Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

LEARNING OBJECTIVES
Describe the nature and importance of planning
Present the various types of plans

Explain the steps in planning and the strategic planning process

Identify the limitations of planning and suggest ways to make it effective List the skills required for effective planning Understand strategic planning in Indian industry
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

NATURE OF PLANNING
Planning is the beginning of the process of management

Planning is an intellectual process

Planning is a continuous process

Planning is an all-pervasive function

Planning is goal oriented Planning involves choice
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IMPORTANCE OF PLANNING
Minimises Risk and Uncertainty Leads to Success Focuses Attention on the Organisation's Goals

Facilitates Control
Trains Executives

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Hierarchy of Organisational Plans

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TYPES OF PLANS

Vision
Mission Objectives Strategies Operational Plans

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VISION
A vision describes a firms aspirations, beliefs & values and shapes organisations strategy. A vision should be brief, focused, clear and inspirational to an organisation's employees. It should be linked to customers needs and convey a general strategy for achieving the mission.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

MISSION
Mission is the unique aim of an organisation that sets it apart from others of its type. It is an organisations specialisation in some areaservice, product or client, which decides the organisations scope of business.
A firms mission guides the development of strategies. It establishes the context within which daily operating decisions are made and sets limits on available strategic options.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

OBJECTIVES
Objectives are goals or aims that the management wishes the organisation to achieve in pursuit of its mission. These are the end points or pole-star towards which all business activities like organising, staffing, directing and controlling are directed. Objectives are the specific targets to be reached by an organisation. They are the translation of an organisations mission into concrete terms against which results can be measured.
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

STRATEGIES
Strategy is a term which connotes a response to a competitive environment. In a competitive situation, it is not enough to build plans logically from goals unless the plans take into account the environmental opportunities and threats and the organisational strengths and weaknesses. A corporate strategy is a plan that takes these factors into account and provides an optimal match between the firm and the environment. Two important activities involved in strategy formulation are: Environmental Appraisal Corporate Appraisal
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OPERATIONAL PLANS
Operational plans act as means of implementing the organisations strategy. They provide the details of how the strategy will be accomplished.
There are two main types of operational plans: Standing Plans Single-use Plans

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STEPS IN PLANNING
1. Establishing Verifiable Goals or Set of Goals to be Achieved

2. Establishing Planning Premises

3. Deciding the Planning Period 4. Finding Alternative Courses of Action 5. Evaluating and Selecting a Course of Action 6. Developing Derivative Plans

7. Establishing and Deploying Action Plans

8. Measuring and Controlling the Progress
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STRATEGIC PLANNING PROCESS

The planning mode in which a corporate strategy is actively formulated is called strategic planning.

Following are the eight steps:

Step 1: Evaluate and improve last years strategic plan
process by building into it the deployment lessons learned during last year.

Step 2: Reaffirm the organisations vision, mission,

values and objectives, which form the foundation for the strategic plan.

Step 3: Review organisations operational performance

for the prior year to know its key strengths and weaknesses.
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Step 4: Evaluate the external environment to prepare for

each environmental element (such as products, service, competitive advantage and marketing and technological approach) a list of potential opportunities and threats.

Step 5: Conduct SWOT analysis based upon the issues

identified in steps 1, 3 and 4 and forecast the results of continuing the existing strategy.

Step 6: Identify, evaluate and select alternative

approaches if a change in the existing strategy appears necessary. Thus, new markets may be entered, key products may be redesigned to enhance quality or reduce cost, new investments may be undertaken or old ones terminated and so on. In choosing among the available possibilities, the organisation should select the alternatives that utilise the existing strength and not those that are non-existing and need both time and money to be built-up.
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Step 7: Deploy the modified plan. Communicate it to all

departmental heads and stakeholders for aligning their actions, measures and goals via derivative plans, programmes and budgets. Effective alignment requires common understanding of purposes and goals and use of complementary measures and information for planning, tracking, analysis and improvement at each level.

Step 8: Provide for updates and tracking to be

conducted throughout the year.

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DIFFERENCE BETWEEN STRATEGIC PLANNING AND TACTICAL PLANNING

STRATEGIC PLANNING
It deals with the long-term concept of the organisation, which is based on its vision, mission and objectives Its emphasis is on doing the right things, i.e., effectiveness It is done by top-level corporate managers Its success depends on the judgement, experience, intuition and well-guided discussions of the top management team It is more prone to unanticipated factors that may erupt to change the situation
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

TACTICAL PLANNING
It deals with the short-term allocation of resources for implementing the strategy Its emphasis is on doing things rightly, i.e., efficiency It is done by lower level managers Its success depends on staff work and mathematical models It has greater element of certainty

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LIMITATIONS IN PLANNING
1. Planning is an expensive and time-consuming process 2. Planning sometimes restricts the organisation to the most rational and risk-free opportunities 3. The scope of planning is said to be limited in the case of organisations with rapidly changing situations 4. Establishment of advance plans tends to make administration inflexible 5. There is the difficulty of formulating accurate premises 6. Planning may sometimes face peoples resistance
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MAKING PLANNING EFFECTIVE

Coordination Communication Participation

Proper Climate

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PLANNING SKILLS
1. Ability to think ahead 2. Ability to define company objectives 3. Ability to forecast future environmental trends 4. Ability to frame correct strategies

5. Ability to monitor the implementation of strategies

6. Ability to provide an appropriately timed, intermeshed network of derivative and supporting programmes.
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