Almajmaah University
College of Science and Human Studies at Ghat
Chapter 2: Planning
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1st Semester
After studying this chapter, you should be able to.
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Explain what is the planning.
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Explain the characteristics of planning.
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Explain the planning process.
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Explain the types of plan.
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Explain the planning tools and techniques.
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Explain the management by objectives.
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Explain the management strategic.
1- Definition of Planning:
Planning is deciding in advance what to do. How to do, when to do and who is to do Plan.
It is the process of setting objectives and determining what should be done to accomplish
them.
2- The Planning Characteristics:
2-1: Planning is directly associated with the goals of the organization. These goals be
implicit or explicit. However, well-defined goals lead to efficiency in planning.
2-2: Planning is primarily concerned with the forecasting of future situation in which an
organization has to function. Accurate forecasting leads to correct decisions about future
course of action.
2-3: Planning involves the selection of the best among several alternatives for achieving
the organizational objectives, as all of them are not equally applicable and suitable to the
organization.
2-4: Planning is comprehensive and required in every course of action in the organization.
2-5: Planning is flexible as it is based on future conditions which are always dynamic. As
such, an adjustment is needed between the various factors and planning process:
3- Planning Process.
The planning process, objectives identify the specific results or desired outcomes; the plan
is a statement of actions steps to be taken in order to accomplish the objectives. The
recommended steps in the systematic planning process are.
Step 1: Define your objectives. Identify desired outcomes or results in very specific ways.
Step 2:Determine where you stand vis-à-vis objectives. Evaluate current accomplishments
relative to the desired results.
Step 3: Develop premises regarding future conditions based on alternatives "scenarios".
Step 4: Analyze possible action alternatives, choose the among them, and decide how to
implement.
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Step 5: Implement the plan and evaluate results.
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The following planning process illustrated in Figure (2-1).
Planning
1st step
Define your objectives
2nd step
:Determine where you stand vis-à-vis objectives
3rd step
Develop scenarios
4th step
Analyze possible action alternatives
5th step
Implement the plan and evaluate results
Figure (2-1): Planning process
4- Types of Plan:
Managers face different planning challenges in the flow of activity in organizations. In all
cases managers must understand the different types of plans and be able to use them
effectively. The different types are:
4-1: Short-range and Long-range plans:
Organizations require plans that cover different time horizons. We can see the short–
range plans, which cover one year or less, intermediate – range plans cover one year to
two years, and long–range plans look three years or more then into the future. Top
management is most likely to be involved in setting long–range plans and directions for the
organization
as a whole while lower management levels focus more on short–run
activities that serve the long- term objectives.
4-2: Strategic and Operational plans:
Plans differ not only in time horizons but also in scope. That mean, we have two types of
plans as strategic plans and operational plans. The strategic plans focus on the long –term
needs and set comprehensive action direction for an organization or submit. Top
management scope of this planning involves determining objectives for the entire
organization and then deciding on the actions and resource allocations to achieve them.
But, operational plans define what needs to be done in specific areas to implement
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strategic plans and achieve strategic objectives. Typical operational plans in a business
firm include production plans, which is mean, dealing with the methods and technology by
employee in their work. Financial plans, that mean, dealing with the money required to
support various operations. Marketing plans that mean, dealing with the requirements of
selling and distributing goods or services. And, Human Resources plans that mean,
dealing with the recruitment, selection and placement workers into various jobs.
4-3: Policies and Procedure:
Policies are standing plans that communicates broad guidelines for decisions and action.
They set guidelines that direct behavior in uniform directions for certain types of situations
regardless of where or when they occur in an organization. A standing plan is used more
than once.
Rules or procedures are plans that describe exactly what actions are to be taken in
specific situations. They are often found stated in employee handbooks or manuals as
"SOP" – Standard Operating Procedures.
4-4: Budgets and Project Schedules:
Budgets are single – use plans that commit resources to activities, projects and programs.
They are powerful tools that allocate scare resources among multiple and often competing.
Good managers are able to bargain for and obtain adequate budgets to support the needs
of their work units or teams. They are also to achieve performance objectives while
keeping resource expenditures within the allocate budget. We have two form of the budget
as a fixed and flexible budgets. A fixed budget that mean to allocate resources for one
level of activity. But the flexible budgets are define as the allocations of resources for
various levels of activities.
Project schedules is a single – use plan for accomplishing a specific set of tasks.
4-5: Business Plans:
Business plan is describes all the details necessary to set direction for a new business and
to obtain necessary financing to operate it. When done well, a business plan offers clear
direction to an enterprise. Banks and other financiers want to see a business plan before
they loan money or invest in a new venture. Senior managers want to see a business plan
before they allocate scarce organizational resources to a new project.
5- Planning Tools and Techniques.
Planning is clearly essential to the success of the management process. The benefits,
however, are most often realized when the planning approaches are comprehensive and
the foundations are well established. In the latter regard, the useful planning tools and
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techniques include forecasting, the use of scenarios, benchmarking, participative planning
and the of staff planners.
5-1: Forecasting.
A forecasting is a vision of the future. It is the process of making assumption about what
will happen in future. It can be qualitative forecasting, which uses expert opinions to
predict the future. By contrast, quantitative forecasting uses mathematical and statistical
analysis of data banks to predict future events.
5-2: Use of Scenarios.
Scenario planning is identified as an alternative future "scenarios" and makes plans to deal
with each. That can help organizations operate more flexibly in dynamic environments.
5-3: Benchmarking.
Benchmarking is a technique that makes use of external comparisons to better evaluate
one's current performance find out what other people and organizations are doing very
well and plan who to incorporate these ideas into one's own operations.
5-4: Participation and Involvement.
Participation is very key word in the planning process. The concept participative planning
requires that the process include people who will be affected by resulting plans and/or will
be asked to help implement them. Participation can increase the creativity and information
available for planning. It can also increase the understanding, acceptance and
commitment of people ti final plans.
5-5: Role of Staff Planners.
Staff planners are employed to take responsibility for leading and coordinating planning for
the organization as a whole or for one its major components. In general a staff planner is
expected to assist line managers in preparing plans, develop special plans upon request,
gather and maintain planning information, assist in communicating plans to others, and
monitor plans in progress and suggest changes.
6- Management By Objectives.
A useful planning technique employed by many organization is Management By
Objectives, or MBO for short. Formally defined, MBO is a structured process of joint
objectives setting between a supervisor and subordinate. MBO requires a formal
agreement between the supervisor and subordinate concerning. The following process of
MBO are:
6-1: The subordinate's performance objectives for a given period.
6-2: The plans through which they will be accomplished.
6-3: Standards for measuring whether or not they have been accomplished.
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6-4: Procedures for reviewing performance results.
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This process illustrated in Figure (2-2).
Supervisor
Jointly plan
-Setting objectives
And
- Setting standards
- Choosing actions
Individually act
- Performing tasks
(subordinate)
- Providing support
(Supervisor)
Jointly control
- Reviewing results
- Discussing implications
- Reviewing MBO cycle
Subordinate
Figure (2-2): A planning framework for management by objectives
A major advantage of MBO is that it clearly focuses the subordinate's work efforts on the
most important tasks and objectives, and is that it focuses the supervisor's work efforts on
areas of support that can truly help the subordinate meet the agreed-upon objectives.
Also, if we want the good MBO. We should take in consideration the performance
objectives. Because they are essential parts of the MBO process. That mean how well
MBO works. We have three types of objectives may be specified in an MBO contract.

Improvement objectives, that mean document intentions for improving performance
in a specific way and with respect to a specific factor.

Personal development objectives, that mean pertain to personal growth activities,
often those resulting in expanded job knowledge or skills.

Maintenance objectives, that mean which formally, express intentions to maintain
performance at an existing level.
In all cases, performance objectives are written and formally agreed to by both the
supervisor and subordinate. They also meet the following criteria of a good
performance objective.
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Specific : Targets a key result to be accomplished.
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Time defined: identifies a date for achieving results.
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Challenging: offers a realistic and attainable challenge .
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Measureable: is a specific and quantitative as possible.
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College of Science and Human Studies at Ghat
Appendix: Strategic Management
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A1 - Definition of Strategy:
A strategy is a comprehensive plan that sets direction and guides the allocation of
resources to achieve long-term objectives.
A2 - The Strategic Management Process:
Strategic management is the process of formulating and implementing strategies to
advance an organization mission and objectives and secure competitive advantage. The
essence of strategic management is to look ahead, understand the environment, and
effectively position an organization for competitive success in changing times. We have
two major of building blocks of strategic management. The first is the strategy formulation,
that mean how to create strategies. And, the second is the strategy implementation, that
mean putting strategies into action. These two major strategic management can be
illustrated in Figure (2A-1).
Identify
current
mission
objectives
and
strategies
Strategy Formulation
Strategy Implementation
Creating strategies
Putting strategies into action
Analyze
* Mission and
objectives
* Values and
corporate
culture
* Internal
strength and
weaknesses
Revise mission
and objectives
and select new
strategies:
*Corporate
* Business
*Functional
*Environment
opportunities
and threats
Implement
strategic
plans:
* Mobilize
resources
Evaluate
results and
renew
strategic
management
process
* Utilize
management
systems and
practices
Figure (2A-1): The strategic management – strategy formulation and strategy
implementation.
The strategic management process begins with a careful assessment and clarification of
organizational mission, values and objectives. These three begins process can be
represented as the following:
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2-1: The mission.
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The mission of an organization is its reason for existence as a supplier of goods and
services to society.
2-2: Values.
The values are broad beliefs about what is or is not appropriate. They are consider as the
corporate culture. Which is the predominant value system for the organization as a whole.
2-3: Objectives.
Operating objectives are specific results that organization try to accomplish. These
objectives are shorter term targets against which actual performance results can be
measured as indicators of progress improvement.
A3 - Analyses of organizational resources capabilities (SWOT).
Two critical steps in the management process are analysis of the organization and
analysis of its environment. They may be approached by a technique known as SWOT
analysis: the analysis of organizational Strengths and Weaknesses as well as of
environment Opportunities and Threats. These analysis forms can be represented as the
following illustrated in Figure (2A-2)
Internal assessment
of the organization
What are our strength?
What are our Weaknesses?
* Manufacturing efficiency?
* Outdated facilities?
* Skilled workforce?
* Inadequate R & D ?
* Good market share?
* Strong financing?
SWOT
Analysis
* Obsolete technologies?
* Weak management?
What are our opportunities?
What are our threats?
* Possible new markets?
* New competitors?
* Strong economy?
* Shortage of resources?
* Weak market rivals?
* New regulations?
* Growth of existing market?
* Changing market tastes?
External assessment
of the Environment
Figure (2A-2): SWOT Analysis
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A4 - Levels of Strategy.
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We have three levels of strategy: The first is the corporate strategy, the second is the
business strategy and the third is the functional strategy
4-1: Corporate strategy.
The level of corporate strategy is the strategy for the long term direction for the total
enterprise.
4-2: Business strategy.
The level of business strategy is the strategy that can be identified how a division or
strategic business unit will compete in its product or service domain.
4-3: functional strategy. It is the third level, that is a major business area that operates with
some autonomy.
The three levels of strategy can be expressed by the Figure (2A-3).
Corporate Strategy
Corporation
Business Strategy
Functional
Strategy
Division 1
Research and
Development
Division 2
Human
resources
Manufacturing
Division 3
Marketing
Figure (2A-3): Levels of strategy
A5 - Types of strategies.
Within organizations, it is common speak of four alternative types of "grand" or "master"
strategies. They include (1) growth strategies, that involves expansion of the organization's
current operations. (2)retrenchment strategies, which involves reducing the scale of
current operations. (3) stability strategy, which maintains the present course of action. (4)
combination strategies, which involves stability, growth, and retrenchment in one or more
combination.
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