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PLANNING

Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making. Planning bridges the gap from where we are to where we want to go.

THE NATURE OF PLANNING


The Contribution of Planning to Purpose & Objectives Its primacy among the managers tasks Pervasiveness The Efficiency of Plans

Plan as the Foundation of Management:

What kind of Organization Structure we have


Which helps us to know

PLANS Objectives and how to achieve them

What kind of people we need and when


Which affects the kind of leadership we have and direction

How most effectively to lead people


In order to ensure success to plans

By furnishing standards of control

RELATIONSHIP OF PLANNING & CONTROLLING:

New Plans Implementation of plans Controlling: Comparing plans with results


No undesirable deviation

PLANNING

Corrective action

TYPES OF PLANS:
Purposes or Missions: basic function or task of an enterprise Objectives or Goals: the ends towards which activity is aimed Strategies: determination of basic long term objectives of the enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals Policies: general statements or understandings that guide or channel thinking in decision making Procedures: chronological sequence of required action to action a particular task. Rules: are specific required actions/non-actions allowing no discretion Programs: are complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed and other elements necessary to carry out the operation Budgets: statement of expected results expressed in numerical terms. Fixed budget, variable budget, zero-base budget.

STEPS IN PLANNING
1. 2. 3. 4. 5. 6. 7. 8. Being Aware of Opportunities. Establishing Objectives. Developing premises Determining Alternative courses Evaluating Alternative courses Selecting a Course Formulating Derivative Plans Numberizing Plans by budgeting.

THE PLANNING PROCESS


Rational Approach Planning period The Commitment Principle Coordination of short and long range plans

OBJECTIVES:
Objectives are the important ends towards which the Organizational and individual activities are directed. The Nature of Objectives: A Hierarchy of Objectives A Network of Objectives A Multiplicity of Objectives

MANAGEMENT BY OBJECTIVES:
MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed towards the effective and efficient achievement of Organizational and individual Objectives. Emphasis on Performance Appraisal, Motivation, Planning & Control

THE PROCESS OF MANAGING BY OBJECTIVES:


Setting Preliminary Objectives at the Top Clarifying Organizational Roles Setting Subordinates Objectives Recycling Objectives

How to set Objectives? Quantitative & Qualitative Objectives

Benefits of Management by objectives: Improvement of managing Clarification of Organization Encouragement of personnel commitment. Development of effective control Weaknesses of Management by Objectives: Failure to teach the philosophy of MBO Failure to give guidelines to goal setters Difficulty of setting goals Emphasis on short-run goals. Danger of inflexibility Other dangers: concentration in converting verifiable goals in terms of numbers

Strategies, Policies & Planning Premises Strategy refers to determination of the purpose & basic long term objectives of an enterprise and adoption of courses of action and allocation of resources necessary to achieve these aims Policies are general statements or understandings that guide managers thinking in decision making. Planning premises: The anticipated environment in which the plans are expected to operate

Nature: The Key function giving direction to plans The Guide: Furnishing the framework for plans The need for Operational Planning: Tactics They effect all the areas of managing

THE STRATEGIC PLANNING PROCESS


1. 2. 3. 4. 5. 6. 7. 8. 9. INPUTS ENTERPRISE PROFILE ORIENTATION OF TOP MANAGERS PURPOSE & MAJOR OBJECTIVES EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT DEVELOPMENT OF ALTERNATIVE STRATEGIES EVALUATION & CHOICE OF STRATEGIES MEDIUM & SHORT RANGE PLANNING IMPLEMENTATION & CONTROL

Mckinseys 7 S Model (Integration of activities)

THE TOWS MATRIX (FOR STRATEGY FORMULATION)


Internal Strengths Internal Weaknesses

External Opportunities

SO Strategy Maxi-maxi

WO Strategy Mini-Maxi

Developmental Strategy
External Threats ST Strategy Maxi-mini WT Strategy Mini-mini Retrenchment, liquidation or Joint Venture

THE PORTFOLIO MATRIX: A TOOL FOR ALLOCATING RESOURCES


STARS BUSINESS GROWTH RATE HIGH QUESTION MARKS

CASH COWS LOW

DOGS

STRONG

WEAK

RELATIVE COMPETITIVE POSITION (MARKET SHARE)

MAJOR KINDS OF STRATEGIES AND POLICIES


GROWTH FINANCE ORGANIZATION PERSONNEL PUBLIC RELATIONS PRODUCTS/SERVICES MARKETING

INDUSTRY ANALYSIS & GENERIC COMPETITIVE STRATEGIES BY PORTER


Industry Analysis:
Porter identified five forces: 1. The competition among companies 2. The threat of new companies entering the market 3. The possibility of using substituent products/services 4. The bargaining power of the suppliers 5. The bargaining power of the buyers Any enterprise may have more than one strategy like: Overall Cost Leadership Strategy. Differentiation Strategy Focused Strategy

EFFECTIVE IMPLEMENTATION OF THE STRATEGIES

Successful Implementation of Strategies:


1) 2) 3) 4) 5) 6) 7) 8) Communicating strategies to all key decision making managers Developing and communicating planning premises Ensuring that action plans contribute to and reflect major objectives & strategies Reviewing strategies regularly Developing contingency strategies and programs Making the Organization structure fit planning needs Continuing to emphasize planning and implementation strategy. Creating a company climate that forces planning. Managers are inadequately prepared for strategic planning. The information for preparing the plans is insufficient for planning for action. The goals of the Organizations are too vague to be of value. The business units are not clearly identified. The reviews of the strategic plans of the business units are not done effectively. The link between strategic planning and control is insufficient.

Strategic Planning failures:

PREMISING AND FORECASTING:


Planning Premises: are defined as the anticipated environment in which plans are expected to operate. Environmental Forecasting: Forecast & review by managers Identify areas that lacks control Participation by the employees Forecasting with the Delphi technique. The Sales forecast: Sales forecast is a prediction of expressed sales by product and price, for a number of months or years. 1. Methods of Sales Forecasting: 2. Jury of executive opinion method 3. Sales force composite method 4. Users expectation methods 5. Statistical methods: Trends & cycles, Correlation Analysis, Mathematical formula or model (trained help required) 6. Deductive methods 7. Combination of methods

EFFECTIVE PREMISING
1. Selection of the premises that bear materially on the programs. 2. Development of alternative premises for contingency planning 3. Verification of the consistency of premises 4. Communication of the premises.

DECISION MAKING:
Decision making is defined as the selection of a course of action among various alternatives. Types of decision making: Rationality in decision making Limited or Bounded Rationality Intuition The importance and limitations of rational decision making: Decision making process: 1. Premising 2. Identifying alternatives/search for alternatives (Principle of the limiting factor) 3. Evaluating alternatives in terms of the goal sought Quantitative and Qualitative Factors Marginal Analysis Cost Effectiveness Analysis 4. Choosing an alternative-3 basic approaches: experience, experimentation, research and analysis

PROGRAMMED & NONPROGRAMMED DECISIONS:

UNSTRUCTURED Nonprogrammed decisions

STRUCTURED Programmed decisions

Structured Problems: Programmed decisions (Lowest level) Unstructured Problems: Non programmed decision (Highest level)

DECISION MAKING UNDER CERTAINITY, UNCERTAINITY & RISK


Certainty- information is available-easily manageable. Uncertainity-meagre database-difficult. In a risk situation, factual information exists, but incomplete. To improve decision making, we can estimate the objective probabilities of an outcome by using mathematical models.

MODERN APPROACHES TO DECISION MAKING UNDER CERTAINITY


Risk analysis (Rate of return based on probability method is calculated) Decision trees: depict, in the form of a tree the decision points, chance events and probabilities involved in various courses that might be taken Preference theory or utility theory is based on the notion that individual attitudes towards risk vary.(risk takers, risk averters, high risk takersgamblers) Organizations attitudes towards risk Risk level is high in high-level managers and less in low level managers. Personal risk or preference curves. EVALUATING THE IMPORTANCE OF A DECISION: Involves commitment. If right decision is not taken it proves costly to the Organization. DECISION SUPPORT SYSTEMS

Creativity and Innovation:


Creativity refers to the ability and power to develop new ideas. Innovation means used of these ideas. Creative Process: Unconscious scanning Intuition Insight and Logical formulation Techniques to Enhance creativity: Brain storming, Synetics etc.

CREATIVE MANAGER SYSTEMS APPROACH AND DECISION MAKING.

Thank You.

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