23298601 Planning Process

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ManagementProcess

Lecturer : H.P. Rasika Priyankara

Unit Title : BM311Stage of Course: Year III Semester I


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PlanningWe will plan to plan.


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Content

Planning Defined.

Planning as a Management Function.

Planning Horizons.

The Planning Process.

Types of Plans.

Barriers to Planning and how to overcome barriers.


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If you do not know where you are goingyou can never get lost

If you do not know where you are, it isnot possible to determine how you canget to where you want to be.

If you know where you are and if youknow where you want to go , the task is

to find the best route to go there.

Basic Principles in Planning


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Planning is going from known to

unknown.

Planning is deciding in advance what

to do, how to do it, when to do it and

who is to do it. (Knoots and Odonnell)

Planning Defined


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Planning is the process of establishing

goals and suitable courses of action for

achieving those goals.

(Stoner and Freeman. 1995)

Planning is the process of deciding theobjectives or goals of the organization and

preparing how to meet them.(G.A Cole,1993)

Planning Defined Contd


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Accordingly, planning can

generally be defined as theprocess of establishing suitable

objectives and strategies for an

organization.

Planning Defined Contd


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Planning defines where the organization

wants to be in the future and how to get

there

Planning

Where we are?

Where we want

to be?

How to get there?


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If management process is a train,

Planning is the locomotive which

carries the apartments of

Organizing, Leading andControlling.

Planning precedes the execution of

all the managerial functions.

(Dr Anil Chandrakumara)

Planning as a Management

Function


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Planning as a Management

Function Contd

Planning

Setting

Goals

&

Objectives

Strategies

Organizing

Arranging work,

Authority &

Resources

Leading

Influencing subordinates

in achieving objectives

Controlling

Assuring and taking

corrective actions

Source: Chandrakumara. A, Management Principles,Concepts and Functions


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Planning horizons explains length of

time of the plan.

There are three categories of plans on

the basis of time.

Planning Horizons

Long Range Intermediate Short Range

Beyond 3 Years 1 to 3 Years Less than 01 year


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In broader sense, the planning processinvolves three major activities.

Deciding the goals and objectives of the entity

subject to planning.

Deciding ways and means (strategies) best

suited to achieve those goals and objectives.

Getting those decisions into plans.

(Documentation)

The Planning Process


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The above mentioned 3 activities can be subdivided intoseveral activities.

1. Goal formulation.

2. Identification of current objectives and strategy.3. External environmental analysis.

4. Internal environmental analysis.

5. Identification of SWOT.

6. Gap analysis7. Strategic decision making.

8. Strategy implementation.

9. Measurement and control of progress.

The Planning Process Contd


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Goal Formulation

Our focus is on four aspects

1. Vision2. Mission

3. Goals4. Objectives


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Goal Formulation Contd

What can be worse than beingblind?

Having eyes to see, but no

vision.(Hellen Keller)

Vision, is it a dream?


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Goal Formulation

Vision

An image of the future we seek tocreate.

Vision defines the envisionedsocietal purpose and Core Values of

the buiness in the envisioned future.

A vision motivates individuals and facilitate

coordination of activities.


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Vision = Core Ideology+Envisioned Future

Core Ideology= Core Values +Core Purpose

Envisioned Future = BHAG +Vivid Description


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Core Ideology = Core Values + CorePurpose

Core ideology defines enduring character.

Leaders dieProduct become obselete

Market changeNew technology emerge

Management fads come & go

ButCore ideology do not change, it guides and

ins ires us.


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Core Values

What are values?

What we belive as What is goodand Bad

Value System is enduring organization ofbeliefconcerning preferable mode of conduct or end

state of existence along a continuum of relative

importance- Milton Rokeach

Core values are the essential and

enduring tenets of an organization.


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Rokeach Value Survey (RVS)

Terminal Values Instrumental Values

A sense ofaccomplishment (lastingcontribution)

Ambitious

(hard working,

aspiring)Happiness Honest (sincere,

truthful)

Pleasure (enjoyable) Independent (selfsufficient)

Salvation (saved,eternal life)

Loving (affectionate)


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Vision

Core Values

Values that an organization will notchange according to environmental

changes.

Core values do not stem from

market requirements but from the

inner beliefs of founders.


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Vision

How to arrive at Core Values ?

1. Prepare a priliminary list of values

2. Ask the question

If the circumstance changed and

peanalized us for holding thisvalue, would we still keep it?

What is your honest


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Core Values

If your answer isYES

The concerned value is a core value

If your answer is

NO

The concern value is not a core value

Who should involve in articulating

the core values?

MARS GROUP


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Vision

Core Values

Can you find out core values from a

book ?

Can we use core values to gain

competitive advantage?

Are there universaly right set of core

values?


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Core Values

Customer service Sony doesnt

Respect for individual Disney Doesnt

Quality Walmart doesnt

Team work Nordstrom doesnt

There are no universaly right set of core

values. Core values are intrinsic.


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Core ValuesHPs Way

1. Deep respect for individual,

2.A dedication to affordablequantity and reliability,

3.A commitment to communityresponsibility.


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Core Values Contd

Sony Core Values

1. Elevation of the Japanese

culture and national status.

2.Being pioneer not following

others; doing the impossible.

3.Encouraging individual

ability and creativity.


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Core Purpose

The organizations reason for being.

It doesnt just describe theorganizations output and target market.

Core purpose is like a guiding star onthe horizon.


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Core Purpose Contd

How to get at core purpose?

Ask 5 Whys

Core purpose inspires people at all levelsof an organization


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Core Purpose Contd

3M To solve unsolved problemsinnovatively.

Sony- To experience the joy ofadvancing and applying technology for

the benefit of the public.Walt Disney To make people happy

Cargill To improve the standard of

living around the world.HP To make technical contributions for

the advancement and welfare of

humanity.


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Vision Contd Core Ideology have to be discovered orarticulated and it will provide the basisfor the organization.

Core ideology is to guide and inspire,not to differentiate.

It should be exciting to people insideand not to the outsiders.

It helps in attracting suitable people.


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Envisioned Future

Envisioned future consists of two parts

1. 10-30 year Big, Hairy, AudaciousGoal

2.Vivid Description


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Envisioned Future Contd

Vision Level BHAG

In establishing organizational levelBHAG, required to look at future first.

Thinking beyond current capabilities

and current environment is essential.


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Envisioned Future

Vision Level BHAG

BHAGs categories

1. Target BHAGs

2. Common Enemy BHAGs

3. Role Model BHAGs

4. Internal Transformation BHAGs


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Envisioned Future

1. Target BHAGs

Become the company known for

changing the worldwide poor qualityimage of Japanese products. (Sony 1950)

Become $125 billion company by the

year 2000. (Walmart 1990)


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Envisioned Future

2. Common Enemy BHAGs

Crush Addidas (Nike 1960s)

We will destroy Yamaha (Honda

1970s)


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Envisioned Future

3. Role Model BHAGs

Become the Harvard of the West (Stanford University1940s)

4. Internal Transformation BHAGs

Transform this company from defensecontractor in to the best diversified high

technology company in the world. (Rockwell 1995s)


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Vivid Description

A vibrant, engaging and specific

description of what it will be like to

achieve the BHAG.

It is a question of painting your future

picture with your words.


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Vivid Description

SonyWe will create products that become pervasivearound the world. We will be the first Japanesecompany to go into US market and distribute

directly. We will succeed with innovations that U.Scompanies have failed at such as transistor radio.Fifty years from now, our brand name will be aswell known as any in the world and will signifyinnovation and quality that rival the most

innovative companies anywhere. Made in Japanwill mean something fine, not something shoddy.


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VisionContd

Identifying core ideology is a discovery

process

Setting the envisioned future is a creative

process.

It makes no sense to analyze whether an

envisioned future is the right one.


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Mission

Mission derives from the vision of theorganization.

Mission defines the scope and the philosophy ofa business

The fundamental, unique purpose that sets abusiness apart from other firms of its types andidentifies the scope of its operations in productand market terms.


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Examples of Mission Statements

Sampath Bank

To be the most innovative, trusted andbest process quality provider of financialservices in the region.

Newport News ShipbuildingWe shall build good ships here at aprofit if we can- at a lost if we must- but

always good ships.


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Examples of Mission Statements

Maytag Corporations

To improve the quality of home life bydesigning, building,marketing and servicing thebest appliances in the world .

Commercial Bank (Sri Lanka)To deliver optimum value to our

customers, employees, shareholders and the

nation.

Goal Formulation


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GoalsA goal is a desired state of affairs of aperson or of a system.

Goal is an open ended statement of what

one wants to accomplish with noquantification of what is to be achieved andno time criteria for completion. Whencompare with an Objective, a goal haslesser SMART features.

S SpecificM Measurable

A AchievableR Rational

T - Time bound


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Long term GoalsHonda (1970)

We will destroy Yamaha

Nike (1960s)

Crush Adidas

Rockwell (1995)

Transform this company from a defense contractorin to the best diversified high technology company in


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Objective

An objective is a specific short term targetfor which measuarable results can be

obtained.

What is intended to achieve within a giventime period.

Objectives should present SMART Features.

Example

Reduce cutomer complaints by 20 % within


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2) Identification of Current

Objectives and Strategies

This is identifying where we are.

What our objectives?

What is our current strategy?

Who are our customers?

What major competitive advantages dowe enjoy?

In what product do we excell?

BCG Matrix, General Electric Model


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External Environment

Analysis

All the external factors which are affectingthe organization can be identified asexternal business environment.

External Environment

Micro Macro

CompetitorsCustomers

Suppliers

Local Authorities

Distributors

NGOs etc..

Political and LegalEconomic

Social and Cultural

Technological

Natural (Ecological)


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Internal Environment

Analysis

All the internal factors which are affectingthe organization can be identified as internalbusiness environment.

Analysis about

Organizational Structure

Organizational Culture

Resources

Share Holders


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Identification of SWOT

After anlysing the internal and externalenvironment we are able to identifyStrengths,Weaknesses, Opportunities andThreats which are exist in the environment.

SWOT analysis will support in establishingappropriate strategies.

S

W

O

T


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GAP Analysis

The performance gap is the differencebetween the objectives established in thegoal formulation and the results likely to beachieved if the existing strategy iscontinued.

Gap Analysis

Continue with

the current strategy

Revise the strategies and

craft new strategies


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Ansofs Strategies

Intensive Strategies

Market Penetration

Market Development

Product Development Integrative Strategies

Horizontal Integration

Vertical Integration

Diversification Strategies

Concentric

Horizontal

Conglomerate


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Strategic Decision Making

If there is a performance gap it isnecessary to change the strategy.

Then the need arises to identify, evaluateand select alternative strategic approaches.

Porters 3 Generic Strategies are available.

Overall cost leadership strategy.

Diferentiation strategy.

Focus strategy.


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Strategic ImplementationOnce the strategy has been determined, it

must be implemented or incorporate into thedaily operations of the organization.

Even the most sophisticated and creativestrategy will not benefit the organizationunless it is carried out effectively.

implementation tools.

Programs,

procedures, and

budgets

C


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Measurements and Controls

Two main questions to be answered.

1. Is the strategy being implementedas planned?

2. Is the strategy achieving theintended results?

T f Pl


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Types of Plans

Strategic Plans/

Corporate Plans

Business Plans /Divisional Plans

Functional Plans

Operational Plans

S i / C Pl


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Strategic / Corporate Plans

Corporate plans ensure a viable fitbetween the external environmentalconditions and internal strategic factorsso that the organization will achieve itsvision and mission by winning asustainable competitive advantage.

Elements of Corporate plans

Corporate visionCorporate missionCorporate goals and objectivesCorporate policies

Corporate strategies

Di i i l B i Pl


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Divisional or Business Plans

This plan is applicable when the corporateentity is multi business one.

In such case, the corporate plan will spellout the strategic goals for each StrategicBusiness Unit (SBU).

The divisional or business plans shouldspecify the strategies that can be adopted

to achieve strategic goals assigned toeach SBU.

Example

Heyleys GroupConsumer Agro Plantation Tourism

F ti l Pl


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To implement strategic or business plans, it is

important to have tactical or functional plans.

These plans are prepared within the scope of

functional management areas such asMarketing, Finance, HR, Operations, IT, R& D.

Functional Plans

Finance Marketing HR Operations

Business Plan

O ti l Pl


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Operational plans concentrates to implement

functional plans.

Operational plans are done by middle and

lower level managers.

These are short range plans. Having timeframe of one year or less or may be day to

day activities.

Operational Plans

Single Use Plans Standing Plans

Operational Plans

O ti l Pl


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Single Use Plans

Apply to activities that do not repeat and

recur once the activity is completed. The

plan is no longer needed. (Programs, Projects, andBudgets)

Standing Plans

Standing plans are made once and

retain their value over a period ofyears with revisions and updates.

(Procedures, rules and regulations)

Operational Plans Contd

B fit f Pl i


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Prerequisite to successful growth

Plans set up the organizational framework.

Plans help delegation.

Plans help motivate people.

Plans serves as a communication media.

Plans lay the basis for control.

Benefits of Planning

Barriers to the Planning


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Constantly changing environment.

Reluctance of managers to establish

goals.

Unwillingness to give up alternative

goals

Fear of failure

Lack of organizational knowledge Lack of confidence.

Lack of knowledge about planning

techniques.


Process



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Inadequate reward systems.

Resistance to change.

Time and expenses.

Lack of interest of the top management.

Cultural and behavioral patterns of

managers.


Process Contd

How to overcome Barriers to


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Planning should be creative, proactiveand more attention should be paid on

environmental changes.

Enhance the knowledge of planningtechniques and systems.

Get the support of the top management.

Change attitudes of managers and

employees.

Get the employee participation in

planning.


the Planning Process?



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Communicate with subordinates about thereasons, why specific actions are being

implemented.

Be a good change agent.

Plans should be simple and flexible.

(Contingency planning is required)

Plans should be monitored and it should be a

continuous activity.


the Planning Process?


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Summary Planning Defined.

Planning as a Management Function.

Planning Horizons.

The Planning Process.Types of Plans.

Barriers to Planning and overcoming barriers.


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Thank You !

Documents

23298601 Planning Process