1. IT 262 PRINCIPLES OF MANAGEMENT
CHAPTER 5
Week 4
TOPIC: Organizational Planning

2. Learning Outcomes Discuss the importance of Planning.
Outline the advantages and disadvantages of planning.
Identify the difference between mission and goals.
Discuss the steps in systematic planning process.
Identify and discuss the common obstacles to planning.
Discuss the planning tools used by managers.
Discuss the strengths and weaknesses of Management by Objectives (MBO).

3. Importance of Planning
Involves setting direction for the organisation.
Effective planning create learning organisations and achieve sustainable competitive advantage in the market place.
Eg. Students planning to have good grades in the exam.
It gives you direction towards where you want to be and what you want to achieve in the future.

4. Advantages and Disadvantages of Planning
Provide sense of direction for the organisation
Time consuming
Good Plans involve employees in the planning process.
Small businesses may not be able to commit employee’s time towards planning.
Ensure that activities can be completed within the resources available to the organisation.

5. Overview of Goals and Plans
Planning is both a short-term and long-term process which successful organizations take very seriously. In order to appropriately plan, organizations must determine their mission, purpose and goals.
Goal: is a future target or end result an organization wishes to achieve.
Plan: is the means devised for attempting to reach a goal.
Planning: is the management function involving setting goals and deciding how best to achieve them.
Goal setting and plan development lead to goal attainment.

6. Major components of Planning
Mission goals plans
Goal attainment
(organizational efficiency and effectiveness)
Mission: Organization purpose or reason for existence.
Mission Statement:
Has a key role to play within the planning process.
A statement that declares the organizations purpose of existence or reason for being. It provides an insight to organization values and future directions.
Eg. USP: Exist to provide quality education or exist to facilitate research in areas considered important to the region.

7. Organisational Goals
Management process begins with the setting of goals.
Goals: are future targets which the organization work towards.
These then have to be converted to detailed plans to help achieve organizational goals.

8. Benefits of Goals
1. Goals increase performance
Example: Requested by Board of Directors to increase sales by 30% next quarter.
2. Help clarify expectations
Goals have been set and employees already know what is expected of them. Giving a sense of accomplishment, recognition and other rewards for reaching targets. Eg. Awarding bonuses for reaching target.
3. Facilitate the controlling function.
Providing benchmarks to assess progress and assist managers maintain organizational control.
4. Increased motivation
Motivated from meeting goals
Sense of accomplishment
Earning recognition and other rewards for reaching targets.

9. Potential obstacles to Planning
Obstacles that threaten the ability of organizations to develop effective plans.
Rapidly Changing Environment
Changes in the environment have great impact on business.
Requires plans to be altered frequently.
View of planning as unnecessary
Managers feel that they do not need to plan.
Move into a business not because of any set plan, but because of a business opportunity.
Not enough management time.
Managers feel they do not have enough time to engage in planning.
This can lead to the downfall of the organization.

10. Potential obstacles in Planning (Cont)
Poor participation of line managers in planning.
If staff specialists dominate planning process.
Managers with less knowledge and skills in planning creates a gap between formulation and implementation of plan.
Result could be a disaster.
Plans are not properly implemented.
Staff specialists dominate planning process.
Staff accept specialists recommendations without question.
Specialists are not familiar with problem at hand but line managers rather.
Good planning requires input from both line and staff personnel.

11. Overcoming and Avoiding Obstacles
Support and involvement of top management
Need for organisation-wide involvement in the Planning Process.

12. Types of Plans used by Managers
Top Level Management
Long Term Plan
5-10 yrs
Long Term Plan
Middle Level Management
Intermediate Term Plan
1-2 yrs
Lower Level Management
Short Term Plan
1 year or less

13. Planning tools used by managers
Contingency Planning: involves planning for the future by taking into account unexpected occurrences.
Benchmarking: Making external comparisons of company’s performance in order to evaluate how the company is performing
Participatory Planning: involving employees in the planning process
Staff Planners: using specialised staff in the planning process
Forecasting involves predicting the future

14. Management by Objectives (MBO)
Another method to facilitate the links between goals and plans.
“…A process of joint objective setting between a superior and a subordinate (Schermerhorn, et al, page. 191)
A process where specific goals are collaboratively set for the whole organization and every unit and individual within it.
Individual as well as group have targets to work towards.
Ensures that workers are aware of what goals are being set and how they would be affected.
Goals can be implemented in a timely manner.

16. Strength and Weaknesses of MBO
Strengths
Weaknesses
1. Aids coordination of goals and plans
1. Tends to fail without strong and continuous commitment from top management.
2. Helps clarify priorities and expectations.
2. Necessitates considerable training of managers.
3. Facilitates vertical and horizontal communication
3. Can be misused as a disciplinary device.
4. Foster’s employee motivation
4. May cause over-emphasis on quantitative goals.