Planning
Learning outcomes
• Understand the importance of planning.
• Understand the planning process.
• Identify the importance of goals and the specifications
for goal setting.
• Explain some important contemporary factors and
issues in planning.
• Realise the importance of time management and its
role in planning.
Introduction
• Planning is a central management task for a manager,
because the saying “fail to plan, is plan to fail” is wellknown and true.
• Important that an organisation develops some goals
that it wants to achieve in order to take the
organisation a step further.
• Managers should develop a plan (strategy) for achieving
these goals.
• The essence of planning involves that managers must
decide on a plan of action in order to achieve the goals
of the organisation.
What is planning?
• The process of planning involves defining what the
organisation wants to achieve in the near future –
developing goals.
• It is important to establishing an overall strategy (plan)
for achieving these goals.
• This involves a comprehensive set of plans to integrate
and coordinate the organisational work.
What is planning?
Definition
• Planning can be defined as the consideration and
visualisation of what the organisation or departments
in the organisation should achieve within a particular
time span and the development of a plan (or set of
plans) to achieve these goals.
What is planning?
• An important issue about planning is whether planning
should be formal or informal.
Informal planning:
Formal planning:
Nothing is written
down and there is little
or no sharing of goals
with others in the
organisation.
The specific goals
covering a specific
time period, are
defined and written
down.
What is planning?
• Important to know what the situation in the
organisation is, then:
• Develop the goals (long term) and objectives (short
term) in each area of the organisation where
performance and results are expected.
• Draft a feasible plan of action that indicates the
activities, resources, policies, schedules, procedures
and other methods that are necessary to achieve the
stated goals and objectives.
• Planning is a thought process (reflects on what should
happen) as well as an action process (implements the
plans).
What is planning?
Past
Present
Things happened in Plans
the
internal
must
Future
be Diagnose what future
and formulated that will opportunities
external environments answer the following: threats
that have an influence 
What
on the organisation.
achieved?
Existing
and
weaknesses 
strengths
will
influence planning.
must
the
be external environment
will be applicable and
How will it be have an influence on
done?

from
and
the organisation.
When must it be
done?
Figure 5.1:
Serves as
Serves as
a basis
a basis
for
for
Relationship between the past, present and future in planning
Why do managers plan?
• The most important reason to plan is to take the
organisation to a next and better level and to obtain a
competitive advantage.
– Competitive advantage is if the organisation has or do
something better that its competitors.
• There are especially four good reasons why planning is
an important management task.
• Planning gives direction in the organisation.
• Planning reduces the impact of uncertainty during
changes.
• Planning minimises wasted time and resources and
redundancy.
• You can only control what you have planned.
Why do managers plan?
Planning and performance
• Formal planning is associated with higher profits and other
positive financial results.
• It makes financial sense to plan.
• The relationship between planning and performance is
influenced by environmental issues.
Why do managers plan?
Dysfunctional aspects of
planning
• There are some points of critic against planning:
– plans can’t be developed for a dynamic environment;
– formal plans can’t replace intuition and creativity;
– planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival; and
– formal planning reinforces success and this success
groove thereby ultimately may lead to failure.
Why do managers plan?
Management in action 5.1
• Why planning is important:
– Increases efficiency
– Reduces business-related risks
– Facilitates proper coordination
– Assists with organising
– Gives direction
– Keeps good control
– Helps to achieve objectives
– Motivates personnel
– Encourages creativity and innovation
– Helps in decision-making
How do managers plan?
• Planning can be divided into practical steps, irrespective
of the level of management and also irrespective of the
complexity of the situation. These steps in the planning
process are:
– Identify the purpose of planning
– Establish goals
– Develop commitment
– Develop alternative plans
– Evaluate the different alternative plans
– Implement the plan
– Control and evaluating the results of the plan
Step 1: Identify the purpose of planning
• If the organisation does not identify the purpose of
planning, it will not really understand the need for
planning.
• The first step in the planning process is thus to make
a realistic diagnosis of why is planning necessary.
• If this is not clear, the focus of planning will be
blurred.
• There must be agreement on the assumptions and
purpose of planning to ensure that all levels of the
management plan are in line with the goal of the end
result.
Step 2: Establish goals
• If a problem or purpose is clear, an organisation must
determine the goals.
• Goal setting gives direction to the organisation and is
fundamental in planning.
• It is important to set goals to give direction to what
should be included in plans.
• A goal is defined as a future desirable state of an
organisation and is usually long term oriented.
Step 2: Establish goals (cont.)
• The first step in goal setting is to determine what the
organisation wants to achieve in the long term.
• To achieve the long-term goal, a number of short-term
goals or objectives are determined.
• Goals are called the foundation of planning.
Stated goals are official
statements of what an
organisation says, and what
it wants its various
stakeholders to believe, its
goals are.
An example of a stated goal
is the mission statement of
an organisation.
Real goals are those goals
that an organisation actually
pursues, as defined and visible
by the actions of its members.
A real goal can be to improve
the profitability of the
organisation with 5% in the
next financial year.
Step 2: Establish goals (cont.)
• Approaches to establishing goals
– Traditional goal setting is an approach in which goals are
set at the top organisational level and then broken down
into sub-goals for each management level of the
organisation. At each level, managers define the goals,
applying their own interpretations and biases as they
translate them in more specific objectives.
Traditional goal setting
Vision and mission
Strategic goal
To increase market share

with 5% in 20xx
Marketing department
Production department
Tactical goals
To introduce one new

product line in the next 12
months
To increase the sales of

products with 500 000 units
per year.
Tactical goal
To increase production of

products with 5% in the
next year
Operational objectives
Respond to customers’

inquires within 2 hours
To sell 150 units per day

Operational objectives
To manufacture 200 units

per day
Figure 5.2: Hierarchy of goals
Step 2: Establish goals (cont.)
• Approaches to establishing goals
– Management by objectives (MBO) is a management
system in which specific performance goals are jointly
determined by employees and their managers.
– The steps in the MBO program highlight also the
essential features of it:
• Identify the employee’s tasks and job
• Establish challenging objectives for each task
• Employee must participate in this process
• Prioritise these objectives
• Build in a feedback mechanism to asses the progress towards
achieving the objectives
• Link rewards to achieving the objectives
Step 2: Establish goals (cont.)
• Criteria for goals and objectives – SMART principle.
• Specificity
• Measurability
• Achievability (Acceptable)
• Realistic
• Time
• One important requirement is that goals and
objectives must be congruent with one another – the
attainment of one objective must not eliminate the
possibility of achieving another objective.
Step 2: Establish goals (cont.)
Types of goals
• Top management are responsible for determining
the strategic goals for the organisation as a
whole in terms of the following:
– Profitability
– Productivity
– Market share
– Human resources
– Technology
– Social responsibility
Step 3: Develop commitment
• Everyone in the organisation must be committed to the
planning process.
• This step in the planning process to get commitment has
a strong link with the management functions of
leadership and motivation.
• Approaches to get commitment:
– Employees need to understand the necessity of the
goals and therefore they will be determined to achieve
it.
– Let employees participate in goal-setting.
– Make some of the goals public.
Step 4: Develop alternative plans
• Different alternative options should be developed so that
the best alternative can be implemented.
• Answers to questions such as who, where, when and
how are now important in developing the specific plans.
– programming will provide the answers to who, what
and where;
– scheduling answers the question when; and
– budgeting provides an answer to what resources are
necessary, that is how will the plan be implemented.
• There are also different levels of plans:
– Strategic plans
– Operational
– Standing plans
– A rule
-
Tactical plans
Single-use plan
A policy
A procedure
Step 5: Evaluating the various alternative plans
• The various alternative plans must now be evaluated in
the light of the assumptions and goals.
• One possible plan may appear to increase profitability,
but the cost of machinery replacement may be too high.
• Evaluation can be a difficult task, but there are qualitative
and quantitative techniques available to help with
evaluation.
• The important thing is that the different alternatives or
options must be evaluated and the manager must select
that alternative that will best achieve the stated goals and
objectives.
Step 6: Implementation of the plan
• The implementation of the plan demonstrates the
action process – time to work the plan.
• The other management tasks now take over from
planning. The work must be organised and the
employees must get active through leadership,
motivation and communication to work with the plan.
• This is the most important step, because a plan means
nothing if it is not implemented.
Step 7: Control and evaluating the results of
the plan
• The implementation of the plan and the results
achieved must be evaluated continuously and
corrective actions should be taken if something is not
correct.
• If the plans do not achieve the desired results, the
managers must have a look at the plans and perhaps
revise some of the plans to achieve the desired results.
Important factors in planning
• Contemporary issues and factors that managers
must consider during planning:
– Significance
– Increasing demand
– Technology
– Legal issues
– Financing
– Marketing
Time management
• Time is the most important resources to deal with in
management in general – “time is money”.
• Time is one of the most important aspects in terms of
competitive advantage.
• The fast and quick response from an organisation in
terms of the delivery of products and services can
create a competitive advantage.
• If managers are not successful in time management,
they will experience difficulty in achieving the goals
and objectives of the organisation.
• Managers must identify their discretionary time and
must plan how they are using this discretionary time
effectively and efficiently.
Time management
• Time management refers to the techniques that a
manager can apply to get more done in less time with
better results.
• Table 5.1 provides a guideline on how to rate activities
with regard to its urgency and importance.
Importance
Urgency
 Very important – activity must be done

Very urgent – must happen now
 Important – activity should be done

Urgent – should happen now
 Not so important – activity may be done,

Not so urgent – can be done later

Not urgent – time is really not a factor
because it may be useful
 Not important – activity will not help
accomplishing something
Time management
• Using this rating, the following process can be applied in
time management:
– Be clear about the objectives that must be achieved.
– Rank the objectives in terms of its importance and
urgency.
– List the activities that are necessary to achieve these
objectives.
– Assign priorities to the activities in terms of its importance
and urgency.
– Schedule the activities that must be done according to the
priorities determined in the previous step.
• By following this process, managers can be successful in
applying the 80-20 principle – can produce 80% of results in
20% of the time.
Summary
• Although planning is the fundamental management
function, managers are sometimes reluctant to plan.
The reason for this can be a lack of knowledge about
the importance of planning.
• It is important that mangers realise why planning is
important for any organisation that is serious about
improving its competitive position in the marketplace.
• Planning is a systematic procedure and therefore the
steps in the planning process are helpful.