Definition.. Planning can be defined as a process of selection and sequential ordering of tasks that are to be achieved in order to accomplish organizational goals. It is therefore the process of identifying tasks to be performed and methods to be used and time horizon for the implementation of the methods. Planning bridges the gap between where we are and where we want to go. Forms of Planning The following are the various forms of planning in various organizations: Short term Intermediate/medium term Long-term/long range Contingency SHORT TERM PLANNING. This refers to planning activities implemented within a time frame of up to one year. This type of planning is mostly pertinent to line managers and general employees of the organization. It focuses on the day-to-day activities of the organization. It specifies duties to be implemented on daily, weekly, monthly, quarterly and annual basis. INTERMEDIATE/MEDIUM-TERM PLANNING Generally involves a time perspective of 1-5 years and are designed to implement activities among middle or departmental level managers of the organization. Planning focuses more on the activities that have to be implemented with a planning horizon that contains less uncertainty. LONGTERM/ LONG RANGE PLANNING This involves identifying those activities to be performed over an extended period of time up to 10 years and above. While short range planning deals with activities which are more specific, long range planning does not e.g. in a 20 years plan, knowledge of the environment and the financial position of the organization are rather uncertain. CONTINGENCY PLANNING This involves identifying alternative courses of action in advance of implementation in order to meet possible changes in the environment. In contingent planning, managers must specify and assess how they would implement the intended plans. Is it important to plan? Why? IMPORTANCE OF PLANNING Growing complexity of business environment. Premises/bases for decision making Efficiency in the utilization of resources Growth in the size of the organization. ELEMENTS OF PLANNING/ PLANNING MODEL Setting Objectives: - Objectives specify the needs/expectations to be achieved by the organization. They specify the target to be achieved e.g. 5% growth in profits in the next one year. Based on the SWOT analysis you did on Sleepy Inn, create two objectives that you think the owner should set. SMART Objectives Objectives must be “SMARTLY” set i.e. specific, measurable, attainable, and relevant and time bound. Specific answers the questions "what is to be done?" "how will you know it is done?" Measurable w/Measurement answers the question "how will you know it meets expectations?" and defines the objective using assessable terms (quantity, quality, frequency, costs, deadlines, etc.). Achievable answers the questions "can the person do it?" "Can the measurable objective be achieved by the person?" "Does he/she have the experience, knowledge or capability of fulfilling the expectation?" It also answers the question "Can it be done giving the time frame, opportunity and resources?" Relevant answers the questions, "should it be done?", "why?" and "what will be the impact?“ Time-oriented answers the question, "when will it be done?" It refers to the fact that an objective has end points and check points built into it Class Activity Make the objectives you created earlier……SMART objectives Strategies/Actions. These are the preferred means to achieve set objectives e.g. the preferred course of action to realize a company’s set objectives of increasing profits by 5% could be to expand the existing business or diversify business through increased investment. It could also opt to increase its promotional campaigns or adverts to improve its existing product appeal to customers. Resources These are the constraints on the courses of actions implemented by organizations. They include: raw materials, financial resources, human resources, time, technology and information resources. In practice resources are scarce. E.g. a plan to realize increased profits through business expansion strategy should specify the kinds and amounts of resources required, potential resources and allocation or uses of these resources. Implementation This involves assignment and direction of personnel to carry out planned activities i.e. implement the organizational plan. The plan should be well communicated to employees. Plans can be implemented using policies, programs, procedures and rules. Policies: Policies are developed to act as guidelines that channel actions of managers towards achieving organization goals. Policies are guides to decision making hence they must allow for some discretion, otherwise they would be rules. Procedures This is a plan which establishes a required method for implementing organizational activities. They describe the details and the exact manner in which certain activities must be accomplished i.e. steps to be followed to undertake an activity. Procedures are therefore a chronological sequence required to implement objectives. Programs This refers to a complex of goals, policies, procedures, rules, resources to be employed and other elements necessary to carry out a given course of action or achieve a specific objective While policies declare what is intended i.e. the basis for decision making, a program represents activities developed to carry out objectives and policies. Programs must be developed at all organization level. Thus, a program embraces a set of related actions surrounding the plan in order to achieve objectives. Rules. Organization rule is a statement of precisely what should or should not be done with no permitted deviation. Unlike policies which allow decision making by offering guidelines, rules allow no range for decision making. The essence of a rule is that it reflects a managerial decision that certain actions must or must not be taken. Rules therefore, spell out required actions or non-actions by allowing no discretion to managers and other employee. E.g. no smoking Evaluation The implementation process should be well- monitored and necessary measures taken to ensure that plans and strategies are implemented to achieve goals. How would you describe your future in three words? APPROACHES TO PLANNING STRATEGIC PLANNING APPROACH – It is concerned with the achievement of long-term goals of the organization. It can be defined as the process of systematically identifying what the organization wants to achieve, how and when to achieve it. It is the process of selecting long-term goals to be achieved and determining policies and strategies required to achieve goals. The responsibility of strategic planning lies with the top management. They identify the corporate mission objectives and establish strategic plans for achieving them. Strategic Planning Process. Defining Purpose/Mission. The organization’s mission is its reason for being i.e. why the organization is in business. The mission statement serves to define for managers the general intent of the organization. It conveys a sense of purpose to the employees and projects a company image to customers. It should set out the key parameters of the organization’s business and these should be able to stand the test of time. It is therefore a broad public statement on behalf of the organization that sets out terms of the customer’s needs that it intends to satisfy What is SU”s Mission? Strathmore University Mission To provide all round quality education in an atmosphere of freedom and responsibility, excellence in teaching, research and scholarship, ethical and social development and service to the society. Setting organization goals/objectives This is an essential component of strategic planning in that it specifies performance target for managers at all levels of the organization. The key aims or goals of the organization embrace all the major units and functions of the organization and usually to provide for medium term solutions to organization’s problems. They are statements of intent directed at those aspects of the organizations operations which are critical to its success. Formulating strategic plan This involves development of strategies and action plans to achieve goals. SWOT analysis must be carried out to determine the best strategies to be implemented by the organization. SWOT analysis provides information that is useful in matching the firms resources and capabilities to the competitive environment in which it operates. STRENGTHS A firm’s strengths are its resources and capabilities that can be used as a basis for developing competitive advantage. A company’s strengths may be superior technology, skilled manpower, strong brand name, large scale operation, good reputation among customers, favorable access to distribution networks, etc. WEAKNESSES The absence of certain strengths may be viewed as weaknesses e.g. poor brand names, inferior technology, narrows product lines, smaller in size, less skilled manpower, less capital, limited access to distribution networks, etc. OPPORTUNITIES This refers to positive external conditions in the environment that present new opportunities for profit and growth e.g. an unfulfilled customer need, arrival of new technologies, loosening of regulations, removal of international trade barriers, growth in demand of the companies’ products, etc. THREATS These are changes in the external environment of a firm that present threats to the firm. Threats could be new competitor in the industry, shift in consumers taste away from the firm’s products, emergence of substitute products, new technology, new regulation, increased trade barriers etc. SWOT analysis assumes that an organization will achieve its success by maximizing strengths and opportunities and minimizing threats and weaknesses. It enables strategic planners to identify their competitors and develop appropriate competitive strategies. Tows Matrix Mini- mini strategy The WT Strategy (mini-mini). In general, the aim of the WT strategy is to minimize both weaknesses and threats. A company faced with external threats and internal weaknesses may indeed be in a precarious position. In fact, such a firm may have to fight for its survival or may even have to choose liquidation. But there are, of course, other choices. For example, such a firm may prefer a merger, or may cut back its operations, with the intent of either overcoming the weaknesses or hoping that the threat will diminish over time (too often wishful thinking). Whatever strategy is selected, the WT position is one that any firm will try to avoid Mini Maxi strategy The WO Strategy (mini--maxi). The second strategy attempts to minimize the weaknesses and to maximize opportunities. A company may identify opportunities in the external environment but have organizational weaknesses which prevent the firm from taking advantage of market demands. Maxi Mini Strategy The ST Strategy (maxi-mini). This strategy is based on the strengths of the organization that can deal with threats in the environment. The aim is to maximize the former while minimizing the latter. The SO Strategy (maxi-maxi). Any company would like to be in a position where it can maximize both, strengths and opportunities. Such an enterprise can lead from strengths, utilizing resources to take advantage of the market for its products and services. For example, Mercedes Benz, with the technical know-how and the quality image, can take advantage of the external demand for luxury cars by an increasingly affluent public. Implementing the strategic plan Implementing the strategies involves converting the strategic plan into action. To implement strategic plan successfully, managers must effectively: communicate their plan, assign appropriate authority and responsibility for activities within the plan, put in place appropriate policies, procedures, programs and rules to back the implementation process. develop the method for measuring the results of activities develop the procedure for taking corrective action Evaluating the strategic plan Evaluation of outcomes of strategies implemented is a critical activity for managers. They must continually monitor the implementation process and take corrective actions where necessary to ensure that organization goals are achieved. Discussion Strategic plans do not always work out! Why do you think strategic plans sometimes fail Two main reasons Inappropriate strategies may arise due to: Failure to define end states (objectives) correctly Incomplete SWOT analysis with respect to the desired end state(s) Lack of creativity in identifying possible strategies Strategies incapable of obtaining the desired objective Poor fit between the external environment and organizational resources - infeasibility Poor implementation of a strategy may happen due to: Under-estimation of resources and abilities Failure to coordinate Ineffective attempts to gain the support of others or resistance Failure to follow the plan Loss of senior management focus and continued sponsorship MBO Management by objectives is a planning approach developed and popularized by Peter F. Druker in 1954. It is a collaborative and participative approach to management. MBO begins with goal setting and continues through performance review. The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. PROCESS OF MBO Involves the following steps; Top level goal setting MBO begins with establishment of the overall goals of the organization by top managers. The top managers may set goals by consulting with other organizations members e.g. divisional or departmental managers. Collaborate goal setting throughout the organization. Each person’s major areas of responsibilities are clearly defined in terms of measurable objectives. Managers consult with members of their to arrive at an agreeable objective Periodic reviews performance. The objectives set are used by the management and the employees to review or monitor the actual implementation of planned activities from time to time. Final evaluation and feedback. Performance appraisal is finally conducted to determine the level of goals/objectives achieved. What are the advantages of using MBO in an organisation Advantages of MBO Clarifies to individual what is expected of them i.e. the objectives to be achieved. Helps managers set achievable performance targets for their employees i.e. by getting the inputs of their employees on the objectives to be achieved. Improves commitment /motivation to goal achievement. Improves communication between managers and subordinates. Improves team spirit in the organization hence high chances of goal achievement It aid managers in reviewing employee performance i.e. it helps to implement controlling and planning functions simultaneously e.g. through periodic review of performance etc. Demerits ? Difficulty in setting goals and targets to be achieved i.e. inappropriate or unattainable goals may be set due to lack of training on MBO tools. It is expensive in terms of training to managers and other resources require for effective implementation of the programme. It kills creative and innovative spirit in the organization i.e. individuals are motivated only to achieve the stated goals using specific methods agreed on and would never be creative. The manager/ subordinate goal setting process requires a very high level of skills in interpersonal relationships. Many managers have neither previous experience nor natural ability in these areas.
