Ch 4 pom shirufi mam

1. Chapter 4 :-Essentials of Planning and
Managing by Objectives
 Module 2 :- Planning
 Asst. Professor :- Shirufi Daruwala
 Parul Institute of Management and Research
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2. Mod-2

3. Definition of Planning
 Planning involves selecting missions and
objectives and the actions to achieve them; it
requires decision making, that is, choosing from
among alternative future courses of action
amongst all alternatives.
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4.  It is a bridges the gap from where we are to
where we want to go.
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5. Why Goals are important for an
organization
1. Goals provide a sense of direction
2. Goals focus our efforts
3. Goals guide our plans and decision
4. Goals help us to evaluate our progress

6. Fig. 4-1 Close Relationship of Planning and Controlling
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7. Types of Plans
Plans can be classified as:
1. Missions or purposes
2. Objectives or goals
3. Strategies
4. Policies
5. Procedures
6. Rules
7. Programs
8. Budgets
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8. Types of Plans
1. The mission, or purpose, identifies the basic purpose
or function or tasks of an enterprise or agency or any
part of it.
Eg : the purpose of business is production and distribution
of goods and services.
The purpose of courts is of laws and their application.
The purpose of university is teaching , research, services to
the community.
Eg : Dupont – “ better things through chemistry.
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9. 2. Objectives
2. Objectives, or goals, are the ends toward
which activity is aimed.
It represents not only the end point of planning but
also the end toward which organizing , staffing,
leading and controlling are aimed.
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10. 3. Strategy
 Strategy is the determination of the basic
long‑term objectives of an enterprise and the
adoption of courses of action and allocation of
resources necessary to achieve these goals.
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11. 4. Policies
 Policies are general statements or understandings that guide or
channel thinking in decision making
 Polices help to decide issues before they become problem.
 E.g.6 of policies :- L&T only first class students are recruited.
 Only B school students are recruited.
 Only of following high standard of business ethics – TATA group.
 Employees satisfaction and engagement policies, retention policies,
setting competitive prices etc.
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12. 5. Procedures
 Procedures are plans that establish a required method
of handling future activities.
 They are chronological sequences of required actions.
 Eg : company made a policy of vacation to employees.
Now procedure would be :-
 Implementing this policy,setting rates of vacation pay,
methods for calculating them, maintaining records , and
to design procedure for applying for leave.
 Eg : to get admission in M BA also there is a procedure
where students have to give online exam, reporting ,
paying fees , taking admission etc.
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13. 6.Rules
 Rules spell out specific required actions or
nonactions, allowing no discretion.
 E.g :- No smoking
 That is certain action must or must not be taken.
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14. 7. Programs
 Programs are a complex of goals, policies,
procedures, rules, task assignments, steps to be
taken, resources to be employed, and other
elements necessary to carry out a given course
of action.
 E.g. company’ s 5 year plan.
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15. 8. Budget
A budget is a statement of expected results
expressed in numerical terms.
 the financial operating budget is often called a
profit plan.
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16. Steps in Planning
1. Being aware of opportunities
2. Establishing objectives or goals
3. Developing premises
4: Determining alternative courses
5. Evaluating alternative courses
6. Selecting a course
7. Formulating derivative plans
8. Quantifying plans by budgeting
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17. STEPS INVOLVED IN PLANNING
1. Being aware of opportunities
In light of :
The market
Competition
What customers want
Our strengths
Our weakness
2. Establishing Objectives/ Setting Objectives or Goals
where we want to be and
what we want to accomplish and when
3. Developing Premises
In what environment – internal or external will our plans operate?
4. Determining Alternatives
What are the most promising alternatives in accomplishing our
Objectives

18. STEPS INVOLVED IN PLANNING
5. Evaluating alternative courses
Which alternatives will give us the best chance of meeting our goals
at the lowest cost and highest profit?
6. Selecting a course
Selecting the course of action we will pursue
7. Formulating derivative plans (Supporting plan)
Such as plans to:
Buy equipment
Buy Materials
Hire and train workers
Develop new product

19. STEPS INVOLVED IN PLANNING
8. Quantifying plans by budgeting
Develop such budgets as:
Volume and price of sales
Operating expenses necessary for plans
Expenditures for capital Equipment
 Co-ordination of Short and long-range plans

20. Fig. 4-2 Steps in Planning
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21. Making Planning Effective
Linked to Long term objectives
Consistency
Everyone participates
Feasible
Flexible
Simple
Top Management Support

22. Verifiable Objectives
 Objectives are the important ends toward which
organizational and individual activities are
directed.
 It can be long term, short term, broad or specific.
 An objective is verifiable when at the end of the
period one can determine whether or not the
objective has been achieved.
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23. The Nature of Objectives
 Objectives state end results and overall
objectives need to be supported by sub
objectives. Thus, objectives form a hierarchy as
well as network.
 Organizations and managers have multiple
goals that are sometimes incompatible and may
lead to conflicts within organization, group or
individual.
 Hierarchy of objectives
 It ranges from the broad aim to specific
individual objectives.
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24. Fig. 4-3 Relationship of Objectives and the
Organizational Hierarchy
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25. HOW TO SET CORPORATE OBJECTIVES
Socio-economic purpose To become the leading
supplier of computers in
Mission statement London
Top down approach
Overall objectives of org.
Bottom-up approach
To increase sales in London
by 10% in the next 5 years
Corporate objectives
e.g. (marketing department) to
Departmental objectives achieve a 10% share of the
computer market in London
within the next 5 years
Individuals and team e.g. to design questionnaires
targets as part of market research

26. Key Results Areas
 Key Results Areas: Areas in which performance is
essential for success
 These are more specific and overall objectives of
organization
 According to Peter Drucker KRA are :- innovation,
productivity, physical and financial resources,
profitability, workers performance and attitude, and
pubic responsibility.
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27. Multiplicity of objectives
 Objective are normally multiple.
 Eg university mission is education and research
is not enough.
 It would be much more than that :-
 attracting good quality students and faculties
 Offering basic training in professional fields
 Discovering and organizing new knowledge
through research.
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28. How to Set Objectives
Compare nonverifiable with verifiable objectives
 Nonverifiable  verifiable objectives
1. To make a reasonable 1. To achieve ROI of 12 %
profit. at the end of fiscal year
2. To improve 2. Is issue a 2 page monthly
communication newsletter beginning 1
3. To improve productivity July 2012.
3. To increase productivity
by 5 % by 31 december
2012.
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29. Evolving Concepts in MBO
 Management by objectives is a comprehensive
managerial system that integrates many key
managerial activities in a systematic manner and
is consciously directed toward the effective and
efficient achievement of organizational and
individual objectives.
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30. Management by Objectives
(MBO):
 Management by Objectives (MBO): This
approach is proposed by Peter Drucker in his
book ‘The Practice of Management’.
 MBO refers to a formal set of procedures that
begins with goal setting and continues through
performance review.
 MBO goes beyond setting annual objectives for
organizational units to setting performance goals
for individual employee
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31. THE NATURE & PURPOSE OF
MBO
MBO is concerned with goal setting and planning
for individual managers and their units.
The essence of MBO is a process of joint goal
setting between a supervisor and a subordinate.
Managers work with their subordinates to establish
performance goals that are consistent with higher
organizational objectives.
MBO helps clarify the hierarchy of objectives as a
series of well-defined means-ends chains.

32. ESSENTIAL STEPS FOR MBO
 Set Goals (The most difficult step)
 What are we trying to accomplish?
 Develop Action Plans
 “What do we need to do to get there?”
 Groups and individuals
 Review Progress
 “How are we doing?”
 Periodically (How Often?)
 Appraise Performance
 Rewards?

33. STEPS FOR MBO
STEP 1: SET GOALS STEP 2: DEVELOP PLANS
•Corporate Strategic goals
Action plan
•Departmental goals –Course of action
–For both workgroups and
•Individual goals individuals
Review Progress
&
Appraise Performance Take Corrective Action
–How are we doing?
–Do we need to restate
our goals?
STEP 3: REVIEW PROGRESS
STEP 4: APPRAISE
OVERALL PERFORMANCE

34. OBJECTIVE SETTING
In an MBO, good goals are SMART goals:
S specific
S
U
M measurable
C
A achievable
WORK HAVE C
R result oriented E
T time-related S
S

35. Uses of MBO
1. Appraisal Tool- Performance appraisal
2. Motivating individuals
3. Strategic planning
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36. Other integration of MBO
 Human resource planning and development
 Career planning
 Reward system
 Budgeting
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37. What Is Management by Objectives?
Organizational
Objectives
Divisional
Objectives
Departmental
Objectives
Individual
Objectives

38. Elements of MBO system

39. Systems Approach to MBO
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40. Benefits of Management by
Objectives
Clear Goals:
 Motivate employees.
 Improve managing through results-oriented planning.
 Clarify organizational roles, structures, and the
delegation of authority.
 Encourage commitment to their personal and
organizational goals.
 Facilitate effective controlling, measuring of results,
and implementation of corrective actions.
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41. Failures of Management by
Objectives
Failure to teach the philosophy of MBO
Employees may go for unethical means to achieve goals
and objective.
Difficulty in setting verifiable goals with right degree.
The major reason for MBO failure is lack of top
management support
Some firms may overemphasize quantitative goals
Some managers will not sit down and work out goals with
their subordinates
Encourage individual rather than team efforts

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