Planning requires managers to make decisions on the following fundamental elements; objectives, actions/strategies/means, resources, implementation and evaluation.
Objectives specify the needs/expectations to be achieved by the organization. They specify the targets to be achieved e.g. 5% growth in profit within two years. Objectives are concrete and specific. Objectives must be SMART i.e. Specific, Measurable, Attainable, Realistic and Time bound.
Actions are the preferred means or strategies to achieve the set objectives e.g. the ideal course of action to realize a company’s objective of increasing profit by 5% in 2 years could be to expand existing business or diversify business through increased investment. It could however opt to increase its promotional campaigns (advertisement) to improve its existing product appeal to customers. Whichever course of action a company takes depends largely on its internal resource capability and available opportunities in the environment.
These may act as constraints on the courses of action. They include physical assets, raw materials, financial and human resources, time, technology and information. In practice resources are limited or scarce.
A plan to realize increased company’s profit through a business expansion strategy would require the manager to specify the kinds and amount of resources required, potential sources and allocation of the resources to be committed to the planned activities.
This involves the assignment and direction of personnel to carry out the planned activities. The plan should be well communicated to employees for effective implementation. Plans can be implemented using policies, procedures, programmes and rules.
Organizational policy is a statement that describes in very general terms the interrelated courses of actions. After the fundamental objectives of an activity have been established policies are developed to serve as guidelines that channel actions and decisions of managers towards achievement of organizational goals.
Purpose of organizational policies
- To facilitate accomplishment of organizational goals
- To provide guidelines for managerial decision making
- To check or restrain managers or subordinates from performing actions or making decisions that are deemed undesirable or which affect achievement of organizational goals.
- To guide decision making by managers
These are plans which establish the required method for undertaking organizational activities. A procedure describes in details the exact manner in which certain activities must be accomplished. They are a chronological sequence of the required methodology for achieving objectives.
A programme represents activities developed to carry out policies. Programmes require appropriate action at all levels of the organization. Thus a programme embraces a set of related actions and activities surrounding the plan in order to achieve the set objectives.
A rule is a statement precisely describing what should or should not be done without permitted deviations. The essence of a rule is that it reflects a managerial decision that certain actions must or must not be taken. Rules therefore spell out specific required action or non action by allowing no discretion to managers.
Implementation process should be well monitored and necessary measures taken to ensure that plans and strategies being implemented are achieving goals.
There are no specific processes in planning. However, planning is not a random process but one that generally follows certain steps.
These steps may vary from one organization to another;
- Identification of opportunities
- Settings objectives. Here the manager must ask the question of where the organization wants to go, how and when to get there. Objectives must be established for the entire organization then for each unit.
- Determining the planning premises. Planning premises refer to the various assumptions that are made about situations and the environment affecting the execution and the results of the entire plan. Assumptions may be in areas such as, what the preferences of the market would be, how much money the customer would be willing to buy the product for, the state of political stability, tax rate etc.
- Developing alternatives. To achieve an objective, several courses of action may be adopted. This step requires that the manager develops all the possible courses of action that would achieve the objectives already established. The purpose of this is to ensure that, the manager selects optimal courses of action.
- Evaluating the various courses of action and then selecting the best. In this step the various alternatives are evaluated for;
- Suitability – Meaning, is the course of action consistent with the situation of the organization e.g. mission and vision?
- Feasibility – How practicable is the course of action in terms of resource availability. Feasibility analysis will also involve a cost benefit against the cost that will be incurred. The risk level will also be established at this point.
- Acceptability – Is it acceptable to the stakeholders. After the evaluation a choice is made among the alternatives based on the evaluation results.
- Formulating derivative plans and contingency plans. Derivative plans will support the basic plan e.g. the plan is to increase production levels, this will need hiring more workers thus a hiring plan will be formulated. Contingency plans are alternative courses of action/plans in case the original plan fails.(Plan B)
- Set a programme for implementation and control