CHAPT

ER

PLANNI
NG

Learning Objectives
Understand the important of planning in an organization;
Explain the value of creativity, the creativity process, & methods to

encourage creativity in an organization;

Discuss the concepts of effectiveness & efficiency in the planning
process;
Define the planning function based on the views of various
management gurus;
Explain the various types of plans that are established in an
organization & discuss their differences from the aspects of time
period, scope, & level of goals;
Describe the objectives of panning based on the importance of
goals to an organization;
Understand the need for planning in an organization;
Explain the process of planning that is generally performed in an
organization;
Understand the barriers faced by managers in preparing plans;
Discuss the management by objective method & explain its

INTRODUCTION TO PLANNING
Planning is the first process in management.
The planning process enables other

management functions such as organizing,

controlling, leading, and decision making to
be performed in the organization.

CREATIVITY
Creativity is define as the conversion to a new

generation of ideas and innovation of products,

services, or production method.
Examples of a new product is the Nokia 3G
mobile phone, while examples of new services
are the e-bag service by Sony, express courier
services, online marketing by major airlines, and
various services provided by banks through the
internet.
According to Lawrence B. Morh, creativity
involves the introduction of something new to
human, while innovation involves the
introduction of new applications.

THE PROCESS OF CREATIVITY

1) Generating ideas or opinions Ideas

contributed by employees depend on the

information that flows from inside & outside the
organization.
2) Expanding the ideas or opinions
Expanding the ideas or opinion of employees
depend on the culture & the creativity process
in the organization. Characteristics, structures,
& organizational values support the
development & application of creative ideas.
3) Implementing the ideas or opinions The
implementation stage in the creativity process

METHOD TO ENCOURAGE
CREATIVITY
Groups of employees involved in the creativity process can be stimulated
through the following processes:

1) Brainstormin This method encourages the free flow of

g
ideas amongst group members before a
decision is made.
Each group member works individually to
2) Nominal
Group
generate ideas before a discussion of ideas
Process
is made in a group. This method produces
more ideas compared to the brainstorming
method.
The group leader tries to identify the real
3) Synectics
(Gordons
problem in order to take an immediate
Technique)
solution. Meanwhile, group members will
have a discussion through the play method.
This method is suitable for designing new
childrens toys.
This method is suitable if the group fails
4) Creative

PLANNING CONCEPT
Planning is a process of setting or

establishing goals and thereafter

determining ways to achieve these goals.

DEFINITION OF PLANNING
Planning is defined as the process of analyzing

relevant current or past information, with the

purpose of measuring & forecasting the future
in order to achieve organizational goals.
Planning is also defined as a process whereby
managers form the organizational goals &
decide the most suitable action to achieve the
goals.

Planning is a process of determining how the management system

can move the organization towards achieving its goals.
Certo (1997)
Planning is a process of forming goals & taking suitable action to
achieve the goals.
Stonner, Freeman, & Gilbert (1995)
Planning is a basic process of selecting & determining suitable
actions to achieve goals. In addition, he also stated that planning is
a comprehensive preset method before performing a certain action.
Dessler (2001)
Planning is an attempt to create something that did not exist
previously.

Ewing

TYPES OF PLANNING
1) Strategic Planning
2) Tactical Planning
3) Operational Planning

Hierarchy of planning & the types of

plans in each level of hierarchy:
M
is
si
o
Goals
n

Strategic
Planning

Overall objective
Area objectives
Division objectives
Department objectives
Individual objectives

Tactical
Planning

Operationa
l Planning

Strategic Planning

1) Strategic Planning
Strategic planning involves setting long-term goals &

objectives for an organization & selecting suitable

actions to allocate organizational resources in order
to achieve these goals.
It is conducted for a period of more than five years.
Known as long-term planning is performed by top-line

manager or strategic managers.

Strategic planning directly influences tactical planning &

operational planning.
For example, the CEO of a company in Malaysia plans to

produce a Perodua VIVA next year (strategic planning).

Based on this strategic goals, managers & their
subordinates must make suitable plans for their own
departments.

Tactical Planning

2) Tactical Planning
Tactical planning is performed by middle-line

managers or tactical managers to achieve goals set

at the strategic level.
This type of planning involves a shorter period of
time, i.e. between one & five years.
Known as mid-term planning.
This type of planning concentrates on specific
individuals, activities, & resources compared to
the strategic planning which covers all the activities
in the organization.
For example, a marketing manager plans several
procedures to increase the sales of the Perodua VIVA
during festive seasons.

Operational Planning

3) Operational Planning
Operational planning involves a small or specific scope

such as job units or individuals in the organization.

Developed & determined by the first-line managers
/operational managers based on the objectives of

tactical planning.
Operational planning is performed for a time duration
of one year or less.
Known as short-term planning.
Operational planning lists the specific objectives that
must be achieved by subordinates. Usually, the
objectives should be easily achieved & can be
measured accurately.
Operational planning can be divided into 2 types:
a) Single-use plan

a) Single-use Plan Concentrate on the

implementation of activities to overcome complex

problems that require specific attention. This plan is
implemented once & would not be repeated in the
same form in the future. This plan is usually
implemented in a short duration of time. Therefore,
managers have limited time to find a solution to the
problem & achieve the set goals. Single-use plan
can be divided into three types: (a) programme, (b)
project, and (c) budget.
b) Standing Plan standing plan is a plan that is

performed repeatedly. It consists of three types of

plans: (a) policies, (b) procedures, and (c) rule.

Types of planning:
Strategic Planning

Tactical Planning

Operational Planning

Single-use Plan

Programme

Project

Standing Plan

Budget

Policy

Procedure

Rule

Differences between Strategic Planning, Tactical

Planning, and Operational Planning

a) Time period

Strategic planning involves a time duration of

several years or decades, while tactical &
operational planning is performed for a shorter
time period.

b) Scope

Strategic planning will influence the overall

activities in the organization, while operational
planning & tactical planning covers a limited
scope of activities.

c) Level of goals

Strategic goals are more generic & simple. These

goals guide employees in seeing the overall

PLANNING OBJECTIVES
Planning is important for the organization in

achieving organizational goals.

Organizations must set specific goals which can be
evaluated & achieved in the specified time frame.
Planning objectives can be viewed in terms of the
important of goals to an organization.
The important of goals are as follows:
a) Provide a direction
b) Focus on effort
c) Drive organizational planning & decision making
d) Evaluate the organizations achievements

IMPORTANCE OF PLANNING
1) Identify business or investment opportunities
2) Identify suitable alternative actions
3) Reduce risks
4) Save costs
5) Facilitate the achievement of goods
6) Provide guidance
7) Provide direction
8) Facilitate coordination
9) Understand the environment
10) Ensure organizations do not stray from original
goals

THE PROCESS OF PLANNING

Setting Goals
Defining the current situation
Identifying assistance and resistance
Developing a new set of plans and
actions
Re-evaluating goals

PROBLEMS FACED IN
PREPARING PLANS
1) Managers face self-conflict in establishing

goals

Refusal to give up old goals or alternative goals

Anxiety towards failure
Lack of knowledge about the organization
Lack of knowledge about the environment
Lack of self-confidence

2) Employees refuse to accept changes in a plan

Employees are in doubt over the impact of changes

Employees refuse to forego existing goals

Employees know the existing weakness in a new plan

3) Changes in the environment

Management by
Objectives(MBO)

Management by
Objectives(MBO)
Is a set of formal procedures used to develop &
evaluate the achievement of common objectives by
managers & their subordinates.
This approach was introduced by Peter Drucker
(1954) in his book, The Practice of Management.
Since then, management by objective/also known as
MBO, has received attention from various parties.
This approach has become the focus of evaluation in
management studies.
The area of responsibility for each employee is
stated clearly. The organizations objectives are also
clear. Evaluation of performance is conducted jointly
& continuously in the specified time frame.
Therefore, the evaluation process is fair as it
focuses on specific achievements. This concept

CORPORATE PLANNING
Corporate planning is established for the whole

organization.
This plan is set by the top management after taking
into account all operations & types of businesses
conducted by the organization.
Corporate planning helps managers to answer one
strategic question, which business area that they
should go into?.
The purpose of corporate planning is to provide
directions & guidance to managers on how to
allocate organizational resources.

Examples of corporate planning strategies are company

takeovers, expansions, development of new products,

diversification of products, & downsizing of operations.
There are 5 forms of general corporate planning, as

follows:
1) Multiple
Corporat
e
Planning

This form of planning involves taking over of a

company & creating another business.
Bank Bumiputra-Commerce (now CIMB) is an
organization that offers multiple service
whereby the
main business of this bank are in the areas of
finance,
insurance, & unit trusts.

2) Jointventure
Corporat
e
Planning

3) Stop
Investme
nt
Corporat
e
Planning

Joint-venture is a contractual partnership

between
two or more organizations.
Each partner contributes to the new
organization &
at the same time maintains a separate
identity.
Through joint-venture, an organization can
penetrate a new market that was previously
difficult to capture.
Example, purpose of a joint-venture between
Celcom & Telekom is to offer mobile phone
services to the public based on sharing &
market
expansion.
Stop investment corporate planning is
performed when
a company sells its business because it is no
longer
interested to continue the business.
Example, Sony Ericson, a company producing

4) Business
Unit
Corporat
e
Planning

5) Function
al
Corporat
e

Business unit corporate planning involves the

development of different strategies for each
business
area.
If an organization has five different businesses,
each
business unit will have its own strategy.
At this level, the main strategic question to ask
is How
can we complete to obtain customers in our
business or
industry?.
Examples of business unit strategies are
products &
services mix, location, & new technology.
Functional corporate planning involves the
development
of strategies related to the activities in each
functional