BCOC-132 BUSINESS ORGANISATION AND MANAGEMENT CHPTER-9 PLANNING AND DECISION MAKING

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BCOC-132 BUSINESS ORGANISATION AND MANAGEMENT CHPTER-9 PLANNING AND DECISION MAKING

WHAT IS PLANNING

it is the process of setting future objectives and deciding on the ways and means of achieving them . it means deciding in advance what is to be done in the future for specific period and then taking the necessary steps to do the things decide upon

NATURE AND CHARACTERISTICS OF PLANNING 1. Primary planning:

• Precedes other managerial functions

• Foundation for organizing, staffing , directing and controlling                                             2. Planning as process:

  • Involves stages or steps

  • Being with identifying mission and goals, end with implementation

    arrangements

    3. Perceived as planning:

    • Managerial function across all levels.

    • Varies in content and quality among different managerial levels                                    4. Future orientation:

    • Inherently future oriented

    • Address uncertainties and unknowns unfolding in the future                                        5. Information basis:

    • Relies on information

    • Essential for diagnosing issues, developing alternatives, and making choices           6. Rationality:

    • Purposeful and conscious managerial activity

    • Backward by adequate information, knowledge and understanding                            7. Formal and informal notion:-

    • Involves both formal and informal elements

    • Formal: systematic , rigorous , informal: intuitive, verbal                                          8. Intellectual process:

  • Requires conceptual skills

  • Involves abstract and concrete thinking, anticipation opportunities, and

    analyzing alternatives

    9. Pragmatic action orientation:

10. 11. 12.

• •

• •

Primarily pragmatic and action oriented
Emphasizes thinking and desiring before acting
   10.Planning as a form of decision making:
Involves problem- solving and decision making
Decision made organizational objectives, policies, programs and procedure                 11.Planning premises:

• Based on assumptions about future events
• Known as planning premises, derived through forecasting

12.Dynamism:

• A dynamic process, involves continues assessment and reassessment

13. Level of planning:
• Divided into corporate(entire organization) and functional( within

units)planning
• Further categorized into strategic(long term) and tactical/

operational(short term) planning                                                                                          14. Types of plans:

• Including objectives , strategic policies , programs, budgets, schedules, procedures, methods and rules

• Categorized into single use plans(specific situations) and standing plans( stable, repetitive situations

IMPORTANCE OF PLANNING:

  1. Provides direction:

    Gives a clear sense of direction to organizational activities and managerial behavior, strengthens confidence in understanding the organization’s goals and chosen path

  2. Analysing alternatives:

    Allows managers to examine and analyze alternative courses of action, enhance

    awareness of likely consequences for informed decision making

  3. Reduce uncertainties:

    Forces managers to look beyond immediate concerns and gain control over

    environmental complexities

  4. Minimize impulsive decision:

    Reduce impulsive and arbitrary decisions , promoting disciplined managerial thinking, improves the organization’s capability to assume calculated risks within defined limits

  5. Kingpin functions:

    Acts as a prime managerial function around which other functions are designed,

    organizational structure and functions are built around planning

  6. Resource allocation:

    Involves judicious allocation of strategic resources for achieving organizational goals. Strategic resources includes funds, competent, executives, technological talent ,etc.

  7. Resources use of efficiency:

    Contribute to the efficient functional of work units. Prompts managers to close

    gaps, rectify deficiencies and reduce wastage for overall resource ef7iciency

  8. Adaptive responses:

    Improves organization’s ability to adapt to change in the external environment. Adaptive behavior is crucial for survival, especially in technology, markets and products

  9. Anticipative action:

    Goes beyond mere adaption. Stimulating proactive initiatives and crisis anticipation. Helps perceive opportunities ahead of competitors for competitive lead
    10.Integration:Facilitates
    effective integration of diverse managerial decisions over time. Provides framework for internally consistent major decision on organizational activities

LIMITATIONS OF PLANNING
1.Assumption : plans are based on forecast and assumptions, which might be inaccurate , affecting the plans

2. Incomplete information: planning often relies on incomplete or untimely information leading to decisions based on partial knowledge

3.Lack of control : managers have limited control over external factors, and

external events can influence plans unexpectedly
4. Difficulty adapting to change:- plans may become outdated in rapidly changing environments, making it challenging to adapt
5. Fluid process:- planning is dynamic process because the future is always changing, making it hard to have a stable view of past, present and future                                  6.Delay in action
7. Rigidity
8.Plans remaining on paper
9.Implimentation challenges at lower levels :- detailed plans at lower organizational levels may not align with boarder plans, causing inconsistence and implementation difficulties

THE PROCESS OF PLANNING

  1. Panning preparation:

    Planning doesn’t just happen, it needs careful consideration. management

    establishes a planning culture through education and training

  2. Internal assessment :

    Top management analyze the organization’s current state , strength , weakness, and performance . Review financial , manpower ,competitive positions and other key aspects

  3. External analysis:

    Examines external factors like economic, social and technological trends . identifies

    opportunities and threats affecting the organization

  4. Key area for planning:

    Management evaluates the relevance of existing aspects based on internal and external appraisals. Considering retaining, strengthening , modifying or exploring new directions

  5. Alternative plans:

    Managers use creative thinking to generate alternative plans, strategies and objectives. Evaluate these plans based on merits and demerits to make informed choice

  6. Medium and short range plans:

    Long range plans cover 1to 3 years , while shirt- range plans are for one year or

    less

  7. Implementation arrangements:

    Effectively implementing plans is crucial. Top management ensures cooperation , participation and commitment from managers at various levels. Speci7ies authority and accountability for resource allocation, decision- making and communication

FORECASTING AS AN ELEMENT OF PLANNING

Forecasting in planning is crucial for anticipating future conditions and events that may impact an organization. It involves estimating variables like economic, social , technological and political factors. Managers use forecasting to gain insight into potential challenges and opportunities. For businesses , it helps predict sales, profitability , technological changes and market trends. While forecasting is not perfect and future

events may deviate, it remains essential for informed decision making and planning, planning premises including external and internal factors, further refine the process by converting forecasting into meaningful assumptions for effective planning.

TYPES OF PLANNING
1. Strategic planning:

  • Integrated organization wide course action

  • Originated from military campaigns

  • Addresses opportunities, threats, strengths, weakness

  • Aims to improve competitive position

  • Involves major measures and moves for growth, pro7itability and market

    share

    2. Tactical planning:

    • Sub-plans to implement strategies
    • More specific, functional sub corporate
    • Concerned with detailed decisions and actions at lower managerial levels • Based on more information and less risky condition
    • Provide the basis for coordinated and time bound activities

    3. Long-range planning:

    • Formulates long range objectives
    • Considers a fairly long time horizon
    • Varies based on enterprise characteristics
    • Guides critical goals and major decisions for the future

    4. Short-range planning:

    • Formulates short-range objectives
    • Time span of one year or less
    • Action oriented detailed and quantitative
    • Breaks down long-range plans into compact, actionable programms • Basis for coordinated performance and source allocation

    5. Operational planning:

    • Refers to tactical planning and short-range planning
    • Involves planning detailed operations at middle and supervisory levels

    PRINCIPLES OF PLANNING

  1. Top management interest:

    Leaders should demonstrate genuine interest in planning and inspire their

    teams to do the same

  2. Long range-view

    Decision should consider long-term effects after through analysis and objective

    consideration of available facts

  3. Contribution to objectives:

    Planning should purposefully contribute organizational objectives

  4. Primary of planning:

    Planning is the foundational function from which all other managerial functions

    7low

  5. Flexibility:

    Adaptive plans helps organizations cope with unforeseen changes without abandoning predetermined plans

6. Navigation change:
Regular monitoring of external events combined with plan review and revision, is crucial for goal achievement

7. Commitment:
Planning should cover the necessary time period to ful7ill commitments made in decision

8. Limiting factor:

Managers must address limiting factors hindering the smooth progress towards achieving objectives.

DECISION MAKING

Decision making is a choice where a person concludes a course of behavior about situation, involves acts of choice and conclusion

IMPORTANCE

Success in business depends on the quality of decisions made by managers in various functional area

DECISION MAKING PROCESS

  1. Identification of problem or opportunity:

    Mangers set organizational goals and identify issues or opportunities hindering

    or enhancing goal achievement

  2. Exploring of possible, alternatives :

    Managers explores various alternatives to address identified problems or

    capitalize on opportunities

  3. Evaluation of alternatives:

    Positive and negative aspects of each alternatives are examined considering

    available resources

  4. Selection of best alternatives:

    Best alternatives is selected based on criteria like risk, economy of effort, timing

    and resource limitation

DECISION CRITERIA:

  • Risk :-managers asses and minimize risks associated with decision making activities

  • Economy of effort:-optimal use of limited resources, leading to better results with less effort

  • situation or timing:- decisions are made considering the right time for maximum effectiveness

  • limitation of resources:-efficient utilization of resources to achieve better results

  1. Implementation challenges:-

    Mangers may face resistance during implementation, requiring persuasion and

    efforts to ensure smooth execution

  2. Follow-up process:

    Continues examination and analysis of decision consequences, using feedback for improvement and correction.


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