PLANNING

UNIT-2
 PLANNING – MEANING AND
DEFINITION
Planning is Deciding in advance what
MEANING : is to be done for achieving the target

Planning is an intellectual process of

thinking resorted to decide a course of action
which helps to achieve the pre-determined
objectives of the organization in future.
DEFINITION :
J.P.Barger , “ Planning is an ability to visualize
a future process and it’s result “
 OBJECTIVES OF PLANNING
1. Reduce Uncertainty
2. Brings Co-operation and Co-
ordination
3. Economy in operation
4. Achieving the predetermined goals
5. Reduce the Competition
 TYPE OF PLANNING
(A) Standing Plan - plan same for all the time
1. Purpose or Mission ( purpose of organization existence )
2. Objectives ( goals or aims that organization wish to achieve over
varying period of time )

3. Strategies (Specific plans for achieving mission and objectives )

4. Polices ( Provide guidelines for decision Making Process )
5. Rules and Procedures ( Rule : Specific Statement of to do or not
do , Procedures : Specifics series of steps to be taken for activities )

(B) Single use Plan – Plan Vary from time to time

1. Programmes or Project ( Designed to bring about result ,
basically investment of funds )

2. Budgets ( A plan of expected result in numerical terms )

STEPS IN PLANNING PROCESS
1
According to Koontz and O’Donnel
“ Planning premises are the anticipated
environment in which plans are expected to
operate . They include assumptions or
forecasts of the future and known
conditions that will affect the course of
plans , such as prevailing policies and
existing company plans that control the
basic nature of supporting plans”
MANAGEMENT BY OBJECTIVES
(MBO)

• The term “ Management by Objectives “ was first

popularised by Peter Drucker in his book ‘The
Practice of Management ‘
• MBO can be described as a process whereby the
superior and subordinate managers of an
organization jointly identify its common goals,
definite each individual’s major areas of
responsibility in terms of results expected of him ,
and use these measures as guides for operating the
unit and assessing the contribution of each of its
Members .
 MBO Process
1. Setting of
Organizational
purpose and
objectives

2. Key Result
6. Recycling
areas

3. Setting
5.Appraisal Subordinates’
Objectives

4. Matching
Resources with
objectives
 FEATURES OF MBO
• Superior – subordinate Participation
• Joint Goal Setting
• Joint decision on Methodology
• Support from Superior
 SWOT ANALYSIS AND TOWS MATRIX
• SWOT analysis is a strategic Planning method used
to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a business
venture.
• This technique is developed by Albert Humphrey
• SWOT Analysis into two main categories :
Internal factors – The strengths and weaknesses
internal to the organization.
External factors – The opportunities and threats
presented by the external environment to the
organization.
 Cont…..

(a) Strengths : These include trained managerial

personnel, Modern machinery, strong financial
position etc.,
(b) Weakness : These include poor distribution
infrastructure, poor financial position, weak
management etc.
(c) Opportunities : The opportunities arise from
economic conditions, subsidies for export effort,
concessions etc.
(d) Threats : These include unfavorable change in
customer attitude , Recession , Economic un
Stability etc.,
TOWS
MATRIX

TOWS Matrix,
profounded by
Heinz Weihrich,
is an important
tool for strategy
formulation –
SWOT Analysis and Tows Matrix for Petrol company
 DECISION MAKING
MEANING : There are a number of alternatives
available to the management . The best is
selected out of the available alternatives is
known as Decision Making
DEFINITION : George R.Terry , “ Decision-
making is the selection based on some criteria
from two more possible alternatives
 DECISION MAKING PROCESS

6. Screening 7.Selection
1.Identification of of Best
of a problem Alternatives alternatives

5.Analysing 8.Conversion of
the Decision into
2.Diagnosing action
alternatives
the problem
9.Impleme
4.Discovery
3.Collect and of tation
analyze the Alternative
relevant Course of 10.Verifying
information Action the decision
PRINCIPLES OF DECISION
• Psychological Theory
• Principle of Alternatives
• Principle of Limiting
Factors
• Principle of Participation
TYPES OF DECISIONS
• Programmed Decision or
Routine Decision
• Non-programmed Decision
or Unstructured Decision
• Major Decision
• Minor Decision
• Organizational Decision
• Personal Decision
• Problem Decision
• Opportunity Decision
 BCG MATRIX
Strategic Business unit (SBU) : Such units
generally are set up like separate companies ,
based on product lines , geographic markets , or
differentiating factors
About BCG :
 Companies that are large enough to be organized
into strategic business units face the challenge of
allocating resources among those units
 In the early 1970’s the Boston consulting group
developed a model for managing SBU with
Market growth rate Vs Market Share
Resources are allocated to business on the basis of
grid
1. Stars:
BCG Matrix
 High Market share and High Growth rate
 Heavy Investment required to maintain that
stage
 Star will become a cash cow when its
industry mature
2. Cash cows :
 Business units with large market share but
slow growing Industry
 little investment to generate cash afterwards
that can be invested in other business units.
3. Question Mark (or Problem Child ) :
 Business unit has a small mkt share in a high
growth market
 These units require resources to grow
market share , but whether it get star
position unknown
4. Dog :
 Slow Market growth and low Mkt share
 This type of unit adopt liquidation strategy
BCG Matrix For ITC