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III) Planning
Introduction
For the effective performance of individual working together in group, manger helps in designing an environment to everyone who understands the group purpose and objectives and its method of attaining them. However, without setting the objectives, there is nothing to organize, direct or control. Therefore, every organization is required to specify wants to achieve; Planning is basically related with this aspect. Planning involves selecting mission and the actions to achieve them; it requires decision from available alternative future course of action.
Meaning of Planning
The need of planning becomes more obvious as persons and organization develop an awareness of the precise nature of their objectives. Planning is a process that determines the future course of action. Planning is primarily concerned with looking into future. It requires forecasting of future situation in which organization has to function. It involves selection of suitable course of action.
Definition of Planning
Planning is the determination of the goals and objectives of an enterprise and the selection, through a systematic consideration of alternatives, of the policies, programs and procedure for achieving them.
Features of Planning
1. Goal orientation What ever be the nature of planning it is always directed towards the achievement of certain specific goals that are based on certain objectives. Objectives provide the basic guidelines for planning activities. 2. Primary function- Planning is the primary function of any organization because it is the planning that forms the foundation of management. It is a first and the foremost exercise to be performed in management process. 3. Pervasive- Planning is a function that needs to be carried out at each and every level of the organization, whether it is the top level, middle level, or lower level. Managers have to plan before launching a new business. They have to plan when ever things change.
Purpose & Functions OR Reasons for Planning 1. 2. 3. 4. 5. 6. 7. 1. 2. 3. 4. 5. 6. 7. 8. Essential for Modern Business Related to Performance Focus on Objectives Proper Allocation of Resources Facilitates Control Helpful in Decision making Avoiding Business Failures Corporate Planning Formal & Information Planning Strategic Planning & Functional Planning Administrative & Operational Planning Long range & Short range Planning Ad-hoc and Standing Planning Physical Planning Total or Comprehensive Business Planning
Types of Planning
Objectives
Objectives are the goals, aims, or purpose that organizations wishes to achieve our varying period of time. The objectives of the organization should be sub-objectives. The objectives have hierarchy and a network. The organization and managers may have multiple goals and at times they may be incompatible and may lead to conflicts within organization and with in groups too. The objective of the organization should be supported by sub-objectives. The objectives have hierarchy and a network. The organization and, managers may have multiple goals and at time they may be incompatible and
Definitions
According to Mc. Farland Objectives are the goals, aims, or purpose that organizations wishes to achieve our varying period of time. According to Terry A managerial objectives is the intended goal which prescribes definite scope and suggest direction to efforts of a manager Mc. Farland suggest that objectives are the goals which an organization wants to achieve where as Terry describes objectives as the parameters with in which the organization has to work and make efforts to achieve them.
Features of Objectives
1. 2. 3. 4. 5. 6. 7. 8. 1. 2. 3. 4. 5. Every org. has its objectives and all members try to achieve it. Objectives may be long term or short term. Objectives have hierarchy. Buss objectives may change as per the environment changes. All objectives of organization are inter related Multiplicity Based on practical situation May change as per the environmental changes Classification of objectives Determining the area of objectives Coordinating various objectives Objective should be realistic Possibility of adjustment
Classification of objectives
The next thing in setting objective is the specification of areas for which objectives are to be set. The business is divided into functional area such as production, marketing, personal, finance, etc. The objectives of all departments are set differently.
Coordinating various objectives
The objectives of different department are set separately. The objectives of various departments are co-ordinate so as to plan main organization goals. The objectives for key factor are decided first and than other departmental objectives are set. The key factor here means Strategic factor. All factors should be co-ordinate in order to achieve over all objectives.
Objective should be realistic
The objective should be realistic so that they may e attainable by the present men and resources. The objective shall take into consideration all the available resources otherwise they will not be realistic. Too high goals will discourage employees as they wont be able to achieve and too low goals will not enthuse the employee to give their maximum. So objectives should be realistic and reasonable.
Possibility of adjustment
There should not be rigidity in objectives because these are based on future estimates. Any change in the circumstances will have an effect on the objectives too. The objective should be modified as and when a situation demands. So there should be a scope for adjustment to make the objectives practicable.
Difficult to define
Objectives are to set up for every area of the business. It is easy to set up quantifiable objectives like sales target to be achieved. Goods to be produced in a particular period, amount of raw material to be produced etc. If the objectives are not measurable in money or quantity then it becomes difficult to set them. The objectives like consumer satisfaction, industrial relations, employee moral are difficult to be defined.
Difficult to Device Means
Another problem in objectives is to devise suitable means for achieving them .General, ambitious objectives are set. They are not related to the availability of resources. Instead of improving efficiency they may become source of frustration. If the employees are not able to achieve the objectives even with more efforts then there enthusiasm is dampened.
Difficult to Reconcile Objectives
The objectives of different fields are sometimes contradictory. It becomes a problem to reconcile various objectives. The objective of increasing productivity may be by achieved by improving the efficiency of workers. The workers on the other hand may not like the disciplinary sanctions imposed on them for not improving their work. So, it becomes problem to reconcile various objectives.
Hierarchy of Objectives
1. 2. 3. 4. 5. At Top level all organizational goals are set Requires to contribute for welfare of society Purpose is to provide specific level of service. Next hierarchy comes is the division of objectives between department, units and these are Objective of individual are decided at bottom of hierarchy.
Socio Economic
Top level
manage ment
Mission Over all org obj Objectives and key Division objectives
areas
Middle
level
manageme nt
MBO Characteristics
MBO is having the following characteristics: 1) Derivation of plans: Based upon the objectives, management drives various types of plans like long range, medium range and short range and also points out the steps required to achieve these. This information is provided to the employees. 2) Job analysis and performance standards: Each manager/employee analyse the job in order to identify the targets and provide a course of action to achieve these targets. Both the senior and subordinate agree on a plan of action by specifying the dates. 3) Control: The seniors use the control information like taking daily, weekly and monthly reports to find out whether the subordinates are achieving the targets or not. 4) Performance review: The subordinates are having normal contact with their bosses at regular intervals, to give the details about progress. In the meetings between the seniors and subordinates the difficulties are discussed, new targets agreed and training needs are identified.
Collaborative Goals
Evaluation
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Benefits of MBO
The benefits of MBO are many because MBO can be applied to many areas like performance appraisal, organizational development, long range planning and so on. Some of the benefits of MBO are: 1) Better Managing: As MBO is a result oriented process and focuses on setting and controlling goals, it encourages managers to do detailed planning with the detailed planning resources and activities are put in such a way that they result into better performance. Thus with the help of MBO, performance can improve in four different ways: decreased time, decreased resources, increased quality and increased quantity.
Prepared by Lalit Singla (Assistant Professor in Management, RIMT-IMCT)
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Limitations of MBO
MBO is not without the weakness. It has been found out that many organizations have been over whelmed by the problems of MBO and failed to achieve the desired results. Some of the MBO are inherent in MBO system while others emerge because of wrong implementation. 1) Reluctance of top managements: In the classical structure of our organisations, the authority flows from top to bottom. This creates discipline and better performance, due to this reason top management is usually reluctant to support the process of MBO in which their
Prepared by Lalit Singla (Assistant Professor in Management, RIMT-IMCT)
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Strategies
Introduction
A Strategy is a technique of our maneuvering the opponent. A planner should see the plans and policies of his competitors and then modify or readjust his plans so that he may prove the superiority of his product or service.
Definition
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Features of Strategies
1. It relates the organization with the external environment. 2. Strategy is always action oriented. 3. It may give rise to the contradictory results. 4. It is always future oriented. 5. It is always based on certain external & internal factors. 6. It consists of general programme of action to be pursued for achieving organizational goals. 7. They are formulated only at the top level management. Lower level management are expected to execute them only. 8. They are never static. They have to be modified or changed as per the needs of the situation. 9. They include the tactics used by the opponents. They are meant not only to achieve business goals but also to counter certain steps taken by the competitors.
Purposes of Strategies
1. The manager should analyse the business and find out weaknesses and strengths of the business unit. 2. The manager should try to asses as what the customer want what will be the reaction of employees and members of the public. The most important factor is to assess what our competitors have been doing & what can be expected from them. 3. Provide direction for carrying out various activities. 4. Help in the allocation of the resources to various departments in the organisation. 5. Provide future direction to reach the end results.
Prepared by Lalit Singla (Assistant Professor in Management, RIMT-IMCT)
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Policies
Introduction
Policies are the general statements which are formulated by an organization for the guidance of its personnel. The objectives are first formulated & then policies are planned to achieve them. Policies are a mode of thought & the principles underlying the activities of an organization or an institution.
Definition
According to Koontz and ODonnell, Policies were identified as guides to thinking in decision making. They assume that when decisions are made, these will fall with in certain boundaries. The objectives are the end points of the planning & policies prescribed the broad ways for achieving them. A policy gives a guideline and leaves scope for interpretation for the person implementing them. This means that the policies has the flexibility for interpretation. A rigid policy becomes a rule. Policies provide a framework within which a person has freedom to act.
Purposes of Policies
The main purposes of policies are to ensure that there is no deviation from planned course of action. The framework is set with in which everybody is expected to work. 1. It allows the scope for the interpretation. The main aspects are given in a policy but the actual mode of implementation is decided by the concerned people. 2. These are helpful for future planning also. The impact of policies helps in thinking about the future. 3. Policy is the source of guidelines to the members of the organization. 4. It provides the limits within which the decisions have to be made. 5. They are generally expressed in the qualitative or conditional terms. 6. It is pervasive in nature i.e. exists at all the levels in the organization. 7. It is the prime function of all the managers in the organization.
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RIMT- Management Block MBA-1 A Principles and Practices of Management (MB-101) Strategic Planning Model
Define Organisational Mission Determine The Strategic Intent Analysing The Environment Strategy Formulation Strategy Implementation
Strategy Evaluation 1. Determining The Strategic Intent: In order to start the strategic planning process, the basic concept of this has to be understood by the organization it self, while a number of issues must be addressed in assessing readiness, the determination comes down to whether an organization leaders are truly committed to the effort, & whether they are able to devote the necessary attention & resources. 2. Define Organisational Mission: A mission statement defines a core purpose of the organization- why it exists. A mission statement is like an introductory paragraph that lets the reader know where the writer is going. It typically describes an organization in term of its purposes & values. 3. Analysing Environment: Once an organization is committed to why it exists & what it does, it must take a clear eyed look at its current situation. Situations assessment means obtaining current information about the organizations strengths, weaknesses & performance, information that will highlight critical issues that organization faces & that its strategic plan must address.
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SWOT Analysis
The term SWOT consists of four words: S = strengths W = weaknesses O = opportunities T = threats
Internal factors:
Strength: Strength is defined as something, which is positive, and good that give to the company an
edge in the competitive market. Thus the strong points of an organization are called strengths. E.g. superior research facilities and presence of development skills are the strengths of an organization. These can be used for development of new products enabling the organization to have competitive advantage over his competitors. The strength of Reliance industries in raising finance from the public is established. So this industry is very strong in capital-intensive sector. The strength of Japanese companies is in their technological skills and human resources. Because of this strength, Japanese companies are very strong in those industries which need high skills like electronics, computers, and telecommunication. The following are some parameters of strength: 1. Technical expertise: It includes technical know how available with the company, high quality products, low costs and excellent after sale service by companys engineers.
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External factors:
Opportunities: Opportunities are the external factors. Opportunities do not come frequently so the
manager has to avail them without any delay. Each opportunity should be analysed in terms of its profitability. For example, government has made it mandatory for two wheelers drivers to wear helmet while driving the vehicle. This has created opportunity for helmet industry. There is a list of potential opportunities: To enter either in the new product lines or in the new business e.g. Reliance company in India has entered the telecommunication sector considering it a big opportunity. 1. To expand the existing companys product lines. 2. To serve the additional customers groups. 3. To find out new sales growth opportunities via Internet. 4. To enter the foreign markets. 5. To create additional share in the market by snatching it from rivals. 6. To acquire the rival firms.
Threats: It is unfavorable condition in the organizations environment. It creates a risk for the
organization. It can be in the form of growing competition, change in fashion etc. E.g. ZEN car is
Prepared by Lalit Singla (Assistant Professor in Management, RIMT-IMCT)
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Analysing strengths: In the first step, strengths of business units are identified. It can be sound
financial resources, sound corporate image, efficient human resources, and healthy work environment good management-labour relations. While analysing strengths, answers to the following questions are identified: What are your advantages? What job can you do well? What special resources do you have? What do the other people see as your strengths?
Analysing weaknesses: In the second step, weaknesses of business units are identified. These
weaknesses can be shortage of financial resources, inefficient human resources, high labour turnover, less popularity of brand, bad corporate image poor management-labour relationship. Analysing weaknesses should be able to answer following questions: What an organization cannot do? What is done wrongly in the organization?
Prepared by Lalit Singla (Assistant Professor in Management, RIMT-IMCT)
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By analysing above questions, the business manager can develop strategies to overcome firms weaknesses.
Analysing opportunities: In the next step, following opportunities available to business unit are
identified Favourable change in government policy related to our field. Favourable change in socio-cultural environment like change in fashion. Favourable change in political environment. Favourable change in economic environment like change in income-level, trade cycles. Favourable change in technological environment.
Analyzing threats: The next step is to identify following threats to business unit:
Entry of strong competitor. Unfavourable change in government policy. Unfavourable change in socio cultural environment. Change in technological environment.
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Portfolio Matrix
Business Portfolio Matrix
A company may have multiple business units (SBUs) that in turn have several product lines composed of multiple products with variants (items, SKUs). The portfolio matrix is most applicable at the corporate level (which SBUs?), and at the SBU level (which product lines?) And is often useful for sorting markets, e.g. regional geographic markets with different characteristics. The essence of the strategic portfolio matrix is that businesses, products, and markets can be categorized along variants of two fundamental dimensions: market attractiveness and relative business strength. For example, the pioneering BCG matrix categorizes businesses based on relative market shares (a proxy for business strength) and market growth (a selective measure of market attractiveness). The popular GE / McKinsey matrix sorts by multi-factor consolidated measures of business strength and market attractiveness.
Planning Premises
Introduction
The term premise refers to a proposition stated or assumed at the beginning of deed. When we use premising in planning, it involves various various assumptions on which plans are formulated. But there are many factors, which affect the implementation of a plan. So assumptions are made in respect of these factors. For example, when a company introduces a new product in the market, it makes assumptions that the product will be succeed by taking into account the various factors, which are assumed to affect the products success or failure.
Definitions
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Forecasting
An organization has to formulate its plans with in the limitations of various factors .In order to formulate accurate plans; managers have to find out the likely behavior of these factors in future. This can done to same extent by making suitable forecast. A major factor is the increased use of systematic planning throughout the world in recent years is the increased effectiveness of forecasting techniques.
Concept of Forecasting
Forecasting is the process of estimating the relevant events of the future, based on the analysis their past and present behaviour .the future cannot be problem unless one knows how events have occurs in the past and how they are occurring presently.
Definitions
According to Neter and Wasserman Business forecasting refers to the statistical of the past and current movement in the given time series so as to obtain the clues about the future pattern of those movements.
Features of forecasting
1. Forecasting relative to the future events. This is needed for planning process. 2. Forecasting define the probability of happening of future events. 3. Forecasting is made by the analyzing the past and present relevant events. 4. The analysis of the various factors may require the use o various statistical tools and techniques.
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Limitations of Forecasting
Following are the limitations of forecasting. 1. Based on the assumptions. It merely suggest that if an event has happened this way in the past, it will happen that way in the future .the basic assumption behind this is that events do not change haphazardly and speedily but change on a regular pattern .this assumption may not hold good. 2. Not absolute truth. Forecast is not always true: they merely indicate the trend of future happenings .this is so because the factors which are taken into account for making forecast and affect by human factor which is highly unpredictable; various techniques of forecasting suggest the relationship among various known facts. 3. Time and cost factor. Time and cost is also an important aspect of the forecasting. For making forecasting data and information is required it involves lot of time.
Steps in forecasting
1. Estimating future business. Based on the past data and identification of events that are likely to affect the future behavior of the business, the trend of the business as whole and market share of the companies.
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