Management functions Planning Determining the organization’s goals and defining the means for achieving them. It is preparing for tomorrow, today. Objectives must be SMART. Planning seeks to answer What needs to be accomplished, When, Where, Who and How

Significance of planning Gives direction to the organization Establishes a basis for teamwork and guides entire organization towards working as a system Lowers management’s threshold to change. Helps to foresee problems and cope with change. Affords managers the opportunity to adjust the organization to the environment instead of just reacting to it. Helps map the organization’s future. Serves as a prerequisite to employing all other management functions.

Internal Limitations to planning brings about rigidity, ie, strict adherence to policies. It is expensive in terms of time, finance and effort full of uncertainty since it is based on estimates about the future Gives a false sense of security. Planning can be misleading as it can be used to serve individual interests.

External Limitations to Planning Change of government policies Labour unions invoked industrial actions. Technological changes. Competitors’ policies. Natural disasters. Changes in demand and prices..

The planning process Planning is an on-going procedure consisting of the following; 1. Setting objectives Analyzing and evaluating the environment Determining and evaluating alternatives Implementing the plan Controlling and evaluating results

The planning process 1. Setting objectives This involves deciding on a target for the organization.

The planning process cont... Analyzing and evaluating the environment Looking at the internal and external environment of the company to establish its strengths and weaknesses as well as opportunities and threats.

The planning process cont... Determining and evaluating alternatives Analyse the available courses of action and select the best.

The planning process cont... 4. Implementation of the plan After selecting the best alternative, decide who will do what; assemble required resources and set deadlines then put ideas into actions.

The planning process cont...  5. Controlling and evaluating results monitor the progress that is being made evaluate reported results and make any necessary modifications. See if the plan is making progress..

Environmental scanning (PEST analysis) This is the measurement, projection and evaluation of change in the different environmental variables.

Political variables Government affects business environment in a regulatory capacity such as; Pricing policies Taxation laws Investment laws property rights

Economic variables These are financial or fiscal related variables that influence the survival of the organization and its community e.g; Economic growth rate Levels of inflation, exchange and interest rates Infrastructure quality Employment levels and labour costs Dispensable income Income distribution

Social variables The shared way of life whereby consumers’ life-styles, habits, norms and values are formed and agreed upon by society, e.g; Population size and its growth rate Cultural / religious values Entrepreneurial spirit Leisure interests Pressure groups.

Technological variables These are innovation related changes. Technology’s impact on product offering Impact on cost structure N.B. Most macro environmental factors are country specific.

The SWOT analysis This is a strategic planning method used to evaluate Strengths, Weaknesses, Opportunities and Threats of a business venture. It provides information helpful in matching the organization’s resources and capabilities to the competitive environment in which it operates.

SWOT analysis Internal variables Strength Weaknesses External variables Opportunities Threats Accept they exist Have courage to change

Strengths An achievement or attribute that puts the company in a position of market advantage It is the in-house talent, eg; Technical knowhow Strong brand names / Superior product Good reputation among customers Exclusive access to high grade natural resources.

Strengths cont... Patent protection In-house R & D facilities Wider product line than rivalries Alliances with suppliers

Weaknesses What a company lacks or does poorly. Examples are: Lake of patent protection Weak brand name Poor reputation among customers High cost structure Lack of talent and RnD facilities. Too narrow a product line relative to rivalries Weak balance sheet burdened with debt

Opportunities cont... These are conditions outside the organization that can be exploited for its growth. Examples are Removal of international trade barriers Introduction of new technology Increase in demand for a product or service already on offer by an organization. Companies seeking partnerships Competitors’ problems An unfulfilled customer need

opportunities “Where others see disasters and problems, I see opportunities, even when I diversify I remain focused. ...my mother taught me to be astute and to be an entrepreneur from pamusika, the vegetable market, and as a tonic”, he adds, “...my father taught me to cast my views and to stay focused, that is me” (Phillip Chiyangwa Sunday Mail 2 February 2013)

Threats These are external unfavourable developments that may weaken an organization’s position. Examples are: Competitors’ positive policies Economic instability of a country New entrants into the business. Decrease in product/service demand General political instability of a country Unfavourable weather conditions