CHAPTER 5 PLANNING © Juta & Company 2019 Business Management: An African Perspective 1e 1 Chapter 5: Planning • Learning outcomes – define the managerial task of planning – explain what the benefits of planning are – identify who the owners of planning are in the business – differentiate between strategic and tactical planning – depict and explain the planning process – explain why the implementation of plans is so tricky, and what the major pitfalls of planning are – conceptualise what the different views are about planning that are now emerging © Juta & Company 2019 Business Management: An African Perspective 1e 2 Chapter 5: Planning • Introduction – Although there have been businesses since people can remember, it never became an object of study until the late 19th Century. So, if you had gone to university in the 18th Century, there would not have been a Faculty of Business (or something similar), and you would not have been able to study a qualification in anything related to business or management. © Juta & Company 2019 Business Management: An African Perspective 1e 3 Introduction Payol presented 5 function of management • Planning • Organising • Commanding / directing • Coordinating • Control • The function of planning is the point of departure in the managerial process • Planning is all about knowing what you want to do and knowing what you need in order to get there © Juta & Company 2019 Business Management: An African Perspective 1e 4 What is planning? • Planning is the set of managerial activities concerned with developing sequential courses of action and desired outcomes that the business can work towards, given the environment it operates within, and the resources it has at its disposal. © Juta & Company 2019 Business Management: An African Perspective 1e 5 What is planning? • The function of planning is concerned with the following questions: – – – – What does this business stand for? What do we want to achieve as a business? Where do we want to go as a business? What must we do in order to get where we want to be? • Characteristics of planning – – – – – – – Set of activities – it is the sum of a few activities Future orientation – what needs to be done in the future Outcome – to work towards an end state Action – the element of doing Sequence – specific order Resource intensive – usage of organizational resources Realism – must be realistic and not too far-fetched © Juta & Company 2019 Business Management: An African Perspective 1e 6 Defining planning Planning is the set of managerial activities concerned with developing sequential courses of action and desired outcomes that the business can work towards, given the environment within which it operates and the resources it has at its disposal © Juta & Company 2019 Business Management: An African Perspective 1e 7 Benefits and cost of planning • Benefits of proper planning: – direction and purpose – a clear road map – standards for performance – well crafted plans give an indication of what is expected from each part of the business, and from each ee – improves speed of decision making – provides context for managerial decisions – by understanding the reasoning behind the plans as it minimises waste and redundancy – focuses attention on the future – to strive for continuous improvement • When looking at cost of planning, make distinction between: – The cost of the actual managerial activity of planning - time – The costs associated with the plans themselves - resources © Juta & Company 2019 Business Management: An African Perspective 1e 8 Who is responsible for planning? • The traditional, or ‘original’ view on planning is that it is only done by top managers in a particular way. Over time, people have started questioning this traditional view, and developed new (or emergent, contemporary) views about things. • The emergent view is that it must be more inclusive of all voices and if people are part of the plan, they will identify with it and take ownership • Communication is key © Juta & Company 2019 Business Management: An African Perspective 1e 9 Levels of planning • Strategic planning • Tactical planning • Operational planning © Juta & Company 2019 Business Management: An African Perspective 1e 10 Strategic planning • • • • • Vision and purpose Mission statement Core values Long-term goals Generic competitive strategy © Juta & Company 2019 Business Management: An African Perspective 1e 11 Vision and purpose • The vision of a business represents an ideal future state that the business aims for. – Direction – Purpose • The reason for its existence © Juta & Company 2019 Business Management: An African Perspective 1e 12 Mission statement • Elements that make up a ‘good’ mission statement: – The products and/or services offered by the business to the market – View of the employees of the business, and the value the business places on their intellectual capital and skills – The customers the business caters for and what they expect from the business – The emphasis the business places on quality – The management style that is found in the business – Community involvement as well as social and environmental responsibility that the business is involved with. © Juta & Company 2019 Business Management: An African Perspective 1e 13 Core values • It is based on the personality of the business • The core values reinforce the mission statement and is the moral compass of the business • An example of core values: – Respect – Trust – Integrity – Quality © Juta & Company 2019 Business Management: An African Perspective 1e 14 Long-term goals • Also referred to as business goals and represent certain outcomes the business wants to achieve in the long-term • Characteristics of long-term goals: – Achievability – to achieve the realistic outcome – Measurability – mgmt. to give guidelines on how this measurement is to be done – Time frame – cut-off point © Juta & Company 2019 Business Management: An African Perspective 1e 15 Generic competitive strategy • Generic competitive strategy, Porter believes businesses need to consider how it competes with competition, he proposes three alternatives: – Cost leadership – prices low, turnover high, not compromising quality – Differentiation – uniqueness in terms products from different competitors – Niche market strategy – smaller markets, high profits – Combination strategy © Juta & Company 2019 Business Management: An African Perspective 1e 16 Tactical planning • Compete in the way it wants to, it needs to call on all parts of the business to operate as an integrated whole, and to work together to pursue these goals and strategies. • Tactical plans break down the strategic plans and long-term goals of the business into smaller, more specific goals geared towards a specific functional area of the business. © Juta & Company 2019 Business Management: An African Perspective 1e 17 Operational planning • Once the different tactical plans of a business have been developed, it is necessary for managers to develop even more detailed, and even shorter-term plans. • These detailed, specific short-term plans are referred to as operational plans (also called action plans). © Juta & Company 2019 Business Management: An African Perspective 1e 18 The planning process • The seven steps of the planning process © Juta & Company 2019 Business Management: An African Perspective 1e 19 Implementation of plans • Contingency planning – Identify the things that can go wrong, and consider unexpected outcomes. – Understand the impact of the factors identified above on the overall plan. – Consider different plans of action that can substitute the original. • Gearing up for roll-out – Resource availability – having correct infrastructure – Dedicated skills – Clear and constant communication – for progress towards targets through formal and informal communication – A flexible attitude – rigidity can have a negative effect on rollout © Juta & Company 2019 Business Management: An African Perspective 1e 20 Pitfalls of planning • Inflexibility – pursuing the plan at all costs or not deviating from what the plan stipulates must happen • Overemphasis on goals – environmental changes can cause the goal to change or even be discarded • Improper communication – clear and constant communication with other managers and employees © Juta & Company 2019 Business Management: An African Perspective 1e 21 Summary • We discussed what planning is, the advantages, who is responsible, the types of plans, how plans are developed, what needs to be taken into account when implementing plans and what to avoid when we plan • Planning is the first task of mgmt. and planning should not be rushed © Juta & Company 2019 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