Where are we now?

Where do we want to be? Gap?

How can we get there from here?

Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making, that is, choosing from among alternative future courses of action.

Goal Oriented Primary Function Pervasive Mental Exercise Continuous process Forward- looking Flexible Integrated process

Reduce uncertainty & minimize risk Effective control Economic operation and leads to success Focuses attention and concentration on the objectives of the enterprise Bridge the present and future Provides direction

To select from many available alternatives so as to achieve the objectives of the enterprise To direct the other function of management To form the basis of the budget To provide effective control To forecast the future to avoid uncertainty and facilitate change To focus the vision on the objective and goals

1. 2. 3. 4: 5. 6. 7. 8.

Being aware of opportunities Establishing objectives or goals Developing premises Determining alternative courses Evaluating alternative courses Selecting a course Formulating derivative plans Quantifying plans by budgeting

2008 Weihrich and Cannice

Ch apt er 4. Es se nti als of Pla nni ng an d Ma na gin g by Ob jec tiv es

Types of plan

Single- use plan Programmes Schedules Projects Budgets

Standing plan Objective Policies & strategies Procedures Methods Rules

Standing plans : Standing plans are put to use ,again and again, over a long period of time.
Single use plans: Single use plans developed to carry out a course of action that is not likely to be repeated in the future.

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The mission, or purpose, identifies the basic purpose or function or tasks of an enterprise or agency or any part of it. Googles mission is to organize the worlds information and make it universally accessible and useful. "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."

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Objectives, or goals, are the ends toward which activity is aimed. Policies are general statements or understandings that guide or channel thinking in decision making. Rules spell out specific required actions or non actions, allowing no discretion Methods: indicate the simplified and standardized technique to be employed to carry out a task.

Schedule: It is a kind of time table of work, specifying the date when a task is to begin and the time needed to complete each task. Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action. A budget is a statement of expected results expressed in numerical terms. Project: It is a small program.
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Establishing Climate for Planning Initiative at Top level Participation in Planning Process Communication of Planning Elements Integration of Long-term and Short-term plans Monitoring

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According to McFarland, Objectives are the goals, aims, or purposes that organisations wish to achieve over varying periods of time.
According to Koontz and Weihrich, an objective is verifiable when at the end of the period one can determine whether or not it has been achieved.

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Hierarchy of objectives
Key Results Areas: Areas in which performance is essential for success

Setting objectives and the organizational hierarchy Multiplicity of objectives

Legitimacy
Direction Coordination

Benchmarks for success

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Definition: MBO is a process whereby the superior and subordinate managers of an organization jointly identifies its common goals, define each individuals major areas of responsibility in terms of results expected of him, and use these measure as guides for operating the unit and assessing the contribution of each of its members.

Clear goals Better planning Facilitate control Objective appraisal Motivation force Result-oriented philosophy Time consuming Goal setting problem

Limitation

Organisational commitment Training Adequate time and resources Take care of the necessary mechanics Timely feedback

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Goal setting

Know your own goals meeting with your subordinates Climate for goal setting second meeting with subordinates

Action Plan Appraisal Performance

Strategy is a general plan developed to achieve long term organizational objective. Strategy is concerned with determination of basic long term goals and objectives of an enterprise, and the adoption of courses of action and allocation of necessary, for carrying out these goals.

It provides competitive advantage. Strategy offers broad guidelines. Forward looking Product of Top management

It provides competitive advantage. Strategy offers broad guidelines. Forward looking Product of Top management Dynamic and flexible Strategys life span is limited

It provides the road map for the firm. It helps the firm utilize its recourses in best possible manner. The firm can respond to environmental changes in a better way. It minimize the chances of mistake and unpleasant surprise.

The corporate-level strategy. The strategy formulated by Top management for the overall company. Business strategies are developed usually by the general manager of a business unit. Functional strategies. The aim is to support the business and corporate strategies.

Corporate level Strategy

Grand Strategy

Portfolio Strategy

Grand Strategy: A general plan of major action by which a firm intends to achieve its long term goals.

Strategy Alternatives
Growth/Expansi on
A. Intensification Market Penetration Market Development Product Dvlpt. B. Diversification Horizontal Concentric Conglomerate Vertical Forward Backward

Stability
Incremental Growth Profit

Retrenchment
Divestment Turnaround

Combination
Joint Ventures Strategic

Sustainable
Growth Pause Strategy

Liquidation
Bankruptcy

alliances
Consortia

1.

Concentrated growth
A concentrated growth strategy involves focusing on increasing market share in existing markets. This strategy is also sometimes called a concentration or market dominance strategy. In a stable environment where demand is growing, concentrated growth is a low risk strategy. Market penetration Market development Product development

Market Penetration This strategy aims at increasing the sale of present product in the presented market through aggressive promotion. The firm penetrates deeper into the market to capture a larger share of the market.

Market Development It implies increasing sales by selling present products in the new markets.
Product Development: In this, the firm tries to grow by developing improved products for the present market.

2.

Diversification-It is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversified growth Horizontal
Vertical Concentric Conglomerate Backward Forward

1. Horizontal Integration
Concentric : When a firm diversifies into some business which is related with its present business in terms of marketing, technology, or both, it is called concentric diversification.

Conglomerate : When a firm diversifies into business which is not related to its existing business both in terms of marketing and technology it is called conglomerate diversification.

2. Vertical Integration Backward Integration -It involves moving toward the input of the present
product. It is aimed at moving lower on the production process so that the firm is able to supply its own raw materials or basic components.

Forward Integration- It means the firm entering into the business of

A stability strategy involves maintaining the status quo or growing in a methodical but in a slow manner. The firm follows a safety oriented approach without bringing about any major changes in its present operation.

It is a corporate level, defensive strategy followed by a firm, When its performance is disappointing or when its survival is at stake.
It involves the sale or liquidation of a portion of business, or a major division, profit centre or SBU. organization back to normal health and profitability.

Divestment:

Turnaround: It is designed to reverse a negative trend and bring the Liquidation: Bankruptcy:
A retrenchment strategy which is considered the most extreme and unattractive is the liquidation strategy, which involves closing down a firm and selling its assets.

Joint venture : When two or more firms mutually decide to establish a new enterprise by participating in equity capital and in business operations, it is known as joint venture. A joint venture is a business partnership between two or more companies for a specific business operation.
Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property.

Consortia A consortium is an association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for achieving a common goal.

Large, diversified organizations generally use a mixture of stability, expansion or retrenchment strategies either simultaneously ( at the same time in various businesses) or sequentially (at different times in the same business).

Portfolio Strategy: It pertains to the mix of business units and product lines that fit together in a logical way, to provide synergy and competitive advantage. BCG matrix The BCG matrix, invented by the Boston Consulting Group, is a tool that allows to classify and evaluate the products and services of a business. The matrix will position the products/services in two ways: the rate of growth of the market ; Relative Market Share

A competitive strategy that focus upon meeting competition, protecting market share and achieving profits, at the business unit level.

Differentiation strategy A competitive strategy that seeks to distinguish an organization product or services from competitors

Cost leadership: Cost leadership is a strategy that focuses on making an organization more competitive by producing its product more cheaply than competitors.
Focus : It is a competitive strategy that emphasizes making an organization more competitive by targeting a specific regional market or buyer group.

The strategy pursued by each functional area of a business unit. Operation strategy Financial strategy Marketing Strategy Human Resource strategy Research development