MGMT module 2 planning

Planning

Management Foundation Planning

Quotable Quotes

A plan is a list of actions arranged in whatever sequence is thought likely to achieve an objective.

- John Argenti, author and founder of the Strategic Planning Society

When a planner speaks of implementing goals rationally, he implies that it is possible to demonstrate logically and experimentally the relationship between the proposed means ad the ends they are intended to further.

- Alan A. Altshuler, planner, The City Planning Process


Planning

Plan A scheme, program, or method worked out

beforehand for the accomplishment of an objective

Planning To formulate a scheme or program for the

accomplishment, enactment, or attainment of the plan

-Wikipedia


Why Plan?

To establish business milestones. You become less reactive, more proactive You gain a competitive advantage

better understand your competitors and customers

Attract investors Uncover new

opportunitiesYou address critical issues

You promote ownership You build your team You provide clear targets You provide the reasons why You create a key management tool You create a key communications tool You show others how serious you are about your organizational goals


Types of Plans

Purpose / MissionObjectives / GoalsStrategies PoliciesProceduresRulesProgramsBudgets

Vision vs. Mission


Source: http://www.diffen.com/difference/Mission_Statement_vs_Vision_Statement


Mission

Identifies the basic function or task of an organization.What is the basic purpose of any business?

A restaurant A state highway department Courts of law University Oil Company Hallmark


Some Mission StatementsAmazon’s vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.

Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings

Facebook’s mission is to give people the power to share and make the world more open and connected.

University: To develop all round Personality of students by making them not just excellent professionals but also good individuals with understanding and regard for Human values, Pride in their heritage and culture, a sense of right and wrong, and a yearning for perfection.


Objectives

Used interchangeably with goalsThe end result towards which activity is aimedRepresent the end point of the planning process…Managerial functions of organizing, staffing, leading and controlling lead to achievement of goals!


Strategies

Determination of the long-term objectives and allocation of resources necessary to achieve these goals.


Policies

General statements or understandings that guide or channel thinking in decision making.Generally implied from the actions of managersPolicy in relation with objectives?Examples:

Production firm – University Marketing department…


Procedures

Plans that establish a required method of handling future activitiesChronological sequence of actions required.May cut across department lines


Rules

Spell out specific required actions / non-actions, allowing no discretion.Eg: “No smoking” rule!!Rules vs Policies?Are rules in an organization always designed within the organization?Apple Inc???


Programs

Programs are a complex of goals, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry pout a given action.Supported by budgets.


Budgets

Budget is a statement of expected results expressed in numeric terms.A numerized program.Budgets…a control device?


Organizational Goals

Goals are statements that establish the desired future an organization is attempting to achieve.Purposes of goals

Guidance: unified direction for members in an organization

Legitimacy: reasons for organization’s existence Planning Motivation Standards: provide a set of standards against

which the organization’s performance can be measured.


MissionStatement of fundamental unique purpose that sets a business apart from other firms; identifies the scope of

business operations in product and market terms

Strategic GoalsGoals set by top management of the organization…focus on

broad general issues

Tactical GoalsSet by and for middle management…focus on how to

operationalize actions necessary to achieve the strategic goals.

Operational GoalsSet by and for the lower level management…concerned

with short term issues associated with tactical goals.

Kinds of Goals in an Organization


MissionOperate as a chain of restaurants that will prepare and serve high quality food on a timely basis and at reasonable prices.

Strategic Goals: President and CEO1. Provide 14% return to investors for atleast 10 years2. Start or purchase new restaurant chain within 5 years3. Negotiate new labour contract this year

Tactical Goals: VP-Marketing1. Increase per store sales 5% per year for 10 years2. Target and attract two new market segments during the next

5 years3. Develop a new promotional strategy for next year

Operational Goals: Restaurant Manager1. Implement employee incentive system within one year2. Decrease waste by 5% this year3. Hire and train new assistant manager

Goals for a Regional Fast-food Chain


Coca Cola Ltd.Our Mission

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.

To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference.

Our Vision Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth.

People: Be a great place to work where people are inspired to be the best they can be.Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.Productivity: Be a highly effective, lean and fast-moving organization.


Group Task

Decide upon the business you would set up

Restaurant chain Search engine Computer hardware company….

Work out for this business Vision Mission Goals Strategies Policies Rules

The Planning Process


The Planning Cycle


Step 1: Being Aware of an Opportunity

In light of The Market Competition What customers want Strengths Weaknesses

Setting realistic objectives depends on awareness

Tool UsedSWOT Analysis


What is SWOT?

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective.

Internal Factors: strengths and weaknesses External Factors: opportunities and threats

Example of a Small Consultancy firm

Strengths Weaknesses Opportunities ThreatsReputation in

marketplace

Expertise at partner

level in HR consultancy

Shortage of consultants at operating level rather than partner level

Unable to deal with multi-disciplinary assignments because of size or lack of ability

a well defined market niche

Identified market for consultancy in areas other than HRM

Large consultancies operating at a minor level

Other small consultancies looking to invade the marketplace


Step 2: Establishing Objectives

Setting up objectives for the entire organization and each subordinate unitObjectives give direction to major plansAddress the questions Where we want to be? What we want to accomplish? When we want to?


Step 3: Developing premises

Utilize critical devices such as forecasts, applicable basic policies and existing company plans.It deals with identifying in what environment- internal or external – will our plans operate.Principle of planning premises:

The more thoroughly individuals charged with planning understand and agree to utilize consistent planning premises, the more coordinated enterprise planning will be.


Step 4: Determining Alternative Courses

What are the most attractive alternatives to achieve the objectives.Reducing the no. of alternatives


Step 5: Evaluating Alternative Courses

Weigh strengths and weaknesses of the alternativesEvaluate them in light of the premises and goals.Eg of Techniques used Cost-Benefit Analysis Cash Flow Forecasts etc.


Step 6: Selecting a Course

Selecting the course of action to be followedPlan is adopted: this is the real point of decision making.


Step 7: Formulating Derivative Plans

These are required to support the basic plan.Example Plans to buy equipment Plans to buy material Hire and train workers Develop a new product


Step 8: Numberizing Plans by Budgeting

Plans become meaningful only once they have certain budgets attached to them.Budgets usually represent the sum total of income and expenses, with resultant profit or surplus Eg:

Sales volume Operating expenses Expenditure on capital equipment


Objectives revisited

The ends towards which organizational and individual activities are directed.Overall objectives need to be supported by sub-objectivesObjectives are hierarchical in nature


Relationship of Objectives and Organizational Hierarchy

Top down or Bottoms up?


Steps involved in MBO

1. Determine the major activities necessary to accomplish the objective.

2. Establish sub activities necessary for accomplishing the major activities.

3. Assign primary responsibility for each activity and sub activity.

4. Estimate time requirements necessary to complete each activity and sub activity.

5. Identify additional resources required for each activity and sub activity.


Management by Objectives

MBO is a comprehensive management system that integrates many key managerial

activities in a systematic manner and that is consciously directed towards

the efficient and effective achievement of organizational and individual objectives.


Five Steps in MBO


And threats


Advantages of MBO

1. Motivation.2. Better communication and coordination clarity of

goals3. Subordinates tend to have a higher commitment to

objectives they set for themselves than those imposed on them by another person.

4. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.

5. Development of effective controls, measuring results, leading to corrective actions


Limitations of MBO

It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.It underemphasizes the importance of the environment or context in which the goals are set.Emphasis on short-term goals at the expense of the longer range health of the organization.Trait appraisal only looks at what employees should be, not at what they should do.


Tools used for strategic planning

SWOTPorter’s diamondTOWS MatrixBusiness Portfolio Matrix (BCG Matrix)


TOWS matrix


BCG Matrix

Plot on the BCG Matrix

cash cows:cash cows:Surf excel PondsLipton Close upBlue band Lifebuoy soap RexonaKnorrSTAR:

LuxSunsilkWall’sFair & lovely


QUESTION MARK:Clear shampooRinComfort

DOG:WheelSupreme teaLifebuoy shampoo


Premising and Forecasting

Planning premises Anticipated environment in which

plans are expected to operate. Include assumptions / forecasts of the

future and known conditions that will affect the operations of plans.

Is forecast a prerequisite to planning or a result of planning?


What is forecasting?

Forecasting is the process of making statements about events whose actual outcomes have not yet been observed.Techniques Qualitative Techniques Quantitative Techniques

Last period demandArithmetic AverageSimple Moving Average (N-Period)Weighted Moving Average (N-period)Simple Exponential SmoothingMultiplicative Seasonal Indexes

Assumptions for Forecasting

The past will repeat itselfAs the forecast horizon shortens, forecast accuracy increases.Forecasting in the aggregate is more accurate than forecasting individual items. Forecasts are seldom accurate. Furthermore, forecasts are almost never totally accurate

Therefore, it is wise to offer a forecast "range.”


Characteristics of a Good Forecast- by William J. Stevenson

Accurate—some degree of accuracy should be determined and stated so that comparison can be made to alternative forecasts.Reliable—the forecast method should consistently provide a good forecast if the user is to establish some degree of confidence.Timely—a certain amount of time is needed to respond to the forecast so the forecasting horizon must allow for the time necessary to make changes.Easy to use and understand.Cost-effective



The Delphi Technique

belongs to the subjective-intuitive methods of foresightBased on the 'principle of the oracle' as a 'non-falsifiable prediction', a statement that does not have the property of being 'true‘ or 'false'.

STEP 1: Panel of experts (insiders / outsiders) STEP 2: Forecasts made by individuals (anonymous) STEP 3: Compilation and results given back to panel STEP 4: With this premise, further forecasts are made STEP 5: Process repeated several times STEP 6: As results converge, results are then used as

an acceptable forecast.


Decision Making

Selection of a course of action from among alternatives.

Assumption of rationality Bounded rationality

Principle of the limiting factor A limiting factor is one that stands in the

way of accomplishment of the desired goal. By recognizing and overcoming the limiting

factor, the best alternative course of action can be achieved.


Evaluating Alternatives

Quantitative and qualitative factors Eg: Cost Effectiveness Analysis


Selecting an Alternative

ExperienceExperimentationResearch and Analysis


Decisions

Programmed decisions Applied to structured or routine problems.

Non-programmed decisions For unstructured, novel and ill-defined

situations of a non-recurring nature.

Most decisions are a combination of programmed and non-programmed!

Certainty vs uncertainty in decision making


Principles for Planning

1. Principle of Contribution to Objectives• The purpose of every plan and all supporting plans is to

promote the accomplishment of enterprise objectives.

2. Principle of Objectives• Objectives, to be meaningful, must be clear, attainable

and verifiable.

3. Principle of Primacy in Planning• Planning logically precedes all other managerial

functions.

4. Principle of Efficacy of Plans• Measured by the amount a plan contributes to purpose

and objectives as offset by costs required to formulate and operate it and by unsought consequences.

The Purpose and Nature of Planning


5. Principle of Planning Premises• Using consistent planning premises

increases coordination in planning.

6. Principle of Strategy and Policy Framework

• If strategies and policies are clearly understood and implemented, then the framework of enterprise plan will be more consistent and effective.

Principles for PlanningThe Structure of Plans


7. Principle of the Limiting factor• The more accurately a manager can identify and solve for the

limiting factor, the more easily and precisely they can select the most favourable alternative.

8. The Commitment Principle• Logical planning should cover a period of time in the future

necessary to foresee, through a series of actions, the fulfillment of commitments involved in decisions made today.

9. Principle of Flexibility• Cost of flexibility should be weighed against its advantages;

building flexibility in plans decreases the danger of losses due to unexpected events!

10. Principle of Navigational Change• Checks on events and expectations periodically as well as the

re-drafting of plans as necessary to maintain a course towards the desired objectives.

Principles for PlanningThe Process of Planning


Kellogg’s case

Address the following questions:1. Describe the difference between an aim and

an objective.2. What does Kellogg’s gain by setting SMART

objectives?3. How do objectives help in establishing a

business strategy?4. The Kellogg’s strategy would not have

worked without good communication. Do you agree? Justify your answer with examples.

Date post:	14-Jan-2015
Category:	Education
Upload:	chinnu05
View:	140 times
Download:	1 times

MGMT module 2 planning

Education