The Nature

and Purpose
of Planning

Types of Plan
1. Purposes or missions
2. Objectives
3. Strategies
4. Policies
5. Procedures
6. Rules
7. Programs
8. Budgets

Purposes or Missions

Mission or purpose
identifies the basic
function or task of an
enterprise or agency or of
any parts of it.

Objectives

Objectives or goals
are the ends toward which
activity is aimed they are the results
to be achieved.
-they represent not only the end
point of planning but the end toward
which organizing, staffing, leading,
and controlling are aimed.

Strategies

Strategies
usually has a competitive
implication, managers increasingly
use it to reflect broad areas of an
enterprise operation.

Three definitions of the most common

usages of the term Strategies:
1. general programs of action and deployment of
resources to attain comprehensive objectives
2. the program of objectives of an organization
and their changes, resources used to attain
these objectives and policies governing the
acquisition, use, and disposition of these
resources
3. the determination of the basic long-term
objectives of an enterprise and the adoption
of courses of action and allocation of
resources necessary to achieve these goals

Policies

Policies
- also are plans in that they are
general statements or
understandings which guide or
channel thinking in decision making

Procedures

Procedures
- are plans that establish a required
method of handling future activities
- they are guides to action, rather
than to thinking, and they detail the
exact manner in which certain
activities must be accomplished

Rules

Rules
spell out specific required
actions or nonactions, allowing no
discretion
- usually the simplest type of plan

Programs

Programs
are a complex of goals, policies,
procedures, rules task assignments,
steps to be taken, resources to be
employed, and other elements
necessary to carry out a given course
of action; they are ordinarily supported
by budgets

Budgets

Budget
is a statement of expected
results expressed in numerical terms
- it may be referred to as a
numberized program

STEPS IN
PLANNING

BEING AWARE OF
OPPORTUNITY
In light of:
The market
Competition
What customers want
Our strengths
Our weaknesses

CHOOSING AN
ALTERNATIVE
Selecting the course of
action we will pursue

SETTING
OBJECTIVES OR
GOALS

CONSIDERING
PLANNING
PREMISES

Where we want to be
and what we want to
accomplish and when

In what environment
internal or external
will our plans operate?

COMPARING
ALTERNATIVES IN
LIGHT OF GOALS
SOUGHT
Which alternative will
give us the best chance
of meeting our goals at
the lowest cost and
highest profit?

FORMULATING
SUPPORTING
PLANS
Such as plans to:
Buy equipment
Buy materials
Hire and train
workers
Develop a new
product

IDENTIFYING
ALTERNATIVES
What are the most
promising alternatives to
accomplishing our
objectives?

NUMBERIZING
PLANS BY MAKING
BUDGETS
Develop such budgets
as:
Volume and price of
sales
Operating expenses
necessary for plans
Expenditures for
capital equipment

1. Being Aware of Opportunities not strictly

a part of the planning process, an
awareness of opportunities in the external
environment
2. Establishing Objectives this is to be done
for the long term as well as for the short
range
3. Developing Premises the third logical
step in planning is to establish, circulate,
and obtain agreement to utilize critical
planning premises such as forecasts,
applicable basic policies, and existing
company plans.

The major principle of planning premises

is this: The more thoroughly individuals
charged with planning understand and
agree to utilize consistent planning
premises, the more coordinated enterprise
planning will be.
4. Determining Alternative Courses the
fourth step in planning is to search for and
examine alternative courses of action,
especially those not immediately apparent
5. Evaluating Alternative courses
evaluating the alternatives by weighing
them in the light of premises and goals

6. Selecting a Course this is the point at

which the plan is adopted the real point
of decision making.
7. Formulating Derivative Plans When a
decision is made, planning is seldom
complete, and a seventh step is indicated.
Derivative plans are almost invariably
required to support the basic plan
8. Numberizing Plans by Budgeting the
overall budgets of an enterprise represent
the sum total of income and expenses, with
resultant profit or surplus, and budgets of
major balance sheets items such as cash
and capital expenditures

Objectives

Objectives were defined as the

important ends toward which
organizational and individual
activities are directed

IE PROCESS OF
MANAGING BY
OBJECTIVES

Enterpr
ise
Objecti
ves

Planni
ng
Premis
es
Key result
areas
Appropriat
e
Organizati
on
Superio
rs
Objecti
ves

Available Superiors
Subordinates
needed
preliminary
preliminary
recommendation
of
statement of
resources
objectives for
subordinate

Agreement
Subordina
tes
Objective
s
Subordinates
ongoing
performance
Final
performance

objectives

How to set objectives

Quantitative and Qualitative objectives
Examples of Nonverifiable and Verifiable Objectives
Nonverifiable Objectives

Verifiable Objectives

1. To make reasonable path

To achieve a return on investments of 12%

at the end of the current fiscal year

2. To improves communication

To issue a two-page monthly newsletter

beginning July 1, 1991, involving a not
more working hours of preparation of time

3. To improve productivity of the

production department

To increase production output by 5% by

December 31, 1991, without additional
costs and while maintaining current quality
level

4. To develop managers

To design and conduct a 40 hr in house

program on the fundamentals of
management

5. To install a computer Eye

To install computerized control system in

the production department by December
31, 1991

Setting Objectives in
Government

Frederic V. Malek a former special

assistant to the President and one of the
driving forces in the implementation of
MBO in the federal government. He stated
If the executive branch of government is
to be managed effectively, it clearly needs
a system for setting priorities, pinpointing
responsibility for their achievement,
requiring follow-through, and generating
enough feedback that programs can be
monitored and evaluated from the top.

Improving the operation of the federal

government, and other governments
as well, requires:
1. Identifying ineffective programs by
comparing performance against preestablished objectives
2. Using zero-based budgeting
3. Applying MBO concepts for
measuring individual performance
4. Preparing short- and long range
objective and plans

5. Installing effective controls

6. Designing sound organization
structures with clear responsibilities
and decision-making authority at
appropriate levels
7. Developing and preparing
government officials for managerial
responsibilities

Guidelines for Setting

Objectives
Setting objective
is indeed a difficult task
- it requires intelligent coaching by
the superior and the extensive
practice by the subordinate

Benefits and Weaknesses of

Management by Objectives
and some recommendations
Benefits of Management by
Objectives

CHECKLIST FOR MANAGER S OBJECTIVES:

Dear Business Executives! Please fill in the following Performa, to have Your Self-Evaluation for FREE !
N.B: If The Objectives Meet The Criteria, Tick Mark( + ), if not, Mark ( - ).
1. Do the objectives cover Main Features of your Job? ( )
2. Is the List of objectives appropriate, as required? ( )
3. Are the objectives verifiable? ( )
4. Do the objectives indicate:
a) Quality, ( )
b) Quantity, ( )
c) Time, ( )
d) Cost ( )
5. Are the objectives challenging?
6. Do objectives have appropriate Ranking & weighing? ( )
7. Does the set objectives also include:
a) Improvement objectives, ( )
b) Personal Development objectives, ( )
8. Are the objectives co-ordinated with those of other Managers
& organizational units? ( )
9. Have you communicated objectives to all who needed to be informed? ( )
10. Are the short term-objectives, consistent with the long term Aims? ( )
11. Are assumptions underlying the objectives clearly identified? ( )
12. Are the objectives expressed clearly & are fully explained to them? ( )
13. Do the objectives provide for timely feedback, so that you can take
any necessary corrective measures, if required? ( )
14. Are your resources & authority sufficient to achieve the objectives? ( )
15. Have you given the individuals, who are expected to accomplish
objectives, a chance to suggest? ( )
16. Do your subordinates have control over aspects, for which they are
assigned the responsibility? ( )

 Clarification of Organization
Managers trying to clarify
organizational roles and structure

Encouragement of personal
commitment
One of the great advantages of
management by objectives is that it
encourages people to commit
themselves to their goals.

 Development of Effective Controls

Aid in developing effective controls
Weaknesses of Management by Objectives
A system of management by objectives
has a number of weaknesses.
Failure to teach the Philosophy Of MBO.
Managers who would put it into practice
must understand and appreciate good
deal about it

 Failure to give guidelines to goal setters

Management by objectives, like any
other kind of planning, cannot work if
those who are expected to set goals are
not given needed guidelines
Difficulty of Setting Goals
Goal setting may not be much more
difficult that any other kind of effective
planning, although it will probably take
more study and work to establish
verifiable objectives.

 Emphasis on short-gun goals

In most MBO programs, managers
set goals for the short term, seldom
for more than a year and often for a
quarter or less
Danger of inflexibility
Managers often hesitate to change
objectives
Other dangers

Strategies,
Policies and
Planning
Premises

The Nature and Purpose Of

Strategies and Policies
Strategy
The term strategy (which is
derived from the Greek word
strategos, meaning general) has
been used in different ways.
Policy
A general statements or
understanding which guide
managers thinking in decision
making.

The Need for Operational Planning:

Tactics
To be effective, strategies and policies
must be put into a practice by means
of plans, increasing in detail until
they get down to nuts and bolts of
operations
Tactics
The action plans through which
strategies are executed.

The Strategic Planning

Process
Inputs
Enterprise Profile
Enterprise Profile is usually the starting
point for
determining where the company is and
where it should go.
Orientation of Top Managers
The enterprise profile is shaped by
people, especially top managers and
their orientation is important for
formulating the strategy.

Purpose and Objectives

The purpose and the major objectives are the
end points toward which the activities of the
enterprise are directed.
External Environment
The present and future external environment
must be assessed in terms of threats and
opportunities.
Internal Environment
The firms internal environment should be
audited and evaluated in respect to its resources
and its weaknesses and strengths in research
development, production, operations,
procurement, marketing and products and
services.

Alternative Strategies
Strategic alternatives are developed on the
basis of an analysis of the external and internal
environment.
Evaluation and Choice of Strategies
The various strategies have to be carefully
evaluated before the choice is made.
Medium- and Short-Range Planning,
Implementation and Control
Must be considered during all phases of the
process.
Control- must also be provided for monitoring
performance against plans
Feedback- shown by the loops in the model

Consistency and Contingency

The last aspect of the strategic
planning process is testing for
consistency and preparing for
contingency plans.

Major Kinds Of Strategies And

Policies
Growth
Growth strategies give answers to such
questions as these: How much growth
should occur? How fast? Where? How
should it occur?
Finance
Every business enterprise and, for that
matter, any nonbusiness enterprise must
have a clear strategy for financing its
operations

Organization
Organizational strategy has to do with
the type of organizational pattern an
enterprise will use
Personnel
There can be many major strategies in
the area of human resources and
relationships.
Public Relations
Strategies in this areas can hardly be
independent; they must support other
major strategies and efforts.

Products or Services
A business exists to furnish products or services. The key
questions in this area are:
What is our business?
Who are out customers?
What do out customers want?
How much will our customer buy and at what price?
Do we wish to be a product leader?
Do we wish to develop out own new products?
What advantages do we have in serving customer needs?
How should we respond to existing and potential
competition?
How far can we go in serving customer needs?
What profits can we expect?
What basic form should our strategy take?

Marketing
Marketing Strategies are designed to
guide managers in getting products
or services to customers and in
encouraging customers to buy.