DIP – 3. PLANNING FUNCTION

Lim Sei Kee @ cK

WHAT IS PLANNING?

PLANNING IS THE PROCESS OF Setting objectives Determining what should be done to

accomplish them Implementing the plan Evaluating the results of the plan

PLANNING HELPS MANAGEMENT ANSWER THE FOLLOWING 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?

STAGES INVOLVED IN THE PLANNING PROCESS Analyze the external environment Analyze the internal environment Define the business and mission Set corporate objectives Formulate strategies Make tactical plans Build in procedures for monitoring and

controlling

6

THE PLANNING PROCESS(ADAPTED FROM FIGURE 7.3)

Copyright © 2005 by South-Western, a division of Thomson LearningAll rights reserved

Task 1:Develop vision,

missionand Goals

Task 5:Prepare strategic

plan

Task 4:Develop strategies

Task 2:Diagnose

opportunitiesand threats

Task 3:Diagnose strengths

and weakness

Task 6:Prepare tactical

plans

Task 7:Control and

diagnose results

Task 8:Continueplanning

PLANNING TAKES PLACE AT DIFFERENT LEVELS OF A BUSINESS – THE MAIN LEVELS BEING:

Strategic plan Tactical plan Operational plan

STRATEGIC PLANS Strategic plans are designed with the entire

organization in mind and begin with an organization's mission.

To develop long-term strategies for achieving growth, improving productivity and profitability, boosting return on investments, improving customer service and finding ways to give back to the community in which it operates.

Strategic plans also tend to require multilevel involvement so that each level of the organization plays a significant role in achieving the goals being strategically planned for.

TACTICAL PLANS Tactical plans support strategic plans by

translating them into specific plans relevant to a distinct area of the organization. Tactical plans are concerned with the responsibility and functionality of lower-level departments to fulfill their parts of the strategic plan.

EXAMPLE: As a tactical planner, Martha needs to create a set of calculated actions that take a shorter amount of time and are narrower in scope than the strategic plan is but still help to bring the organization closer to the long-term goal

OPERATIONAL PLANS Operational plans are the plans that are made by

frontline, or low-level, managers. All operational plans are focused on the specific procedures and processes that occur within the lowest levels of the organization.

Operational planning activities would include things like scheduling employees each week; assessing, ordering and stocking inventory; creating a monthly budget; or outlining an employee's performance goals for the year.

Operational plans can be either single-use or ongoing plans. Single-use plans are those plans that are intended to be used only once. Ongoing plans are those plans that are built to withstand the test of time. Ongoing plans are typically a policy, procedure or rule.

CONTINGENCY PLANS Even the best plans can fail, especially in

today's fast-paced, chaotic business environment, and as such, it is important for managers at all levels to engage in contingency planning.

Contingency plans allow a manager to be flexible and change-savvy by providing an alternative course of action, which can be implemented if and when an original plan fails to produce the anticipated result.

PURPOSE OF BUSINESS PLANNING Clarify direction of the business Ensure efficient use of resources Provide a way of measuring progress Support effective decision-making Co-ordinate activities Allocate responsibility Motivate & guide people

DON’T FORGET THAT PLANNING IS DIFFERENT FROM FORECASTING: Forecasts are predictions - they

concern events and trends over which the business has little or no control

Plans are about what the business intends to do

But forecasts (especially sales forecasts) are essential in planning