Introduction To Planning

Introduction to Planning
Introduction to Planning_v1
Dr. Harald Fien
Introduction to Planning Opening thoughts

Plans are of little importance but planning is essential (Winston Churchill) Plans are nothing; planning is everything (General later President Dwight D Eisenhower) Failing to plan is planning to fail Failing to plan makes an organisation reactive, vulnerable to threats and closed to opportunities
Dr. Harald Fien
Introduction to Planning Plans and plan

Planning is the process of
Setting objectives Determining what should be done to accomplish them Implementing the plan Evaluating
A plan is a statement of intended means to accomplish a goal
Dr. Harald Fien
Introduction to Planning Tasks of management (1)

Planning Leading Controlling Organising
Dr. Harald Fien
Introduction to Planning Tasks of management (2)

Planning is the functional task of management The other tasks of organising, staffing, leading and controlling all stem from the planning function Organising and staffing can only take place after goals and plans to achieve the goals are in place Leading (motivating and influencing the behaviour of people) depends on the goal to be achieved The planning function provides the goals and standards that drive the controlling function
Dr. Harald Fien
Introduction to Planning Types of plan

Business plan - sets out the markets the business intends to serve, how it will do so and what finance is required Strategic plan - sets out the overall direction for the business in broad scope Operations plan
Details how the overall objectives are to be achieved Specifies what senior management expects from specific departments or functions
Dr. Harald Fien
Introduction to Planning Levels of planning

Strategic Level Organisation wide Business Strategic business unit Operational Functional area or product
Focus
Direction and strategy for whole organisation Broad and general
Direction and strategy for the division More detail on goals and tasks 1-2 years
Resources and action for functional area or product Specific to the function or product Up to one year
Nature
Time horizon
Long term 3+ years
Dr. Harald Fien
Introduction to Planning The purpose of planning

To clarify direction To motivate people To ensure efficient use of resources To provide a way of measuring progress To ensure that decisions are made on the basis of a wide range of evidence To co-ordinate activities To ensure someone is responsible for each significant activity
Dr. Harald Fien
Introduction to Planning Why plan?

Planning gives: Certainty Confidence Route map Evidence to others of our thoughts Planning helps us: Shape our thoughts Think through scenarios Co-ordinate activities Identify SWOT Examine risks Communicate ideas Demonstrate business control
Dr. Harald Fien
Introduction to Planning A plan is more than a forecast

The distinction between a forecast and a plan is best seen in the daily weather forecast it is not a weather plan Forecast: are predictions, they concern events and trends over which the organisation has little or no control Plans are about what we intend to do Plans are about actions to be taken But forecasts (especially sales forecasts) are essential in planning but they are merely the backdrop to a plan
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Introduction to Planning Top down or bottom up?

Top down planning Decisions taken at the top Lower level managers have little input Plans are passed down the line for implementation Planers are able to focus on strategic issues but can be divorced from the real issues Bottom up planning Involves all levels of managers and others Ensures all are involved and all issues considered Functional managers able to suggest and evaluate proposed action There is a danger that they will have a narrow perspective without seeing the big picture
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Introduction to Planning Commitment

People cant implement what they dont understand (Stettenius et al How to Plan and Execute Strategy) so it is essential to: Involve people in planning Communicate objectives and strategies Ensure that everyone knows what is expected of them Devise strategies to convince people of the need for and desirability of change
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Introduction to Planning Advantages of planning (1)

Improves motivation and communication Provides a sense of direction, purpose and urgency Allocates responsibility Leads to better control and co-ordination and greater consistency Forces manages to think ahead Establishes a framework for decision making Identifies both constraint and risks
Dr. Harald Fien
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Introduction to Planning Advantages of planning (2)

Provides a better understanding of the organisations position in the market place Leads to a focus on key issues such quality, productivity and customer satisfaction Clarifies objectives Encourages a forward looking approach Prepares people for change Clarifies choice Organises priorities Pulls all the threads together
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Introduction to Planning A good plan

Tells a coherent, consistent and cohesive story Contains credible assumptions Is based on credible forecasts Identifies the assumptions to which the business is must sensitive Identifies the potential risks and any mitigating action Is supported by those who must implement it Identifies the funding requirements
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Introduction to Planning Avoiding planning traps (1)

Why can formal planning fail? What should be done to reduce the danger of failure? Planning should not be left exclusively to planners It should be seen as a continuing process and not just a once a year ritual Planning requires commitment and an allocation of time Those involved in implementation must be involved in the planning
Dr. Harald Fien
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Introduction to Planning Avoiding planning traps (2)

Planning will only be successful if the broad direction and objectives for the organisation are agreed, accepted and widely understood Targets should be used as a measures of performance Organisational structure and culture should be consistent with the plans and strategy Flexibility should be built into the plan Planning must be more than a tick box exercise - if they are perceived as such they will fail
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The process of planning
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Introduction to Planning Key planning questions

Where are we now? How did we get here ? Where would we like to be? How do we get there? Are we on course to achieve our targets?
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Introduction to Planning The planning process

Analyse the external environment Analyse the internal environment Define the business and mission Set corporate objectives Formulate strategies Make tactical plans Build in procedures for monitoring and controlling
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Introduction to Planning The planning cycle
Evaluation of performance
Gather information
Monitor implementation
Mission
Implementation of plan Devise strategies
Goals
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Introduction to Planning The key elements

Situational analysis Objectives Where are we now? Gather and analyse information Where do we want to go? Develop mission Set goals and objectives How are we to get there? Identify actions and associated resources Measures adopted to deal with short term opportunities and threats Tactic fill in the details of the strategy Implementing the plan Budgets Action programmes Are we meeting our objectives? Monitor progress Evaluate results
Strategy
Tactics
Action Control
Introduction to Planning Where are we now?

The purpose of situational analysis is to determine which opportunities to pursue Pest/Pestle - identify and analyse trends in the environment Competitor analysis understand and, if possible, predict the behaviour of competitors Audit of internal resources SWOT analysis: build on strengths ,resolve weaknesses, exploit opportunities, confront threats
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Introduction to Planning Situational analysis

Analysing the present situation is the prelude to devising objectives and strategies for the future We need to understand where we are and where we have come from before planning the future But we must always be careful to avoid paralysis by analysis This describes a situation in which no decisions are made because of the disproportionate amount of effort that goes into the analysis phase
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Introduction to Planning Explanations for paralysis by analysis

High complexity of the situation at hand Excessive amount of analytical data Poor prioritisation Excessive focus on planning rather than action Inability to delegate A rigid, formal and rational organisational culture Aversion to risk
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Introduction to Planning Where are we going?

Vision
Non-specific directional and motivational guidance for the entire operation What will the organisation be like in five years time
Mission statement
An organisations reason for being It is concerned with the scope of the business and what distinguishes it from similar businesses
Objectives
SMART objectives
Goals
Specific statements of anticipated results
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Introduction to Planning Strategy and tactics

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before the defeat (Sun Tzu, The Art of War) Strategy: the broad approach to achievement of objectives over the long term Tactics: detailed filling-in of measures designed to contribute to the strategy Designed to achieve short term goals
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Introduction to Planning Strategy

The annual business plan specifies actions needed to implement the strategy Strategy is the broad approach to the achievement of objectives It starts with the identification and evaluation of strategic objectives And then summarises how to fulfil the objectives Strategic options can be analysed by using Ansoffs matrix and Porters generic strategies
Dr. Harald Fien
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Introduction to Planning Tactics

Tactics are designed for the short term Tactics are the details within the overall the strategy The details include what, where and how activities will take place to accomplish a goal Examples :
Promotional mix Pricing policy Production plan
These details will be contained in programmes and budgets and will eventually be translated into action plans
Dr. Harald Fien
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Introduction to Planning Action

This involves the implementation of the plan Remember the greatest strategy on earth is useless unless properly implemented This stage involves:
Action plans The development of costed action programmes Detailed budgets Project management Putting the strategy and tactics into action
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Introduction to Planning Action plans

Action plans convert strategy into a series of steps which answer the following questions:
What is to be done? How is to be done? By whom is it to be done? Who is responsible for making sure it is done? By when is it to be done?
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Introduction to Planning Budgets

Budgets play a key role in planning Budgets are presented as spread sheet showing:
Expected sales or cash inflow Expected and planed expenditure
Discretionary spending such as that on promotion can be planned in terms of type of spending and timing with the aid of a budget spreadsheet This allows specialist managers to enjoy some autonomy within the budget but at the same time places a cap on spending and facilitates the monitoring of spending
Dr. Harald Fien
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Introduction to Planning Gantt chart

This shows the activities needed to complete a task shown
As a horizontal bar chart In the correct sequence With timing attached
The purpose is to ensure that the project can be completed on time and with maximum efficiency Gantt charts enable managers to plan activities, allocate resources and monitor progress towards completion
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Introduction to Planning Gantt chart example - opening a shop

Week number Task Find site Acquire site Get planning permission Fitting out shop Promotion & launch
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Introduction to Planning Monitor and control

The results of a business should be monitored to determine whether or not the strategic initiatives are being implemented on schedule and within the budgeted resources allocated to it If senior managers are to retain control (whilst delegating detailed implementation) there must be an efficient data collection system feeding back information on progress
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Introduction to Planning Control mechanism

Gantt charts: progress on a project can be monitored against the schedule in the chart Budgets: monitor actual performance against budget to analyse variance Management information system (MIS): rather than gathering information on an ad hoc basis organisations use computer software to gather a wide variety of information as a by-product of activities Computer systems capture and process the data to provide managers with continuously up-dated results
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Introduction to Planning Management by exception

A review of current data allows managers to compare actual performance against standards or plans These comparisons will reveal deviations from the plan and, if substantial, will lead to further investigations This approach is an example of management by exception- leave matters to subordinates down the line and intervene only when there is evidence of deviation from the plan
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Introduction to Planning Advice to managers

Monitor for success - not control for its own sake:
Only intervene where deviation is substantial Feed back results to allow subordinates to correct minor deviations
Keep a focus on strategic goals

If you micro-manage you will not be able to see the wood for the trees
Monitor selectively
Focus on variables that of great significant and those that provide early warning of major problems And always avoid paralysis by analysis
Dr. Harald Fien
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Introduction to Planning Evaluation and modification

The evaluation of performance should lead an ongoing review process Where necessary, modify plans and take corrective action to ensure put the organisation back on course to achieve its objectives Planning is not a one off event but a continuing process:
The implementation has to be fine tuned during the period of the plan Results from the plan will be fed into next years plan
Dr. Harald Fien
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Introduction to Planning A final thought

Planning without action is futile Action without planning is fatal (unknown)
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Introduction to Planning Lessons Learned

What is planning? Explain different types of plan. What is the purpose of planning? Explain top down and bottom up planning. What are planning traps? Explain the planning process/cycle. For what are action plans? For what are budgets? Explain Gantt chart.
Dr. Harald Fien
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Dr. Harald Fien