What is Planning Process and Explain Its Types

8/9/2019 What is Planning Process and Explain Its Types

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What is Planning Process and Explain its

types

The process of planning includes the determination of objectives and outlining the

future actions that are needed to achieve these objectives. Various steps that are

followed in the process of planning are:

(i) Identifying the problem: It involves the identification of the aim for the

fulfillment of which the plan is being formulated. If a new plan is require or the

modification of an existing plan could help in achieving these aims.

(ii) Gathering information about the activities involve: n effective plan needs

complete !nowledge of the activities involved and their effect on other external

and internal activities.

(iii) Analysis of information: This information is then anal"sed minutel" and the

information related with similar subjects is classified so that similar t"pe of data

can be !ept together.

(iv) Determining alternate plans: There are alternate plans available for the

achievement of the objectives and ingenuit" and creativeness are required as

some plans are also developed at this stage.

(v) Selecting the plan: t this stage the plan which is acceptable to the operating

personnel is proposed. The adaptabilit" and the cost of the plan are also ta!en

into consideration.

(vi) Detailed sequence and timing: #etailed li!e who will perform which activit"

under the plan and the time within which the plan should be carried out is

determining in this step.

(vii) Progress check of the plan: The provisions are made for the follow up of the

plan as the success of an" plan can be measured b" the results onl".

Different types of planning.


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Strategic Planning

$ %trategic planning involves devising strategies to meet specific objectives and

determining what resources this will require.

$ simple strategic plan might involve a single strateg" for achieving a single

objective& while complex strategic plans can involve man" progressive steps&each with its own strateg" and objective& all wor!ing toward a major objective.

$ 'or example& a compan"s plan for a product launch would include a series of

stages& including mar!et research to determine consumer demand& product

development& mar!eting and distribution.

$ nce the strategic planning is complete& the next step is communicating the planto ever"one involved.

$ %trategic planning ta!es a long$term loo! at the future of an organi*ation. It is an

essential tool for providing leadership to an organi*ation.

$ %trategic planning has a long time frame& often three "ears or more.

$ %trategic planning generall" includes the entire organi*ation and includes

formulation of objectives.

$ %trategic planning is often based on the organi*ations mission& which is its

fundamental reason for existence. n organi*ations top management most often

conducts strategic planning.

It involves:$ nal"*ing the environment in which the organi*ation operates$ #etermining organi*ational strengths and wea!nesses$ Identif"ing critical issues the organi*ation faces$ #efining the organi*ation+s vision& mission and values$ #eciding about core overall strategies as well as specific goals and objectives.

%trategies& goals and objectives will usuall" not onl" relate to programs but also tofinances& human resources or other organi*ational functions

Tactical ,lanning


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$ The next level of planning& !nown as tactical planning.

$ Tactical planningsupport strategic plans b" translating them into specific plans

relevant to a distinct area of the organi*ation.

$ Tactical plans are concerned with the responsibilit" and functionalit" of lower$level departments to fulfill their parts of the strategic plan.

$ Tactical planning is an extension of strategic planning& and tactical plans are

created for all levels of an organi*ation.

$ It establishes the specific steps needed to implement a compan"-s strategic

plan.

$ Tactical plans are t"picall" short$term in nature and describe what a compan"

needs to do& the order of the steps needed to accomplish those tas!s and thepersonnel and tools needed to meet the organi*ation-s strategic goals.

$ firm-s tactical plan can include the input of man" of its departments. fter

completing and implementing "our compan"-s tactical plan& "ou should visit the

plan on a regular basis to verif" that "our compan" is stic!ing to the outlined

steps.

$ Tactical plans are beneficial to companies because the steps developed in the

plan help management find inefficiencies in its operations.

$ nce operational shortcomings are discovered& management can ta!e the

necessar" steps to ma!e corrections. Tactical plans also allow companies to

benefit from the input of its emplo"ees.

$ ffective tactical plans must include the input of individuals involved in the da"$

to$da" operations of a firm

$ #isadvantage of tactical planning is that it can cause a slow down in a firm-s

operations if the plan is extensive. This ma" possibl" lead to a decrease in

profits.


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perational ,lanning

$ perational planning focuses on a firm-s products and services and develops

plans to maximi*e mar!et share and develop financial projections.

$ perational planning focuses on the production& equipment& personnel& inventor"

and processes of a business.

$ n operational plan uses an organi*ation-s financial ratios to anal"*e profitabilit".

$ 'or example& the plan ma" include contribution ratio anal"sis to determine whatprocesses are required to increase profits. This could include focusing on selling

its premium products or reducing variable costs.

$ benefit of operational planning is that a compan" is able to anal"*e the effect

of its operations on profit.

$ perational planning dissects a compan"-s financial position& identifies

wea!nesses and develops wa"s to increase profits.

$ disadvantage of tactical and operational planning is that the developmental

process is time consuming. %ome managers are lost in the process because the"

spend an excessive amount of time planning and little to no time implementing

the plan

perational plans should contain:

$ clear objectives

$ activities to be delivered

$ qualit" standards

$ desired outcomes

$ staffing and resource requirements

$ implementation timetables


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$ a process for monitoring progress

/usiness planning

01 might get involved in business planning if

it wants to start a social enterprise in order to earn income or when it considers expanding its existing product and2or service range.

#uring a business planning process& a 01 ta!es a long$term loo! at specificproducts and service and their mar!ets.

The process is about products and services that are alread" being sold andalso about new ones.

/usiness planning involves:

nal"*ing mar!et trends for products and services that the organi*ation wants toprovide

nal"*ing the competition Identif"ing actions that have to be ta!en to be successful in the mar!et place ,reparing a financial anal"sis of the first three "ears

There are certain differences between strategic and

operational planning which are explained below:

(i) Duration:

Strategic planning is for a longer period and can also be called long range planning.

These plans are related with decisions that have enduring effects which are difficult to

reverse. Operational planning is concerned with short term plans or plans having short

duration. Both the plans complement each other and cannot be separated.


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(ii) Scope:

The scope of strategic planning is broad while it is narrow in operational planning.

Strategic planning guides the choice among the broad directions in which organisationseeks to move while operational planning focuses on the ways and means which each of

the individual functions may be programmed for achieving the organisational goals.

(iii) Type of Environment:

Strategic planning takes into account external environment and tries to relate it to the

organisation. It encompasses all the functional areas and is affected within the existing

and longterm future characteristics of various environmental factors. Operational

planning is mostly concerned with internal organisational environments so as to make

effective use of resources.

(iv) Primary:

Strategic planning precedes operational planning! the former setting the trends and

direction of the organisation while the later implements what has been decided by the

former.

Strategic planning is for fairly a long period while operational planning is for a short

period. Strategic planning also limits the scope of operational planning because the later

is to operate within the overall limits fixed by the former.

strategic plan as a written long$range plan& which is founded on an enduring corporate

purpose& and including a smallset of corporate strategic objectives. corporate

strategic plan includes brief statements of a handful of strategies indicating how to

achieve the corporate strategic priorities. %trategic planning also provides the indicators

for assessing and controlling performance of the organi*ation as a corporate whole.


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operational planning& on the other hand& as the setting of short$term objectives for

specific functional areas such as finance& mar!eting& and human resources.

,erformance is monitored and controlled using management performance indicators

(3,I) or 4e" ,erformance Indicators (4,I) rather than 5orporate ,erformance

Indicators (5,I) or /eneficiar" ,erformance Indicators (/,I).

%trategic plans tend to be more general& and have longer time hori*ons than do

operational plans. %trategic plans normall" cover a three$to$five$"ear and longer

planning hori*ons& while most operational plans usuall" cover periods of something less

than a "ear. perational and tactical plans are more concrete and expressed in practical

da"$to$da" terms. perational plans might include written manufacturing capacit" plans&

inventor"& and sales forecasts6 and financial& human resource& and advertising budgets&

for monthl" or quarterl" periods.

TA!SA"TI#!A$ A!A$%SIS

Transactional anal"sis (T) provides useful models for leadership st"les. ric /erne developed transactional

anal"sis& and it has been applied& and written about ever since. T has been used with organi*ational

development and to improve qualit" of wor! life. 7ecentl" T has been used to develop multinational

corporations prepare mangers to operate efficientl" within other cultures. T is being used within relationship

mar!eting to develop good human relations with customers.

Transactional anal"sis is a method of understanding behavior in interpersonal d"namics. 8hen "ou tal! to

someone about an"thing& "ou are involved in interpersonal d"namics& and a series of transactions ta!e place. n

organi*ation is a product of the process of its human relations.

rgani*ations have trained their emplo"ees in T to improve their abilit" to handle difficult personal

situations. few of these companies include ,an merican 8orld irwa"s& the 9nited Telephone 5ompan" of

Texas& and ,itne" /owes. %tud"ing T can help "ou better understand people-s behavior& and how to deal with

emotions in a more positive wa".

/elow are three ego states& t"pes of transactions& and life positions and stro!ing. 4eep in mind that people are

diverse and "ou will encounter a variet" of ego states.


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&G# STAT&S

ccording to /erne& we all have three major ego states that affect our behavior or the wa" we transact. The

three ego states are the parent, child, and adult. 8e change ego states throughout the da"& and even during a single

discussion a series of transactions can ta!e place between different ego states. our parent& child& and adult ego

states interact with other people-s parent& child& and adult ego states. 9nderstanding the ego state of the person

"ou are interacting with can help "ou to understand his or her behavior and how to transact in an effective wa".

Parent &go State

8hen the parent ego is in control& people behave from one of two perspectives:

;. "ritical Parent. 8hen "ou behave and respond with evaluative responses that are critical& judgmental&

opinionated& demanding& disapproving& disciplining& and so on& "ou are in critical parent ego state. ,eople

in the critical parent ego use a lot of do-s and don-ts. 3anagers using the autocratic st"le tend to be in

critical parent ego state because the" use high tas!2directive behavior.


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cool and calm behavior. 8hen communicating in the adult ego state& "ou avoid becoming the victim of the

other person b" controlling "our response to the situation.

1enerall"& the most effective behavior& human relations& and performance come from the adult ego state


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(hat is the Delphi Technique

The Delphi Techniqueis a structured communication process that can be used to

collect& group& sort and ran! data and reach consensus from a group of people without

requiring face to face contact.

The process t"picall" builds consensus or agreement b" participants altering their views

between successive questionnaires to align with responses from others& or b"

establishing a new common view.

Advantages and Disadvantages

There are man" advantages of the #elphi Technique.


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3ore participants can be involved than a face to face method allows.

The time and cost of participants travelling to meetings is saved& while still

enabling their participation

,rovides a structured wa" for a group of people to ma!e decisions in a political oremotional environment about complex problems.

dditional factors that could lead to the choice of #elphi are described b" =instone and

Turoff (>?& p.?) as

The problem does not lend itself to precise anal"tical techniques but can benefit

from subjective judgments on a collective basis.

The individuals needed to contribute to the examination of a broad or complex

problem have no histor" of adequate communication and ma" represent diversebac!grounds with respect to experience or expertise.

The heterogeneit" of the participants must be preserved to assure validit" of the

results& i.e.& avoidance of domination b" quantit" or b" strength of personalit"

(@bandwagon effect@).

disadvantages.

The process is time consuming to coordinate and manage. #unham (;AAB)

states that Ccoordination of the #elphi technique using email with participants andthe processing of three questionnaires could utilise D> E ?> hours of the

coordinators time.

It can be difficult to maintain active participation b" participants the whole wa"

through& and so drop outs are more li!el" than at one off meetings.

The decision$ma!ing process is less transparent than face to face meetings& and

can be more easil" influenced b" the coordinator. This can lead to less trust in the

process and outcome2s b" participants

$ The Delphi techni"ue involves circulating "uestionnaires on a specific problemamong group members! sharing the "uestionnaire results with them! and thencontinuing to recirculate and refine individual responses until a consensusregarding the problem is reached.


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$ The #elphi method is an iterative process used to collect and distill the

*udgments of e+pertsusing a series of questionnaires interspersed with

feedbac!.

The formal steps followed in the Delphi Techni"ue are#

$. ST%& $# ' problem is identified.

(. ST%& (# )roup members are asked to offer solutions to the problem byproviding anonymous responses to a carefully designed "uestionnaires.

*. ST%& *# +esponses of all group members are compiled and sent out to all groupmembers.

,. ST%& ,# Individual group members are asked to generate a new individualsolution to the problem after they have studied the individual responses of all

other group members.

-. ST%& -# Step * and , are repeated until a consensus problem solutions isreached.

01T:

$ The modified nominal group technique (01T) is a useful and practical course

evaluation toolthat complements existing methods such as evaluation forms&surve"s& pretests and posttests& focus groups& and interviews.

$ The 01Ts unique contribution to the evaluation process is the semi$quantitative&

ran!$ordered feedbac! data obtained on learners perceptions of a courses

strengths and wea!nesses.

$ 0ominal group technique (01T) is a structured method for group brainstorming

that encourages contributions from ever"one.

When to Use Nominal Group Technique


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$ 8hen some group members are much more vocal than others.

$ 8hen some group members thin! better in silence.

$ 8hen there is concern about some members not participating.

$ 8hen the group does not easil" generate quantities of ideas.

$ 8hen all or some group members are new to the team.$ 8hen the issue is controversial or there is heated conflict.

Nominal Group

Technique

Delphi

1 The NGT is used for making decisions

as quickly as possible (within severalhours or less).

Takes several iterations overtime that could

use traditional questionnaire deliverymethods like postal mail services. Quality

over quickness.

2 sed in a !live" face#to#face

interactive environment

$ore passive !batch process" and !o%ine"

3 Get results with minimal iterations &ould take three to more iterations

depending on goal the researcher seeks

4 face#to#face nature of NGT provides a

range of opportunities to better

understand the opinions and'udgments of others." (&ampbell

*+*)

$ore anonymous in nature but face#to#face

meetings could be arranged.

Table 1 - Compare and Contrast NGT with Delphi

Nominal Group Technique Delphi Method

Compare

group brainstorming

forecast oriented

structured group of individuals

encourage contribution

facilitator moderated

solution ranking

seek group consensus

Contrast


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Session time limit Process stopped based upon predefined criteria

Each member writes their ideas in free form Each member completes a questionnaire andcomments

No discussion questions or clarification

allowed

Participants are ph!sicall! separated

Participants do not initiall! consult or discusstheir ideas with others

Participants remain anon!mous

Each member reads aloud their idea "acilitator provides an anon!mous summar! of

the each members# contribution

Each member in turn states one idea Participants remain anon!mous

Wording ma! be changed onl! when theidea#s originator agrees

Participants ma! change their earlier answers

$ne round in one session Two or more rounds over longer duration

Similar to up or down vote therefore ma! bebetter for more narrow problems

%a! be better for more significant issuesbecause of more time to research and respond

The techni"ues differ in some aspects.

The Delphi ethod is usually used for longer term forecasting that is more abstract in

nature and can take much longer to achieve consensus as team members share data

sometimes via mail or email over a period of time.

/)T is usually used to achieve consensus within a couple of hours as team members

"uantify their opinions numerically 0using for example sticky notes1 and the values are

ranked and summari2ed. Sometimes smaller teams achieve numerical consensus and then

these results are compiled into a larger group.

The Delphi ethod and the /ominal )roup Techni"ue 0/)T1 are both techni"ues for

achieving consensus within a group.

The Delphi method was created to make accurate predictions of the future while /)T was

developed to prioriti2e issues within a group.

Both techni"ues are iterative in nature where the groups make initial assessments and then

refine them as evaluations are shared within the group.

The Delphi ethod can have closed collaboration where a single set of individuals work

toward consensus or open collaboration where new people are brought into the evaluation

as needed.

The Delphi Methodis effective in improving and clarifying the collective judgment of experts.

Any expert around the world can be included in the Delphi Method. The NGT technique on the

other hand isa structured method for group brainstorming that encourages contributions from

everyone


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Similarities bet,een Delphi and !ominal Group Technique -ethods

F /oth are used for groups of different si*es

F /oth ta!es ever"ones solution in account

F /oth get to the final results via at least one or more iterations

F /oth utili*es methods to ran! the results after each iteration

F /oth methods promotes a level of anon"mit"

5omparison between management and administration:

Management Administration

Definition Art of getting things done through

others by directing their efforts

towards achievement of pre-

determined goals.

Formulation of broad objectives,

plans & policies.

Nature executing function, doing function decision-making function, thinking

function

Scope Decisions within the framework

set by the administration.

Major decisions of an enterprise

as a whole.

Level of authority Middle level activity Top level activity

Status Group of managerial personnel

who use their specialized

knowledge to fulfill the objectives

of an enterprise.

Consists of owners who invest

capital in and receive profits from

an enterprise.

Usage Used in business enterprises. Popular with government, military,

educational, and religious

organizations.

Influence Decisions are influenced by thevalues, opinions, beliefs and

decisions of the managers.

Influenced by public opinion,government policies, customs etc.

Main functions Motivating and controlling Planning and organizing

Abilities Handles the employees. Handles the business aspects

such as finance.


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difference between 3anagement and dministration can be summari*ed under < categories: $

;. .unctions


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pplicabilit"

It is applicable to business concerns i.e.profit$ma!ing organi*ation.

It is applicable to non$business concerns i.e.clubs& schools& hospitals etc.

Influence The management decisions are influencedb" the values& opinions& beliefs G decisionsof the managers.

The administration is influenced b" publicopinion& govt. policies& religious organi*ations&customs etc.

%tatus 3anagement constitutes the emplo"ees ofthe organi*ation who are paid remuneration(in the form of salaries G wages).

dministration represents owners of theenterprise who earn return on their capitalinvested G profits in the form of dividend.

,racticall"& there is no difference between management G administration. ver" manager is concerned with both $administrative management function and operative management function as shown in the figure. However& themanagers who are higher up in the hierarch" denote more time on administrative function G the lower level denotemore time on directing and controlling wor!ers performance i.e. management.

$. anagement is the act or function of putting into practice the policies and plans

decided upon by the administration.

(. 'dministration is a determinative function! while management is an executive

function.


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*. 'dministration makes the important decisions of an enterprise in its entirety!

whereas management makes the decisions within the confines of the framework! which

is set up by the administration.

,. 'dministrators are mainly found in government! military! religious and educational

organi2ations. anagement! on the other hand! is used by business enterprises.

Nature of work

Administration:

It is concerned about the determination of objectives and major policies of an organization.

Management:It puts into action the policies and plans laid down by the administration.

Type of function

Administration:It is a determinative function.

Management:It is an executive function.Scope

Administration:It takes major decisions of an enterprise as a whole.

Management:It takes decisions within the framework set by the administration.

Level of authority

Administration:It is a top-level activity.

Management:It is a middle level activity.

Nature of status

Administration:It consists of owners who invest capital in and receive profits from an enterprise.

Management:It is a group of managerial personnel who use their specialized knowledge to fulfill the

objectives of an enterprise.

Nature of usage

Administration:It is popular with government, military, educational, and religious organizations.


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Management:It is used in business enterprises.

Decision making

Administration:Its decisions are influenced by public opinion, government policies, social, and religious

factors.

Management:Its decisions are influenced by the values, opinions, and beliefs of the managers.

Main functions

Administration:Planning and organizing functions are involved in it.

Management:Motivating and controlling functions are involved in it.

Abilities

Administration:It needs administrative rather than technical abilities.

Management:It requires technical activities Management handles the employers.

'dministration is a determinative function! while management is an executive function.

It also followsthat administration makes theimportant decisions of an enterprise in its

entirety! whereas management makes the decisions within the confines of the

framework! which is set up by the administration.

'dministration is the top level! whereas management is a middle level activity. If one

were to decide the status! or position of administration! one would find that it consists of

owners who invest the capital! and receive profits from an organi2ation. anagement

consists of a group of managerial persons! who leverage their specialist skills to fulfill

the ob3ectives of an organi2ation.

'dministrators are usually found in government! military! religious and educational

organi2ations. anagement is used by business enterprises. The decisions of an

administration are shaped by public opinion! government policies! and social and
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religious factors! whereas management decisions are shaped by the values! opinions

andbeliefs of the mangers.

-atri+ organi4ation structure

matrix organi*ation structure is usuall" defined as one where there are multiplereporting lines E that is& people have more than one formal boss.

$ The matrix organi*ational structure is at"pical because it brings togetheremplo"ees and managers from different departments to wor! towardaccomplishing a goal.

$ The matrix structure is a combination of the functional and divisional structures.

$ The former divides departments within a compan" b" the functions performed&while the latter divides them b" products& customers or geographical location.

$ t this level& the definition of a matrix organi*ation structure is quite simple butthere are man" different t"pes of complex structure.
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$ The matrix organi*ation structure is a combination of two or more t"pes of

organi*ation structure& such as the projecti*ed organi*ation structure and the

functional organi*ation structure.

$ These two t"pes of organi*ation structures represent the two extreme points of a

string& while the matrix organi*ation structure is a balance of these two.

$ This combination helps organi*ations to achieve higher efficienc"& readiness& and

quic! mar!et adaptation. 3oreover& the" can respond faster to mar!et or

customer demand& and decrease the lead time to produce a new product.

$ This t"pe of structure is most suitable for organi*ations operating in a d"namic

environment.

$ matrix organi*ation is defined as an organi*ation where people have to report

to more than one boss.

$ The matrix organi*ation structure is a blend of the projecti*ed organi*ation and

the functional organi*ation& and ta!es the best of both worlds.


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$ This t"pe of structure is suited to those big organi*ations who wor! in a d"namic

environment and need a quic! response to mar!et demand

&+ample

In the ;A>s& ,hilips& a #utch multinational electronics compan"& set up matrix

management with its managers reporting to both a geographical manager and a

product division manager. 3an" other large corporations& including 5aterpillar Tractor&

Hughes ircraft& and Texas Instruments& also set up reporting along both functional

and project lines around that time.

Type of -atri+ #rgani4ation Structure

The matrix organi*ation structure can be classified into three categories depending on

the level of power of the project manager. These categories are as follows:

;. %trong 3atrix %tructure


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Weak Matrix Organization Structure

In wea! matrix organi*ations& the project manager will have a limited power and

authorit". He will have a part time role and no administrative staff will report to him. His

role will be more li!e a coordinator or an expediter. Here& the functional managercontrols the project budget.

wea! matrix organi*ation structure resembles the characteristics of a functional

organi*ation structure.

Advantages

It allows emplo"ees to communicate more readil" across the boundaries&

creating a good wor!ing and cooperative environment which helps in integrating

the organi*ation.

The matrix structure provides a good environment for professionals to learn and

grow their career.

It can lead to an efficient exchange of information.

#epartments wor! closel" together and communicate with each other frequentl"

to solve issues.

fficient lines of communication enhance productivit" and allow for quic!

decision$ma!ing.

'or example& in a matrix structure& individuals from the mar!eting& finance and

product departments ma" confer with one another to formulate strategies.

The matrix structure encourages a democratic leadership st"le.

This st"le incorporates the input of team members before managers ma!e

decisions.

The abilit" to contribute valuable information before decisions are made leads to

emplo"ee satisfaction and increased motivation.

Disadvantages


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conflict ma" arise between the project manager and the functional manager

regarding the authorit" and power.

It is generall" seen that matrix organi*ations have more managers than required&

which ma!e overhead cost high.

matrix structure is expensive to maintain. rgani*ations have to pa" extra to

!eep resources because not all resources will be occupied at all times. %ome

resources are needed onl" for a short duration.

The sharing of emplo"ees ma" cause unhealth" competition between managers

within a compan"

It can result in internal complexit". %ome emplo"ees ma" become confused as to

who their direct supervisor is.

'or example& an emplo"ee ma" receive different directions concerning the same

thing from supervisors in different departments

What is Planning Process and Explain Its Types

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Transcript of What is Planning Process and Explain Its Types