UNIT 2

Concept of organizational planning

The Process of identifying an organization's immediate and long-term objectives, and formulating and
monitoring specific strategies to achieve them. It also entails staffing and resource allocation, and is one
of the most important responsibilities of a management team.

Planning is an ongoing organizational function that provides the framework for operational activities and
decision making. The organization mission is translated into operational objectives through an
organizational hierarchy of planning activities. Formal organizational planning focuses the energies and
activities of the organization on achievement of its objectives, to reconcile differences in objectives and
plans of subareas and individuals within the organization, and to remove doubts about what
organization should do. Thus planning can help in motivation.

The Planning Process

Planning is the process used by managers to identify and select goals and courses of action for the
organization.

 The organizational plan that results from the planning process details the goals to be attained.

 The pattern of decisions managers take to reach these goals is the organization’s strategy.

 Planning is the first step in building MIS in an organization.

Three Stages of the Planning Process

It clarifies the generic planning activities, the order of activities, and the alternative techniques and
methodologies that apply.

Planning Levels

 Corporate-level: decisions by top managers.

 Considers on which businesses or markets to be in.

 Provides a framework for all other planning.

 Business-level: details divisional long-term goals and structure.

 Identifies how this business meets corporate goals.

 Shows how the business will compete in market.

 Functional-level: actions taken by managers in departments of manufacturing, marketing, etc.

 These plans state exactly how business-level strategies are accomplished.

Why Planning is Important

Planning determines where the organization is now and where it will be in the future. Good planning
provides:

 Participation: all managers are involved in setting future goals.

 Sense of direction & purpose: Planning sets goals and strategies for all managers.

 Coordination: Plans provide all parts of the firm with understanding about how their
systems fit with the whole.

 Control: Plans specify who is in charge of accomplishing a goal.

Stages in planning for MIS development:

• Strategic planning

• Developing overall organizational plan for adjusting MIS strategic plan.

• Organizational information
 • resource analysis (OIRA)

• Analyzing current & projected information needs to support decision making.

• Resource allocation

• Developing h/w & s/w data communication plan & financial plan.

• Project planning

• Preparing completion, cost, requirement, difficulty, time estimates.

Computational support for planning:

1. An analysis of historical data to obtain relationship useful for projection.

2. Various projection and forecasting techniques to estimate future value.

4. Computations internal to the plan and computation required for outputs.

5. Output of the results in a meaningful planning format.

Historical data analysis techniques

Historical data analyzed to discover pattern or relation that will be useful in projecting the future value
of significance variables. Even when the quantitative relations are not sufficiently stable to use in
forecasting data analysis is useful for input into the judgmental forecast.

Historical extrapolation techniques

Historical data describes the past planning that involve the future estimating is generally based on
analysis of past history combined with various technique to generate data for planning purposes.

Financial planning computation

Models that involve financial plan need to provide for various computation and analyses commonly
required for measuring or evaluating profitability example are depreciation computation rate of return
analysis and break even analysis. Depreciation is a significant computation in most financial planning it
affect profit computation because it is an expense and it effect cash flow because of its impact on taxes.
There are several methods for computing deprecation all of which should be available to the planner.
These methods are straight line double declining balance sum of the year digits and production or use
basis.

Controlling - At the middle level management, information is management control. Middle level
managers such as departmental heads are concerned with the current and future performance of their
units. Therefore they need aggregate information on the sales, profit etc.of their units such information
is available from both within the organization as well as outside the organization, for example, financial
data for budgets and ratio analysis are available from the company’s records. However market data can
be collected through special surveys and reports from outside the organization. Top level managers also
require management control information. But these information must be more detailed narrower in
scope and more accurate than information required for strategic planning. It should also generate at
more frequent because the time horizon of decision is shorter.

At the supervisory level of management operational control is exercised production scheduling, cost and
credit control, etc. are examples of operational control. Therefore a detailed report on a daily and
weekly basis is required, inventory report, operating cost, production rate, etc are examples of such
information. Such information available from with in the organization.

The control feedback loop is basic to system design. The computer can improve the control process in
several ways:

1. The standard can be complex. Computational simplifications are not necessary.

2. The computation of deviation and identification of cause can be more sophisticated.

3. Reporting with computers can use irregular time interval which is very difficult with manual
processing and can be done more frequently.

The process of controlling :

 The process of analyzing current performance and comparing them against predefined
standards contained in plan and taking appropriate corrective actions against the identified
deviation in the result.

The characteristics of controlling

 Continuous process

 Function of management

 Important for each level of management

 It is back ward looking

 Linked with planning

 Control is an action

Elements of controlling :

• Characteristics

• Characters involved
 • Sensor

• Checking/analyzing

• Comparator

• Comparing assumed & actual performance

• Activator

• Taking corrective actions

CHARACTERISTICS OF CONTROL PROCESS IN MIS

1. Control is the function of every manager. Managers at all levels have to perform this function to
contribute to the achievement of organisational objectives.

2. Control leads to appraisal of past activities. The deviations in the past are revealed by the
control process. Corrective actions can be initiated accordingly.

3. Control is linked with future, as past cannot be controlled. It should anticipate possible
deviations and to think of corrective action for the control of such deviations in the future. It is
usually preventive as presence of control system tends to minimize wastage's, losses and
deviations from standards.
4. Control is concerned with setting standards, measurement of actual performance, comparison
of actual performance with predetermined standards and bringing to light the variations
between the actual performance and the standard performance.

5. Control implies taking corrective measures. The object in checking the variations or deviations is
to rectify them and prevent their recurrence. It is only action which adjusts performance to
predetermined standards whenever deviations occur.

6. Control can be exercised only with reference to and or the basis of plans. To quote Mary
Cushing Niles - "Whereas planning sets the course, control observes deviations from the course
or to an appropriately changed one".

7. To some people, control is opposite of freedom. This is not true. Control is based on facts and
figures. Its purpose is to achieve and maintain acceptable productivity from all resources of an
enterprise. Therefore, control aims at results and not at persons. It is for correcting a situation,
and not for reprimanding persons.

8. Information or feedback is the guide to control. The feedback is helpful to the manager to
determine how far the operations are proceeding in conformity with plans and standards, and
where remedial action is called for.

9. Control involves continuous review of standards of performance and results in-corrective action
which may lead to change in the performance of other functions of management. This makes
control a dynamic and flexible process.

10. Control is a continuous activity. It involves constant analysis of validity of standards, policies,
procedures etc.