Planning process
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The Nature And Purpose Of
Planning
Plan:
 A method for doing or making something (in advance),
consisting of a goal and a course of action.
 Is a systematic set of actions that will help the organization
achieve its goals and objectives.
Goal:
 A specific result to be achieved; the end result of a plan.
 Goal: Is a board, long-range target of the organization.
Objectives:
 Specific results toward which effort is directed.
 Objective: Is a specific short-range target.
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 Planning as a process
 The process of
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setting goals and courses of action,
developing rules and procedures,
and forecasting future outcomes.
Plans are devices that answers;
What will we do?
When will we do it?
Who will do it?
How much will it cost?
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 What Planning Entails
 Choosing goals and courses of action and deciding now
what to do in the future to achieve those goals.
 Assessing today the consequences of various future
courses of action.
(Making tomorrow’s decisions today. So when you have a
plan, it means what you are going to do in future)
A trip to Paris.
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What Planning Accomplishes
 Allows decisions to be made ahead of time.
 Permits anticipation of consequences.
 Provides direction and a sense of purpose.
 Provides a unifying framework; avoiding piecemeal
decision making.
 Helps identify threats and opportunities and
reduces risks.
 Facilitates managerial control through the setting of
standards for monitoring and measuring performance.
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The Management Planning Process
 Hierarchy of Plans
 A set of plans that includes the company-wide plan and
the derivative plans of subsidiary units required to help
achieve the enterprise-wide plan.
 Top management approves a long-term plan; and each
department creates its own budgets
 The Planning Hierarchy works like that
 Top management formulates its plans based on
upward feedback from the departments, and the
departments in turn draft plans that make sense in
terms of top management’s plan.
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The Management Planning Process
The basic process always involves;
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Setting objectives,
Analysing the situation and making forecasts,
Determining alternative courses of action
Evaluating those options and then
Choosing and implementing your plan (inc. A budget)
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Peter F. Drucker
Market standing—Management should set objectives indicating where it would like to be
in relation to its competitors.
Innovation—Management should set objectives outlining its commitment to the
development of new methods of operation.
Productivity—Management should set objectives outlining the target levels of production.
Physical and financial resources—Management should set objectives regarding the use,
acquisition, and maintenance of capital and monetary resources.
Profitability—Management should set objectives that specify the profit the company
would like to generate.
Managerial performance and development—Management should set objectives that
specify rates and levels of managerial productivity and growth.
Worker performance and attitude—Management should set objectives that specify rates
of worker productivity as well as desirable attitudes for workers to possess.
Public responsibility—Management should set objectives that indicate the company’s
responsibilities to its customers and society and the extent to which the company intends to
live up to those responsibilities.
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Hierarchy of Goals
FIGURE 4–1
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Checklist 4.1
How to Develop a Plan
 Set an objective.
 Develop forecasts and planning
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premises.
Determine your options.
Evaluate alternatives.
Choose your plan, and start to implement
it.
Go to Level 2.
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Who Does the Planning?
 Small businesses:
 Entrepreneurs do most of the planning.
 Large firms:
 Traditional:
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A central corporate planning group works with top
management and each division to solicit, challenge, and refine
the company’s plan.
 Current:

Planning is decentralized and includes the firms’ product
and divisional managers, aided by small headquarters
advisory groups.
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The Business Plan And Its
Components
 Description of the business (including ownership and
products or services)
 Marketing plan
 Financial plan
 Management and/or personnel plan.
(BP provides a comprehensive
Overview of the firms’s situation today and
And of next 3-5 years)
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The Business Plan And Its
Components
BP Executive Summary: 1-2 pages- brief summary of the plan
inluding snap shots. The firms mission is generally 1/2
paragraphs.
Who we are
What we do
Where we are headed, competitive strengths, financial
situation
A strategic plan specifies the business or businesses the firm
will be in and a major step they have to take.
A strategy is a course of action (HOW)..
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The marketing Plan
MP specifies the nature of your products / services (
quality, design, features, variety) as well as price, place,
promotion and deliveries (4 P’s of marketing)
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Outline
of a
Marketing
Plan
FIGURE 4–3
Source: Source: Adapted
from Philip Kotler and Gary
Armstrong, Principles of
Marketing (Upper Saddle
River, NJ: Prentice Hall,
2001), p. 70.
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Acme’s Potential Market Segments
Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.
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FIGURE 4–4
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Product,
Pricing,
and Sales’
Forecasts
Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.
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FIGURE 4–5
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Personnel Plan
Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.
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FIGURE 4–6
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Sales Forecast by Service:
Two-Month Sales Plan for Acme Consulting, 2003
FIGURE 4–7
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Gantt Scheduling Chart for
Acme Strategic Report Projects, January 1–15, 2003
FIGURE 4–8
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The importance of Teamwork;
Creating a cohesive and cooperative top-management team
is a precondition if a firm is to execute its plans and
achieve its goals.
Teamwork is important because;
- CEO has a complex coordination task and cannot be
effective unless he/she is working closely with the people
who are in charge of the company’s activities,
- Subordinates usually possess expertise about the
operating components then CEO,
- The team members: if they have a voice in decision
making they can more supportive,
- Cross functional communication and collaborations
enables more innovations.
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Types of Plans
Plans differ in functional orientation
 According to Formats, Length, Frequency of Use:
 Formats:

descriptive plans, budgets, graphic plans
ex: descriptive =what is to be achieved and how (what to achieve, by
whom, when and at what cost) ex: marketing plan
ex: budget=financial plan, showing financial expectations for a specific
period
ex: graphical plans =shows what is to be achieved graphically and when
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Types of plans according to Time Span:
Strategic plans, tactical plans, operational plans
 Strategic plans (by top mgmt) are the actions designed to achieve strategic
goals. These plans are usually long-term, defining actions over a period of 3
to 5 years.
 Tactical plans or functional plans(by middle mgmet) a plan that shows
how top management’s plans are carried out at the departmental, short-term
level. (marketing, production plan) . (the actions designed to achieve tactical
objectives and to support strategic plans). These plans usually lay out actions
for the next 2 to 3 years.
 Operational plans (by first line mgmt)are the actions designed to achieve
operational objectives and to support tactical plans. These plans usually
define actions for less than one year.
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Types of plans according to
Frequency of Use:
programs, standing plans (ex: policies, procedures, rules)
 Program: lays out all the steps in order
 Standing Plan: a plan established to be used repeatedly as the
need arises
 Policies: a standing plan, sets broad guidelines for the enterprise
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Procedures: spell out what to do in specific situations
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(ex:we sell only high fashion shoes! Hamburger not kebap –standard
service not customized!)
(ex:if someone complains the waiters must see their chief and
manager must contact with the customer)
Rules: specific guide to action

(ex: after 30 days later we do not refund! If any problem occurs with
our product)
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Preparing your plan? Simply answer the
questions
1. What are you going to do?
2. When are you going to do it?
3. Who is going to do it?
4. What will be the cost?
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
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How to Set Objectives
Checklist 4.2 Principles of GoalSetting
Set SMART goals—make them specific,
measurable, attainable, relevant, and timely.
Choose areas (sales revenue, costs, and so forth)
that are relevant and complete.
Assign specific goals.
Assign measurable goals.
Assign doable but challenging goals.
Encourage participation.
Use executive assignment action plans, or
management by objectives.
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Goals to be SMART
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Specific: clearly stated the designed results,
Measurable: answers the questions ‘How much’
they are attainable.
Relevant and clearly derived from the crucial need
(to turn Chrysler around)
(Target and Targeting strategies)
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Management by objectives
 Process whereby a superior and subordinate jointly
set goals for the latter and periodically assess
progress toward those goals.
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MBO Process – 5 Steps
 set organisational goals (Top management)
 Set departmental goals : Departments heads and their
superiors jointly set supporting goals for their departents
 Discuss department goals: Dept. Head present
department goals and asks all subordinates to develop
their own individual goals.
 Give Feedback: Supervisor and subordinate meet
priodicaly to review the subordinate’s performance and to
monitor and analyse progress towards his/her goals.
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Forecasting and Developing
Planning Premises
 Sales Forecasting Techniques
 Quantitative Forecasting
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Time series, causal forecasting
 Qualitative Forecasting
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Jury of executive opinion, salesforce estimation
 Marketing Research
 Primary data
 Secondary data
 Competitive Intelligence
 Forecasting and Supply Chain Management
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Forecasting and Developing
Planning
 Quantitative Forecasting
A statistical methods to examine data and find underlying
patterns and relationships. (time series method and causal
method)
 Qualitative Forecasting
Predictive techniques that emphasise human judgement
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Forecasting and Developing
Planning
Time Series
Is a set of observations taken at specific times. Usually at equal
intervals. (yearly, monthly GDP )
Causal Method
Forecasting techniques that develop projections based on the
mathematical relationship between a company factor and
the variables believed to influence or explain that factor
(advert. Exp., unemployment, ..)
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 Qualitative Forecasting Methods: Qualitative
forecasting tools emphasize human judgement. They
gather as logical unbaised and systematic a way as
possible, all the information and human judgement
that can be brought to bear on the factors being
forecasted.
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