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Foundations of Planning

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PLANNING Definition:

Planning encompasses defining the organization’s objectives or goals, establishing an overall strategy for achieving those goals and developing a comprehensive hierarchy of plans to integrate and coordinate activities .”

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PLANNING The Purpose of Planning:

Gives direction Establishes coordination Reduces uncertainty Reduces overlapping / wasteful action Establishes objectives or standards

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Criticisms of Formal Planning

Planning may create rigidity. Plans cannot be developed for a

dynamic environment. Formal plans cannot replace

intuition and creativity. Planning focuses managers’

attention on today’s competition, not on tomorrow’s survival

Formal planning reinforces success, which may lead to failure

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Planning Increases Performance

Generally produces positive financial results

Quality of the planning process and the implementation efforts are more important than the extent of planning

Environmental change can strongly affect the impact of planning

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Types of Plans

Strategic Long-term Directional Single use

Tactical Short-term Specific Standing

FREQUENCYBREADTH TIME FRAME SPECIFICITY OF USE

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Types of Plans

Strategic -- organization wide, overall objectives, position firm in environment

Tactical -- specify the details of how overall objectives are to be met

Short term -- less than a year long term -- beyond five years

BIMTECH FOUNDATION COURSE : PPM JUNE 2010

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Types of Plans

Specific -- clearly defined objectives

Directional -- flexible plans setting out general guidelines

Single use -- meets the needs of a unique situation

Standing -- provides guidance for repeatedly performed actions

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Specific Plans

Directional Plans

Clear

General

Low

High

Flex

ibilityO

bje

ctiv

es

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Managerial Levels and Plans

TopExecutives

Middle-levelManagers

OperationalPlanning

StrategicPlanning

First-levelManagers

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Management By Objectives (MBO)

What is MBO ?A system in which specific performance objectives are jointly determined by subordinates and their superiors, progress toward objectives is periodically reviewed and rewards are allocated on the basis of that progress.

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Management By Objectives

Common MBO elements Identify key job tasks Set specific and challenging goals Encourage active participation Prioritize goals Build in feedback Link rewards to goal attainment

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Management By Objectives

OverallOrganizational Objectives

OverallOrganizational Objectives

DivisionalObjectives

DivisionalObjectives

DepartmentalObjectives

DepartmentalObjectives

IndividualObjectives

IndividualObjectives

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MBO Downside Overly focussed on what is being

measured rather than final result (quantity over quality)

Individual rather than team focus Objectives become ceilings rather

than floors -- decreases further motivation

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The Strategic

ManagementProcess

Identify Current MissionIdentify Current Mission

Analyze the Environment

Analyze the Environment

Formulate StrategiesFormulate Strategies

Evaluate ResultsEvaluate Results

Reassess Organization’s MissionReassess Organization’s Mission

Implement StrategiesImplement Strategies

AnalyzeResources

AnalyzeResources

Opportunities & Threats

Opportunities & Threats

Strengths &Weaknesses

Strengths &Weaknesses

1.1.

2.2.4.4.

3.3.5.5.

6.6.

7.7.

8.8.

9.9.

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The Strategic Management Process

Identify the current mission and goals Analyze the Environment Environmental Opportunities – Threats Analyze the firm’s Resources and Skills Firm’s Strengths and weaknesses Reassess the mission and objectives Strategy Formulation Implement strategies Evaluation

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Mission The fundamental purpose of

an organization -- the definition of success

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SWOT: Identifying Organizational Opportunities

Organization’sResources

Opportunitiesin the

Environment

Organization’sOpportunities

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Competitive Strategies

Cost-leadership Differentiation Focus

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Comparison: Entrepreneurs and Traditional Managers

AcceptanceAvoidanceView toward mistakes

ModerateLowRisk tendency

Direct involvementDelegationActivity

5-10 year growth of business

Short-term goalsTime orientation

IndependenceCorporate rewards Primary motivation

EntrepreneurTraditional

Manager

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Project Management and Process

Contemporary planning tool Is a process of quality control to ensure a

project’s activities are done on time, within budget, and according to specification

Project is a one-time-only set of activities that has a definite beginning and ending point in time