CHAPTER 2

PLANNING

PLANNING

2.1 Understand planning element and types o f planning in management

2.1.1 Define planning

2.1.2 Describe the objectives of planning

2.1.3 Determine the importance of planning

2.1.4 Identify the importance of creativity in planning

2.1.5 Elaborate three types of planning

a. Strategic planning

b .Tactical planning

c .Operational planning

2.2 Elaborate planning process and problems faced

2.2.1 Identify the steps in planning process.

a. Setting the goals

b. Defining current situation

c. Identifying assistance and resistance

d. Developing a new set of goals and action

e. Re-evaluating goals

Identify problems faced in preparing plans

a. Managers face self conflicts in establishing goals

b. Employee refuse to accept changes in plan

c. Changes in environment

2.2.3 Identify forces of change

a. Organization structure

b Technology

d. People

2.2.4 Determine techniques for reducing resistance of change

a. Education and communication

b. Participation

c. Facilitation and support

d. Negotiation

e. Coercion

2.2.5 Elaborate management method to facilitate planning

implementation process

a. Management method by objectives

b. Corporate planning.

Definition of Planning process of setting or establishing

goals and thereafter determining ways to achieve these
goals.
Without planning, managers will probably fail to manage
their subordinates and the organizational resources
effeciently.
Planning enables managers to evaluate the situation,
predict future possibilities and grab the opportunities to
bring success to the organization.
Planning- analysing relevant current or past information,
with the purpose of measuring and forecasting the future
in order to achieve organizational goals.

Planning-is
a
process
of
determining how
the mgmt system
can
move
the
orgniztion towards
achieving its goals.
Certo(1997)

Planning is a
process of forming
goals and taking
suitable action to
achieve the goals.
Freeman and
Gilbert (1995)

Planning is a basic process

of
selecting
and
determining
suitable
actions to achieve goals.
Dessler(2001)

Planning is an analytical
process that involves the
evaluation
of
future
situations.
Planning
involves the development
and the selection of the
best
alternatives
to
achieve a goal.
Michael Scott

Planning is a process of managing all the

individuals involved in the organization
and the variables from the internal and
external environment of the organization
in order to achieve the set goals.

(a) Provide a direction-by establishing goals, employee in

the organization will have the motivation and inspiration
to work harder to overcome the barriers and achieve the
set goals.
(b) Focus on effort
(i) Each employee in an orgn has limited resources & has
various methods to implement an action
(ii) Setting one common goals enables the indv to establish
pririties and build commitment in utilizing limited
resources effectively and efficiently.
(iii)Goals are important in order to control and ensure that
the organization is moving towards achieving
organizational goals according to the stablished plan.

(c)Drive organizational planning and decision makingevery employee in the orgn has short term and long term
goals according to their position and job designation in the
orgn. Therefore, setting of goals can help decisions to be
made accurately in the attempt to achieve orgn. goals.
(d) Evaluate the orgn. achievement
Goals evaluated in a specific time frame can be used as
performance standards to assist employees and managers
evaluate their work performance.

(a) Identify business or investment opportunities-planning can

help managers identify business opportunities,
thereby
increasing the organizations competitiveness. For ex; if an orgn.
Wants to expand its market oversea, the org must evaluate the
investment opportunities that are supported by the government
and grab the incentives provided by government.

(b) Identify suitable alternatives actions- Planning enables

managers identifu suitable alternatives actions according to the
set goals.
The best alternatives can be selected and
implemented.ex

(c)Reduce risks- planning can reduce the risk faced by the

organization in an ever changing business environment. Planning
requires managers to forecast the future, makes changes,
evaluate the effect of the changes and take suitable action to
overcome the organizational weaknesses.Ex

(d)Save costs- Through planning, orgn can save cost as resources

can be used efficiently and effectively. Ex.

(e) Facilitate the achievement of goals-good planning enables the

organization to achieve the set goals efficiently and effectively.

(f) Provide guidance-planning is important to provide guidance

on the purpose of an activity performed by an organization.

(g)provide direction-planning is important to determine a

direction for each manager in the organization.
Through
planning, managers can ascertain the tasks to be performed,
ways to performed the tasks, the time frame to perform the task
and the individual who is responsible for implementing the tasks.

(h) facilitate coordination-planning helps manager coordinate all

activities and resources needed to achieve organizational goals.
Al physical resources and human resources in an organization
must be combined to achieve organizational goals.

(i) Understand the environment- planning helps the orgn.

Understand the business env.ex: the types of barriers that
need to encounter, the competition pattern that is faced
and the threat and opportunities that exist.
(j) Ensure organizations do not stray from original goals.
Planning can also ensure that managers do not get distracted
from achieving the organizations original goals. Managers
must be able to identify mistakes that have been made
and take corrective action in order to achieve orgn. goals.

Creativity-conversion to a new generation of ideas and

innovation of products, services or production method.
The process of creativity

(a) Generation ideas or opinions

(b) Expanding the ideas opinions
(c) Implementing the ideas or opinions
Methods to encourage Creativity
(i) Brainstorming-methods encourage the free flow of ideas
amongst group members before a decision is made.
(ii) Nominal group process-each group member works
individually to generate ideas b4 a discussion of ideas is
made in a group.

(iii)Synectics (Gordons Technique)-the group leader tries to

identify the real problem in order to take an immediate
solution. Group members will have a discussion through the
play method.
(iv) Creative group decision making-this method is suitable if
the group fails to find a solution. The objective of this me
thod is to find a solution for the problem.
***In 5-6 member in a group.
creativity in planning.

Discuss the importance of

(i) Strategic planning

(ii) Tactical planning
(iii) Operational planning
(iv) Scenario planning

Mission

strategic planning

Goals
overall objectives
area objective

tactical planning

Division objective
Department objective
Individual objective

The hierarchy of Planning

operational planning

(i)Strategic planning- setting long term goals and objectives for an

orgn. And selecting suitable actions to allocate organizational
resources in order to achieve these goals. Strategic planning is
conducted for a period of more than five yearsLong term planning
performed by top line managers or strategic managers.
Step to be taken by top line mgr:
(i)Identify

a market potential

(ii)Allocate
(iii)Utilize

orgn resources effeciently

resources productively

Ex.
The procedures to perform strategic planning in the organization
are as follows:
(a)Form the company mission
(b)Establish a strategic planning unit
(c)Determine the goals of the project
(d)Analyse the env. to detect threats and barriers that can affect the
orgn plan.

(e) Develop a strategic plan (tactical and operational plans will be

developed by other departments or divisions in the orgn)
(f) Monitor and measure performance to ensure that orgn goals are
effectively achieved.
(ii)Tactical planning-is performed by middle line magr or tactical
mgr to achieve goals set at the strategic level. This type of
planning involves a shorter period of time, between 1 and 5 years.
-the roles and contribution of each department or unit in achieving
the strategic plan developed by top line manager.
Tactical planning has the following characteristics:
(i)Concentrates

on specific indv, activities and resources compared

to the strategic planning which covers all the activities in the orgn.
Ex.during festive seasons
(ii)Conducted

planning

for a shorter period of time compared to the strategic

(iii)Involves the various functions of management.tactical planning

provides guidance on how to perform activities and utilize resources
in the best way possible in certain areas such as the marketing of a
new product, the production of the comp.
(iv) Established and implemented by middle line managers together
with their executives.
(iii)Operational Planning-involves a small or specific scope such as
job units or individuals in the organization.Provide specific guidance
on the roles and responisbilities of the relevant parties in the
organization in achieving operational goals based on the
implementation of the strategic and tactical planning.
-This plan is develop and determined by the first line manager or
operational managers based on the objectives of tactical planning.
-performed for a time duration of one years or less.
-short term planning

Operational planning can be divided into two types:

Single use plan-refer notes

(i)

Programme

project

budget

Standing plan-refer notes

(ii)

Policies

procedures

rule

Differences between strategic planning, tactical planning and

operational planning
(i)Time

period

(ii)Scope
(iii)Level

Discuss in group
of goals

(iv)

Scenario planning-involves rediscovering the original

entrepreneurial creative throught which which is required
in uncertain internal and external env. Where there are
always drastic changes , and graet market uncertainty in
the world.
Scenario planning is the process in which creative
managers invent and then consider, in depth several
varied scenarios of possible future events with the
objective to bring forward surprises & unexpected leaps of
understanding to the event.

Identify the steps in planning process:Discuss

Setting the goals
Defining current situation
Identifying assistance and resistance
Developing a new set of goals and action
Re-evaluating goals

1.Setting

goals-goals which have been set must be clear,

realistic,
rational,
logical and have a specific time
frame.Managers must identify what is desired or needed by
the organization and a target performance that has to be
achieved by the organization.Example.
2.Defining the current situation-when the orgn goals are
clearly established, the top-middle and first line managers
will examine the current condition of the orgn and compare
it with the goals that are to be achieved.Managers need to
ensure, that financial resources, human & orgn information
are adequate to achieve the set goals.If the setting goals are
challenging and require high expenditure, managers must
make the necessary changes to the planning conditions
according to the orgn.financial position.Example

3. Identifying assistance and and resistance-managers must

examine the internal and external orgn. Factors that can
assist or hinder the process of achieving orgn. Goal. Example.
Manager must find suitable alternatives, identify available
support and existing barriers and determine the solution that
should be taken.
4. Developing a new set of plans and actions-managers will
identify various alternatives actions,
evaluate each
alternative and select the best alternative that can be
implemented.
5. Reevaluating goals-if there are many barriers at a large stage
and the planning is not implemented successfully, managers must
set new goals or design new plans. Managers can use the nformation
obtained from the re evaluation process as an indicator to develop a
better plan in the future.

(a)

Managers face self conflicts in establishing goals

(i)Refusal to give up old goals or alternative goals

(ii) Anxiety towards failure
(iii) Lack of knowledge about the organization
(iv) Lack of knowledge about the environment
(v) Lack of self confidence

(b) Employee refuse to accept changes in plan

(i)Employees are in doubt over the impact of changes
(ii) Employees refuse to forego existing goals
(iii) Employees know the existing weaknesses in a new plan

(c)Changes in environment
Changes in eco, social, culture, customers, supplies and technology
(i)
(ii)
(iii)
(iv)
(v)

Economy
Social and culture
Customers
Suppliers
Technology

Organizational structure change, technology change, new product change

and people change

(a)Organizational structure Change-structural changes involves the hierarchy

of authority, goals, structural characteristics, administrative procedures
and management system.Ex:Successful structural change is accomplished
through a top down approach, which is distinct from science and
technology change (bottom up)and new products(horizontal). The
structural change is usually planned by middle and top managers.
(b) Technology change-a technology change is related to the organizations
production process, the way the orgn. Does it works. Technology changes
are designed to make the production of a product or service more efficient.
(c ) New product change- a product change is a change in the organizations
product or service output. New product innovations have major
implications for an organization because they often are an outcome of a
new strategy and may define a new market.
(d) People change-employees value, norms, attitudes, beliefs and
behaviour. Change in people relate to the way employee think.Culture
change relates to the organization as a whole: orgn changed its basic mind
set by becoming less bureaucratic.

(I)

Education and communication-edu. is especially important when the

change involves new technical knowledge or users are unfamiliar with
the idea.ex:

(II)

Participation-participation involves users and potential resisters in

designing the change.Participation also helps managers to determine
potential problems and understand the differences in perceptions of
change among employees.Ex:

(III)

Facilitation and Support-The visible support of top management also

helps overcome resistance to change.Top management support
symbolizes to all employees that change is important for the
organization.

(IV)

Negotiation-use formal bargaining to win acceptance and approval of a

desired change.

(V)

Coercion-managers use formal power to force employees to

change.Resisters are told to accept the change or lose rewards or
even their job.

(a)

Management method by objectives-Peter

Characteristics of management by objectives (MBO):

Drucker (1954)-is a
set of formal procedures used to develop and evaluate the
achievement of common objectives by managers and their
subordinates.The area of responsibility for each employee is stated
clearly in the workplace. The organizations objectives are also clear.
Helps managers determine the goals and targets involving managers
and employees at all organizational level.

(i) Goals need to be established

(ii) feedback must be given for performance
(iii)Participation must involved all subordinates
In order to perform an effective MBO, an orgn needs to possess several
characteristics as follows:
(a)

Managers and subordinates must show high commitment towards the

programme to be performed

(b)

Organizational objectives must be clear and involve the participation

of managers and their subordinates.

Managers must hold discussions with their subordinates and study their
dev towards achieving organizational objectives

Top line managers will set common goals while lower level management
will set specific goals

Managers must be given appropriate autonomy and freedom to implement

programmes. Planned programmes must be changed if necessary.

Reevaluation of past performance

MODEL OF THE MBO PROCESS

Step 1: Set goals
Corporate strategic goals

Step 2:develop actions plan Step 3: Review &

Action plan

Departmental goals
Individual goals

evaluate
review
work progress

Step 4:Appraise overall performance

Performance appraisal

take corrective action

Discuss the advantages and disadvantages of

MBO

(b)Corporate planning

Several forms of general corporate planning as follows:

is established for the whole organization.This

plan is set by top mgmt after taking into account all operations and types
of business conducted by the organization. Corporate planning helps
managers to answer one strategic question, which business areas should
we go into? The purpose of cp is to provide directions and guidance to
managers on how to allocate organizational resources. Refer book

(i)Multiple Corporate Planning-taking over of a company and creating

another business.CIMB-offers multiple services whereby the main business
of this bank are in the area of finance, insurance and unit trust.
(ii) Joint venture corporate planning-contractual partnership between 2 or
more orgn.Each partner contributes to the new orgn and at the same
time maintains a separate identity. Joint venture Telekon and Celcomoffer mobile phones service to sharing cost.
(iii) Stop investment corporate planning-when a company sell its business
because it is no longer interested to continued the business.The business
might be suffering from losses or the company has changed the corporate
strategy.-Sony Ericson.

(iv) Business Unit Corporate planning-involves the department of different

strategies for each business area. If an orgn has five different business,
each business unit will have its own strategy.
(v) Functional Corporate Planningthe development of strategies related to
activities in each functional area. Each department such as the marketing
department, the finance department and research department has its own
functional strategies.

QUESTIONS: MULTIPLE CHOICE QUESTIONS-REFER BOOKS

Jun 2013
1. Managers usually face various barriers in their
attempt to prepare an effective plan.
(a)List FIVE (5) reasons which cause managers tend
to face self conflict when they are establishing
new goals.(5m)
(b)Explain THREE(3) barriers in implementing a plan
which caused by changes in the environment by
giving suitable example (12m)
(c)Identify FOUR(4) characteristics of tactical
planning.(8m)