chapter two mgt

8/3/2019 Chapter Two Mgt

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PLANNING

Prepared by Emnet N.

Chapter TWO


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2.1 Concepts and need for planning

2.1.1 concepts of planningPlanning - is the process of setting objectives anddetermining the steps needed to attain them.

is systematic preparation for tomorrow,

today is an orderly process that allows managers to

determine what they want and how they get it

deals with ends (what is to be done)

Chapter TWOPlanning function


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Cont Planning answers six basic questions in regard to any

intended activity (objective). what ,when, where, who,how and how much

in planning managers:

assess the future Determine objectives of the organization and develop the

overall strategies.

determine resources needed to achieve the objectives


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2.1.2 Need for planning

Planning is important for every organization irrespective

of its size, objectives, and location. Because decisions without planning would become

random this may lead to failure of entire organization.

Planning is important for several reasons:

1.It provides direction for an organization byspecifying objectives

2. It reduces risk and uncertain of the future3. It allows organizational members to

concentrate on common organization'sobjective4. It provides criteria for decision making5. It provides basis for control or it facilitates

control


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2.2 Types of Plans

Plan can be classified in to different types based on

various criteria (basis):repetitiveness,

time dimension and

scope or breadth dimension Classification of plans based on repetitiveness

On the basis of repetitiveness plans can beclassified in to two:

single use plans

standing plans


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I, Single use plans

Single use plans are those plans whichhave no

more use after objective is accomplished.

Relatively for short period of time.

Are non- recurring in nature.

They include: programs , projects, and Budgets.

Program:- is set of goals, policies, procedures,rules, job assignments, resources to be employed,

and other elements necessary to carry out a givencourse of action.

is set of activities used to accomplish objectivesor used to solve some problem


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Single use plans project:-is specific action plan formulated to

complete various aspects of a program which canbe distinctly identified as a clear-cut grouping ofactivities with definite objectives and completiontime.

Budget:- is a statement of expected resultsexpressed in numerical terms. Even if budget isoften thought as control technique, it is also a plan

since it sets forth objective to attain. Some times called as 'numerical plan' as they are

quantitative in nature.


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II,standing plans.

Standing plans are type of plans which can be usedagain and again once they made.

They remain useful for long period in dealing withrepetitive situations . They include: -

policies, procedure,

Method and

rules


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II,standing plans.

Policies:-are guidelines to decision making.

Policies establish abroad framework with in whichmanagers at different levels make decisions.

are general guide to thinking and action

Policies are important for an organization as they:provide guidance to decision making

Channels all decisions toward the attainment of objectives.

Ensure consistency and uniformity in decision making


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II,standing plans.

Procedures:- are sequences of steps or activitiesinvolved in making decisions or performing othertasks.

Procedures aim at laying down a mechanism for

orderly performance and coordination of variousorganizational activities.

avoid random actions and operations.

Like policies, procedures also contribute in

consistency of organizational activities by providingsteps.


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II,standing plans.

Methods:- are sub-units of procedure They show clearly as to how a step of procedure

should be performed

They indicate the techniques to be employed make

the procedure effective Rules :- are on-going specific plans influencing

human behavior or conducts at work place.

are fixed plans and define what should and what

should not be done. (Guide to action). Unlike polices, rules don't allow for interpretation or

decisions. Decisions are needed only in making therules.


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Classification of plans

Classification of plans based on time dimension

Basically planning deals with future and the future ismeasured in time. Hence it is convenient and acceptableto think of different kinds of planning in terms of the time

periods for which the planning is intended.Taking time in consideration a plan can be categorized in to

three Long range plans

Intermediate plans

short range plans

Long range plans

Long range plans are those plans which have longer timehorizon.

they are concerned with distant future than immediate


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Intermediate plans

Intermediate range plans are those plans with a timehorizon between one and five years.

They range between long and short-term plans.


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short range plans

Short range plans are those plans with timedimension it is not possible to have aright timehorizon guide line.

For a plan to be short range or long range, it depends

on the size of an organization and nature of businessof an organization.

So short range plan for one organization may be anintermediate or long range plan for the other

organization.

Cl ifi ti f l b d


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Classification of plans based on scope(Breadth)

Based on their scope or breadth plans canbe classified in to three types:

strategic planstactical plans, and

operational plans.Strategic plans:Performed by top-level

management

Mostly long range in its time frame Expressed in relatively general terms Type of planning that provides general future

based direction to organization


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Tactical plans

Tactical planning is the process of developing actionplans through which strategies are executed.

Tactical plan- is a plan used to develop meansneeded to activate and implement strategy.

Tactical plans:performed by middle level managers

Have shorter time frame, more detail and narrowerscope than strategic plans

Guide submits of an organization


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Operational plans

Operational planning is the process of setting short-range objectives and determining in advance howthey will be accomplished.

Operational plans:

are first line managers' tools for exciting daily, weekly, andmonthly activities.

performed by operational level managers.

are Specific and more detail than others.


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2.3 Planning process

Planning is not something which is made all once ata time.

A person involved in planning pass through number ofsteps to make effective plans

The steps generally involved in planning are: environmental Analysis and forecasting

Establishing objectives

determining alternative course of Action

evaluating the alternatives Select the best alternatives

Implementing the plan

Controlling and evaluating the results

Step 1 environmental Analysis and


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Step 1. environmental Analysis andforecasting

awareness of environment, both internally andexternally.

It involves continual assessment of the environmentto determine

strengths internally weaknesses

to be aware of opportunities externally

threats

Based on this analysis of internal and externalenvironment forecasting (predicting) of differentenvironmental factors such as economics,technological, social, political etc can be made to

assist real planning.


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Step-2. Establishing objectives

establish objectives for the enterprise and then foreach subordinate work unit.

Objectives are established at all levels of thestructure, beginning at the top level and running down

to first line

St 3 d t i i lt ti f


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Step 3. determining alternative course ofAction

Identifying alternative ways for reaching objectives. When developing alternatives a manager should try to

create as many roads to each objective as possible.

In fact, in most cases the challenging is not to find

alternative ways but to decide which ones are best. To decide on best ones it requires evaluation.


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Step 4. evaluating the alternatives

Evaluating each alternative to select the best one toachieves objectives.

In evaluating, managers should assess cost(disadvantages) and benefits (advantages) of all

alternatives. The assessment may include both financial and non

financial considerations.


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Step 5. Select the best alternatives

After evaluating all possible alternatives, managerswill select alternative that remains better than others.

It may be an alternative with least disadvantages andmost advantages.


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Step 6. Implementing the plan

After the alternative course of action selected, it isimportant to develop an action plan to execute theplan.

In this step method for implementation will be

suggested.

St 7 C t lli d l ti th


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Step 7. Controlling and evaluating theresults

Once the plan is implemented it needs monitoring.

monitor the progress being made,

evaluate the reports made based on results, and

make any necessary modifications, because factors inenvironment are constantly changing, plans must be

modified to cope up with changes.


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mission goals, objectives, and targets

These words are often the most confusing words

in management filed. They are some what similarbut not exactly the same in their meanings.

Mission :-refers to the main reason why the

organization is established. it indicates purpose for existence of an

organization

relates organization to external environment.

Goal :- is expected (desired) performance to beaccomplished but it is not set specifically

It is desired future outcome that an organization

strives to achieve generally.


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, ,targets

Objective : is expected (desired) performanceexpressed in specific and measurable terms(manner).

Target : is expected performance set for specific

individual in an organization. is more specific in nature than objectives.


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The difference between goals,objectives and targets.

Goals are milestone to reach.Example Ethiopia wants to be the world's

best producer of coffee. Objectives are usually the written steps to achieve

goals.

Example to increase coffee production by20% per annum.

Targets are usually numerical objectives.

December sales of $200,000 per salesperson is a target.

C


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2.4 Characteristics of good(effective) objective effective objectives should be SMART Specific:- Objectives should state the exact level

of performance expected specifically.

Measurable:-as much as possible objectivesshould be expressed quantitatively.

therefore, it is possible to easily determinewhether or not goals have been achieved.


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2.4 Characteristics of good(effective) objective

Appropriate:-objectives should be prepared insuitable, acceptable. and achievable manner.

Realistic and challenging:- objectives should beattainable or real rather than fantasy. It also

better to have challenging objectives as far asthey could motivate workers if attained.

Time bound :-objectives should be set with inspecific time limits or target dates for theirattainment.


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2.5 Planning techniques

Managers can improve the quality of their planningby applying variety of Planning tools and techniques.The important fanciful of planning is managementby objectives (MBO).

Management by objective (MBO) MBO is the technique in which managers and their

subordinates together set objectives for subordinates,periodically evaluate the performance and reward

effective workers etc.

Elements of MBO


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Elements of MBO

1. Top level goal setting: effective MBO

begins with the objective being set by topmanagers which is open for discussion bymanagers and subordinates to reach up onthe common objectives.

2. individual targets:-in an effective MBOeach manager and subordinate has clearlydefined responsibilities or expected results

3. Participation:-both managers andsubordinates are participating in objectivesetting.

4. Autonomous of individuals:-Once the

objective is set, subordinates have a right to


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Elements of MBO

5.performance review:-managers andsubordinates periodically meet to reviewprogress toward the objectives

6. Reward:-those individuals who meet the

objectives in performance review are rewarded.The rewords may be recognition, praise, payincrease etc

St i MBO


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Steps in MBO

Effective MBO passes through different steps:Setting individual objectives and plans

with each subordinate the manager jointly setobjectives.

the participation of subordinates in the objectivesetting process is away of strengthen theircommitment to achieve their goals.Giving feedback and evaluating performance

Employees must know how much they are

progressing toward their objectives. Thus, managers and subordinates should meet

frequently to review progress and evaluateperformance communication is key factor in

determining success of failure of MBO


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Steps in MBO

Rewarding according toperformance

employees' performance should be measured

against their objectives. Employees who meet their objectives should be

rewarded through recognitions, praises, Pay risesand so on .


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Benefits and limitations of MBO

BenefitsMBO uplifts workers motivation

MBO allows managers and

subordinates share experienceLimitation

It consumes much time


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The END

chapter two mgt

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