6. 2.1. MEANING, NATURE AND IMPORTANCE OF
PLANNING
2.1.1. The Meaning of Planning
• Planning is the dynamic process of making decisions today
about future actions and it is a selection or choice among
alternatives.
• It bridges the gap between where we are now and where we
want to be.
• Preparing today for tomorrow; it is the activity that allows
managers to determine what they want and how to get it.
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2.1.2. Nature of Planning
• The contribution of planning to purpose and objectives
• The primacy of planning
• The pervasiveness /Universality of planning
• Planning and information
• Planning is a continuous process
• Planning is a means to an end
• Plans are arranged in a hierarchy
8. 2.1.3. Importance of Planning
• It provides direction and sense of purpose
It reduces uncertainties and anticipates the future/ preparing for
change
• Developing managers
• It provides basis for controlling
• It forces managers to see the organization as a system
• It promotes efficiency
• It provides the base for cooperative and coordinated efforts
• It provides guideline for decision making
9. 2.1.4. Limitations of Planning
• Planning is risky
• It is a difficult and complicated task
• It is expensive and time consuming
• It is affected by external factors
10. 2.3.The planning process
1. Establishing objectives (consider present and future conditions)
2. Developing premises (environment, SWOT analysis)
3. Determining alternative courses of actions
4. Evaluating alternative courses of action (cost and benefits)
5. Selecting a course of action (optimum)
6. Formulating derivative plans ( to support the basic plan)
7. Number zing plans by budgeting
8. Implementing the plan (Develop an action plan)
9. Controlling and evaluating the results
11. 2.4. Types of plans
1. Based on Scope/Breadth Dimension
A. Strategic Plan
• wide plan and developed by top-level management
• It applies to the entire organization.
• Looks ahead over the next five or more years.
• Develops the direction for the entire organization.
• Solving long-term problems
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B. Tactical Plan
• An intermediate plan
• Helps to reduce long range planning into intermediate
• Specific and more goal oriented than strategic plans.
• What the lower must do, how they must do it, and who will
have the responsibilities for doing it.
C. Operational Plan
• day to day activities and made at the lower level management
• what must be accomplished to achieve specific/operational
goals.
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2. Based on time Dimension
long-range (five years or more),
medium-range (between one and five years) and
short-range plans (one year or less).
All strategic plans are long-range plans.
All tactical plans are medium-range plans.
All operational plans are short-range plans.
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3. Based on use Dimension (Frequency of use )
A. Standing Plans
• Used again & again and designed recurring problems
• Help decision-making in a predetermined, consistent manner.
• Types of standing plans are policies, rules and procedures.
B. Single use plans
•To achieve a specific goal and to solve non recurring problems
• Types of single use plans are programs, projects, and budgets.
15. 2.4.1. Characteristics of a Good Plan
Every sound business plan must have these characteristics:
• Objectivity
• Futurity
• Flexibility
• Comprehensive
• Simplicity and clarity
• Contingency planning
• Planning staff ( Responsible for developing the various
components of the planning process)
16. Types of objectives in organizations
Organizational objectives.
• They concern such areas as organizational efficiency,
productivity, and profit maximization.
• Individual objectives, which also exist within
organizations, are the personal goals each organization
member would like to reach through activity within
the organization.
17. Co
Goals and objectives are the important ends towards which
organizational and individual activities are directed
• To provide guideline and direction -
• To facilitate planning –
• To inspire motivation and commitment –
• To promote evaluation and control -
18. Management by objectives (MBO
• MBO is a system of managing or a special planning technique.
• It is a comprehensive managerial system that integrate many key
managerial activities in a systematic manner and that consciously
directed toward the efficient & effective achievement of
organizational & individual objectives.
• MBO is the philosophy of management and an approach to
planning.
• It emphasizes that the management and the subordinates work
together in identifying and setting up of objectives and make plans
together in order to achieve these objectives.
19. Planning technique
Forecasting is the process of developing assumptions or premises about
the future that managers/ planners can use in planning and decision
making.
Forecasting techniques
The quantitative forecasting techniques
Time-series analysis - Time-series is analysis forecasting technique that
extends past information into the future through calculation of a best fit
line.
Casual modeling - Casual modeling is a group of different techniques
that determine casual relationships between different variables.
Regression models are equations that use one set of variable to predict
another variable, i.e.
Econometric models are casual models that predict major economic
shifts and the potential impact of those shifts on the organization.
Economic indicators are a key population statistic or indexes that reflect
the economic well-being of a population
The qualitative forecasting techniques
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The qualitative forecasting techniques
• The qualitative forecasting techniques are one of the several techniques
that rely on individual or group judgments or opinions rather than on
mathematical analysis. Some of the widely used qualitative approaches
to forecasting are
– The Delphi method/ procedure - a mechanism for managing group
decision making activities;
– The jury-of-executive/ expert-opinion approach - involves using
the basic Delphi process with members of top management. In this
instant top management serves as a collection of experts asked to
make prediction about something.
– The sales-force-composition method - is the pooling of the
predictions and opinions of experienced salespeople. Their
experience enables to forecast quite accurately what various
customers will do.
• The customer evaluation/expectation - Involves a survey of customers
as to their future needs.
