Planning in Management

Planning is deciding in advance what to do and how to do.It is one of the basic managerial functions. Before doing something, the manager must formulate an idea of how to work on a particular task. Thus, planning is closely connected with creativity and innovation. It involves setting objectives and developing appropriate courses of action to achieve these objectives.

Planning Definition

"Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen"

Importance of Planning

·         Planning provides directions

·         Planning reduces the risks of uncertainty

·         Planning reduces overlapping and wasteful activities

·         Planning promotes innovative ideas

·         Planning facilitates decision making

·         Planning establishes standards for controlling.

Features of planning

·         Planning focuses on achieving objectives

·         Planning is a primary function of management

·         Planning is pervasive

·         Planning is continuous

·         Planning is futuristic

·         Planning involves decision making

·         Planning is a mental exercise

Planning Process

Setting objectives: Objectives may be set for the entire organisation and each department or unit within the organisation.

Developing premises: Planning is concerned with the future which is uncertain and every planner is using conjucture about what might happen in future.

Identifying alternative courses of action: Once objectives are set, assumptions are made. Then the next step would be to act upon them.

Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative.

Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and implemented.

Implement the plan: This is concerned with putting the plan into action.

Follow-up action: Monitoring the plans are equally important to ensure that objectives are achieved.

Types of Plans

Objectives: Objectives are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations.They serve as a guide for overall business planning.

Strategy: strategy is a comprehensive plan for accomplishing an organisation objectives. This comprehensive plan will include three dimensions, 

(a) determining long term objectives, 

(b) adopting a particular course of action, and 

(c) allocating resources necessary to achieve the objective.

Policy: They are guides to managerial action and decisions in the implementation of strategy.

Procedure: Procedures are routine steps on how to carry out activities. Procedures are specified steps to be followed in particular circumstances.

Method: Methods provide the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed.

Rule: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion.

Programme: Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action.

Budget: It is a plan which quantifies future facts and figures. It is a fundamental planning instrument in many organizations.

UNDERSTANDING STRATEGIC PLANNING

Introduction -- What is Strategic Planning?

There Are Various Different Views and Models -- and the Process You Use Depends

Simply put, strategic planning determines where an organization is going over the next year or more, how it's going to get there and how it'll know if it got there or not. The focus of a strategic plan is usually on the entire organization, while the focus of a business plan is usually on a particular product, service or program.

There are a variety of perspectives, models and approaches used in strategic planning. The way that a strategic plan is developed depends on the nature of the organization's leadership, culture of the organization, complexity of the organization's environment, size of the organization, expertise of planners, etc. For example, there are a variety of strategic planning models, including goals-based, issues-based, organic, scenario (some would assert that scenario planning is more of a technique than model), etc.

1) Goals-based planning is probably the most common and starts with focus on the organization's mission (and vision and/or values), goals to work toward the mission, strategies to achieve the goals, and action planning (who will do what and by when).

2) Issues-based strategic planning often starts by examining issues facing the organization, strategies to address those issues and action plans.

3) Organic strategic planning might start by articulating the organization's vision and values, and then action plans to achieve the vision while adhering to those values. Some planners prefer a particular approach to planning, eg, appreciative inquiry.

Some plans are scoped to one year, many to three years, and some to five to ten years into the future. Some plans include only top-level information and no action plans. Some plans are five to eight pages long, while others can be considerably longer.

Quite often, an organization's strategic planners already know much of what will go into a strategic plan (this is true for business planning, too). However, development of the strategic plan greatly helps to clarify the organization's plans and ensure that key leaders are all "on the same script". Far more important than the strategic plan document, is the strategic planning process itself.

Also, in addition to the size of the organization, differences in how organizations carry out the planning activities are more of a matter of the nature of the participants in the organization -- than its for-profit/nonprofit status. For example, detail-oriented people may prefer a linear, top-down, general-to-specific approach to planning. On the other hand, rather artistic and highly reflective people may favor of a highly divergent and "organic" approach to planning.

Benefits of Strategic Planning

Strategic planning serves a variety of purposes in organizations, including to:

1. Clearly define the purpose of the organization and to establish realistic goals and objectives consistent with that mission in a defined time frame within the organization’s capacity for implementation.

2. Communicate those goals and objectives to the organization’s constituents.

3. Develop a sense of ownership of the plan.

4. Ensure the most effective use is made of the organization’s resources by focusing the resources on the key priorities.

5. Provide a base from which progress can be measured and establish a mechanism for informed change when needed.

6. Listen to everyone’s opinions in order to build consensus about where the organization is going.

Other reasons include that strategic planning:

7. Provides clearer focus for the organization, thereby producing more efficiency and effectiveness.

8. Bridges staff/employees and the board of directors (in the case of corporations).

9. Builds strong teams in the board and in the staff/employees (in the case of corporations).

10. Provides the glue that keeps the board members together (in the case of corporations).

11.Produces great satisfaction and meaning among planners, especially around a common vision.

12. Increases productivity from increased efficiency and effectiveness.

13. Solves major problems in the organization.

What are the steps involved in Planning Process?

The various stages in the process of planning are as follows:

1. Goal setting:

Plans are the means to achieve certain ends or objec tives. Therefore, establishment of organizational or overall objectives is the first step in planning. Setting objectives is the most crucial part of planning. The organizational objectives should be set in key areas of operations.

They should be verifiable i.e., they should as far as possible be specified in clear and measurable terms. The objectives are set in the light of the opportunities perceived by managers. Establishment of goals is influenced by the values and beliefs of executives, mission of the organization, organizational resources, etc.

Objectives provide the guidelines (what to do) for the preparation of strategic and procedural plans. One cannot make plans unless one knows what is to be accom plished. Objectives constitute the mission of an organisation. They set the pattern of future course of action.

The objectives must be clear, specific and informative. Major objectives should be broken into depart mental, sectional and individual objectives. In order to set realistic objectives, planners must be fully aware of the opportunities and problems that the enterprise is likely to face.

2. Developing the planning premises:

Before plans are prepared, the assumptions and conditions underlying them must be clearly defined these assumptions are called planning premises and they can be identified through accurate forecasting of likely future events.

They are forecast data of a factual nature. Assessment of environment helps to reveal opportunities and constraints. Analysis of internal (controllable and external (uncontrollable) forces is essential for sound planning premises are the critical factors which lay down the bounder for planning.

They are vital to the success of planning as they supply per tenant facts about future. They need revision with changes in the situa tion. Contingent plans may be prepared for alternate situations.

3. Reviewing Limitations:

In practice, several constraints or limitations affect the ability of an organization to achieve its objectives. These limitations restrict the smooth operation of plans and they must be anticipated and provided for.

The key areas of Imitations are finance," human resources, materials, power and machinery. The strong and weak points of the enterprise should be correctly assessed.

4. Deciding the planning period:

Once the broad goals, planning premises and limitations are laid down, the next step is to decide the period of planning. The planning period should be long enough to permit the fulfillment of the commitments involved in a decision.

This is known as the principle of commitment. The planning period depends on several factors e.g., future that can be reasonably anticipated, time required to receive capital investments, expected future availability of raw materials, lead time in development and commercialization of a new product, etc.

5. Formulation of policies and strategies:

After the goals are defined and planning premises are identified, management can formulate poli cies and strategies for the accomplishment of desired results. The res ponsibility for laying down policies and strategies lies usually with management. But, the subordinates should be consulted as they are to implement the policies and strategies.

Alternative plans of action should be developed and evaluated carefully so as to select the most appropriate policy for the organization. Imagination, foresight, experience and quantitative techniques are very useful in the development and evalua tion of alternatives.

Available alternatives should be evaluated in the light of objectives and planning premises. If the evaluation shows that more than one alternative is equally good, the various alternatives may be combined in action.

6. Preparing operating plans:

After the formulation of overall operat ing plans, the derivative or supporting plans are prepared. Several medium range and short-range plans are required to implement policies and strategies.

These plans consist of procedures, programmers, sche dules, budgets and rules. Such plans are required for the implementation of basic plans.

Operational plans reflect commitments as to methods, time, money, etc. These plans are helpful in the implementation of long range plans. Along with the supporting, plans, the timing and sequence of activities is determined to ensure continuity in operations.

7.Integration of plans:

Different plans must be properly balanced so that they support one another. Review and revision may be necessary before the plan is put into operation. Moreover, the various plans must be communicated and explained to those responsible for putting them into practice.

The participation and cooperation of subordinates is necessary for successful implementation of plans. Established plans should be reviewed periodically so as to modify and change them when ever necessary.

What is a SWOT Analysis?

Conducting a SWOT analysis of your business is actually kind of fun. It won’t take much time, and doing it forces you to think about your business in a whole new way.

The point of a SWOT analysis is to help you develop a strong business strategy by making sure you’ve considered all of your business’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace.

As you might have guessed from that last sentence, S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.

Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them.

Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.

New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.

How to Conduct a SWOT Analysis

 

To get the most complete, objective results, a SWOT analysis is best conducted by a group of people with different perspectives and stakes in your company. Management, sales, customer service, and even customers can all contribute valid insight. Moreover, the SWOT analysis process is an opportunity to bring your team together and encourage their participation in and adherence to your company’s resulting strategy.

A SWOT analysis is typically conducted using a four-square SWOT analysis template, but you could also just make a lists for each category. Use the method that makes it easiest for you to organize and understand the results.

Once you are finished brainstorming, create a final, prioritized version of your SWOT analysis, listing the factors in each category in order from highest priority at the top to lowest priority at the bottom.

STRENGTHS (INTERNAL, POSITIVE FACTORS)

Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within your control.

·   What do you do well?

·   What internal resources do you have? Think about the following:

·          

o    Positive attributes of people, such as knowledge, background, education, credentials, network, reputation, or skills.

o    Tangible assets of the company, such as capital, credit, existing customers or distribution channels, patents, or technology.

·   What advantages do you have over your competition?

·   Do you have strong research and development capabilities? Manufacturing facilities?

·   What other positive aspects, internal to your business, add value or offer you a competitive advantage?

WEAKNESSES (INTERNAL, NEGATIVE FACTORS)

Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor.

·   What factors that are within your control detract from your ability to obtain or maintain a competitive edge?

·   What areas need improvement to accomplish your objectives or compete with your strongest competitor?

·   What does your business lack (for example, expertise or access to skills or technology)?

·   Does your business have limited resources?

·   Is your business in a poor location?

OPPORTUNITIES (EXTERNAL, POSITIVE FACTORS)

Opportunities are external attractive factors that represent reasons your business is likely to prosper.

·   What opportunities exist in your market or the environment that you can benefit from?

·   Is the perception of your business positive?

·   Has there been recent market growth or have there been other changes in the market the create an opportunity?

·   Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your timing?

THREATS (EXTERNAL, NEGATIVE FACTORS)

Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur.

·   Who are your existing or potential competitors?

·   What factors beyond your control could place your business at risk?

·   Are there challenges created by an unfavorable trend or development that may lead to deteriorating revenues or profits?

·   What situations might threaten your marketing efforts?

·   Has there been a significant change in supplier prices or the availability of raw materials?

·   What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales?

·   Has a new product or technology been introduced that makes your products, equipment, or services obsolete?

Developing Strategies from Your SWOT

Once you have identified and prioritized your SWOT results, you can use them to develop short-term and long-term strategies for your business. After all, the true value of this exercise is in using the results to maximize the positive influences on your business and minimize the negative ones. But how do you turn your SWOT results into strategies? One way to do this is to consider how your company’s strengths, weaknesses, opportunities, and threats overlap with each other. This is sometimes called a TOWS analysis.

For example, look at the strengths you identified, and then come up with ways to use those strengths to maximize the opportunities (these are strength-opportunity strategies). Then, look at how those same strengths can be used to minimize the threats you identified (these are strength-threats strategies).

Continuing this process, use the opportunities you identified to develop strategies that will minimize the weaknesses (weakness-opportunity strategies) or avoid the threats (weakness-threats strategies).

The following table might help you organize the strategies in each area:

Once you’ve developed strategies and included them in your strategic plan, be sure to schedule regular review meetings. Use these meetings to talk about why the results of your strategies are different from what you’d planned (because they always will be) and decide what your team will do going forward.

Strategy Formulation vs Strategy Implementation

Following are the main differences between Strategy Formulation and Strategy Implementation-

Strategy Formulation	Strategy Implementation
Strategy Formulation includes planning and decision-making involved in developing organization’s strategic goals and plans.	Strategy Implementation involves all those means related to executing the strategic plans.
In short, Strategy Formulation is placing the Forces before the action.	In short, Strategy Implementation is managing forces during the action.
Strategy Formulation is an Entrepreneurial Activitybased on strategic decision-making.	Strategic Implementation is mainly an Administrative Task based on strategic and operational decisions.
Strategy Formulation emphasizes on effectiveness.	Strategy Implementation emphasizes on efficiency.
Strategy Formulation is a rational process.	Strategy Implementation is basically an operational process.
Strategy Formulation requires co-ordination among few individuals.	Strategy Implementation requires co-ordination among many individuals.
Strategy Formulation requires a great deal of initiative and logical skills.	Strategy Implementation requires specific motivational and leadership traits.
Strategic Formulation precedes Strategy Implementation.	STrategy Implementation follows Strategy Formulation.

Strategy Implementation - Meaning and Steps in Implementing a Strategy

Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance. Organizational structure allocates special value developing tasks and roles to the employees and states how these tasks and roles can be correlated so as maximize efficiency, quality, and customer satisfaction-the pillars of competitive advantage. But, organizational structure is not sufficient in itself to motivate the employees. An organizational control system is also required. This control system equips managers with motivational incentives for employees as well as feedback on employees and organizational performance. Organizational culture refers to the specialized collection of values, attitudes, norms and beliefs shared by organizational members and groups.

Follwoing are the main steps in implementing a strategy:

	Developing an organization having potential of carrying out strategy successfully.
	Disbursement of abundant resources to strategy-essential activities.
	Creating strategy-encouraging policies.
	Employing best policies and programs for constant improvement.
	Linking reward structure to accomplishment of results.
	Making use of strategic leadership.

Excellently formulated strategies will fail if they are not properly implemented. Also, it is essential to note that strategy implementation is not possible unless there is stability between strategy and each organizational dimension such as organizational structure, reward structure, resource-allocation process, etc.

Strategy implementation poses a threat to many managers and employees in an organization. New power relationships are predicted and achieved. New groups (formal as well as informal) are formed whose values, attitudes, beliefs and concerns may not be known. With the change in power and status roles, the managers and employees may employ confrontation behaviour.

Quantitative tools for planning

Quantitative tools are used by management to determine where a company is doing well or struggling compared to the industry and competitors.

KEY POINTS

·         Many quantitative and analytic tools are available for managers to use to better understand workflow processes, financial management, and employee efficiency.

·         A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

·         Simulation is the imitation of the operation of a real-world process or system over time.

·         Trend charts are often used in management to display data over time to explore any potential trends, either positive or negative, that require addition attention by management.

·         Benchmarking allows a manager to see how different aspects of a business are performing compared to national, regional, and industry standards. It also allows management to explore how the company is performing compared to its competitors.

TERMS

·         Decision Tree

A visualization of a complex decision-making situation in which the possible decisions and their likely outcomes are organized in the form of a graph that resembles a tree.

·         Benchmarking

A technique that allows a manager to compare metrics, such as quality, time, and cost, across an industry and against competitors.

Managers can use many different quantitative and analytic tools to better understand workflow processes, financial management, and employee efficiency. These tools, such as decision tress, simulation, trend charts, benchmarking, and financial projections, help managers improve their decision-making abilities, determine how the business is performing relative to competitors, and discover opportunities for improvement. Using these tools to create quantitative and measurable metrics helps an organization see exactly where it is performing well and also where it is performing poorly.

Decision Tree

A decision tree is a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. Decision trees are commonly used in operations research (specifically, in decisionanalysis) to help identify a strategy most likely to reach a goal. They can also be used to map out a thought process or the possible consequences of a decision. A manager may use this tool when deciding between different projects or investments.

Decision Tree

Decision trees are used to determine the consequences and potential outcomes of an investment or a project.

Simulation

Simulation is the imitation of the operation of a real-world process or system over time. The act of simulating something first requires that a model be developed; this model represents the key characteristics or behaviors of the selected physical or abstract system or process. A simulation could be used to study investment decisions by actively playing out what may happen in certain situations.

Trend Chart

Trend charts are often used to display data over time to explore any potential trends (either positive or negative) that require additional attention by management. Many metrics are analyzed using trend charts, including employee productivity, financial metrics, operational efficiency, and comparisons between competitors.

Trend Chart

A trend chart shows changes in spending, prices, efficiency, or any other metric that management is interested in analyzing over time.

Benchmarking

Benchmarking allows a manager to see how different aspects of a business (usually quality, time, and cost) are performing compared to national, regional, and industry standards. It also allows a manager to explore how the company is performing compared to competitors. In the process of benchmarking, management identifies the best firms in the industry, or in another industry where similar processes exist, and compares the results and processes of the target firms to management's own results and processes. In this way, management learns how well the targets perform and, more importantly, the business processes that explain why these firms are successful.

Financial Projections

 

Managers can also use financial analysis as a management tool. When investing in a project or an acquisition of any kind, a manager will always want to know how quickly the investment will bring in a profit. For example, when a company invests in a new building, management will calculate how long it will take for the building to generate enough income to cover the upfront cost of the building, and therefore start bringing in profits. This calculation is sometimes called a payback period. Payback period intuitively measures how long something takes to "pay for itself.” All else being equal, shorter payback periods are preferable to longer payback periods.