, flexi time, and flexi workplace
2) Part-time work
3) Home based working
4) Dependency on IT
5) Loose organizational boundaries
6) Goal directed
7) Customer centric


32
Organization Culture
J.C Spender defines organization Culture as a belief system
shared by an organizations members.

Factors shaping Organizational Culture

1) Environmental Analysis
2) Business Goal
3) Formulation of Strategy
4) Formulation of strategic values
5) Create New Cultural Values
6) Implement New Cultural Value
7) Achieve Strategic Values
(Strategic Values are the basic belief about an organizations
Environment those shape its strategy. For example adopting the
participative management style to grow at faster rate)