PLANNING

MEANING
This is one of the functions of a manager.
Deciding in advance what, where, how,
who and when to do it.
What-involves setting objectives and
goals
How- setting strategies
Where- Is at what level whether at
departmental level or business level.
Who- Involves the people (personnel)
When- Involves the timing of the
particular strategy.

LEVELS OF PLANNING
Corporate level
Business Unit level
Operational Level

CORPORATE LEVEL

Involves determination of the companys future objectives both long term

and medium term.

Objectives:
1. Is the most important aspect of planning because it provides the legitimacy
of the existence of the organization and shows why the organization should
be in existence.
2. Clarifies the purpose of that organization. This is stipulated in the
memorandum of association of the registered company.
3. Help establish the guidelines for achieving future direction or prescriptions.
4. Give future direction to all the activities of the organization. These
activities are harmonized by the objectives.
5. Provide standards by which one can access the efficiency and the
effectiveness of the organization
6. The objectives are normally set by the top management level i.e. C.E.O,
B.O.D and very high important people.
7. In Kenya for example companies come into existence by registration by the
promoters or shareholders who establish the objectives. The shareholders
therefore are the ones who give policy guidelines on management of the
company, this is why most of the B.O.D therefore do not have a say on the
original objectives.

Steps in Corporate
Planning
1.
2.
3.
4.
5.
6.
7.

Determination of what business the company should be in

or line of business to specialize in. The decision is
determined by the resources.
Identification of the key factors that affects a particular
line of business.
Identification of the customer needs and the development
of making strategies to satisfy those needs.
Anticipation of profit to be made.
Evaluation of the ability of the company to satisfy those
customer needs.
Determination of which strategies to use for purposes of
taking off.
Determination of the kind of image that the company
wants to portray.(mission of the company)

Those missions are long term and medium term but not short
term strategies.

BUSINESS UNIT LEVEL

This is done at a lower level than corporate planning.
Determination involves the departments and the
sections.
Establishing the functional and departmental objectives.
Preparations of the departmental budget and other
requirements.
Determination of activities of each department.
Done by the senior managers e.g Departmental Heads
The plans are normally guided by the strategy
developed at the corporate level.
What kind of contribution will be expected by them at
each level.
The activities should be geared towards fulfilling the
objectives of the strategy set by the top level
management.

OPERATIONAL LEVEL
This is the lowest level of planning. Focus is on
individual tasks. i.e the industrial work programs
e.g. The delay tasks.
Prepared normally by sectional heads.
Arrange for what should be done and who and
this has to do with a particular task at hand.
Planning is about uncertainty and risks.
Reason is that we are talking about the future
which is about uncertainty and risks.
Planning helps to reduce uncertainty and risks.
It is very intellectually demanding because it
requires knowledge that it has to have
techniques in planning therefore quite essential.

PROCESS OF PLANNING:
1.

Environmental appraisal or
analysis: Must be done before
planning. It is a forerunner. It is
vital because the organization will
work in a given environment. Use
the S. W. O. T analysis. Analyze the
internal environment e.g.
(management style, employees,
financial resources) and external
environment e.g. political, cultural,
social, economic, legal etc

PROCESS OF PLANNING.
.2. SETTING OF OBJECTIVES: Regarded as the 1 st planning process. Objectives
are the end results desired in a performance. Objectives should be smart.

S-Specific

M-Measurable

A-Attainable

R-Reliable/Realistic

T-Time frame
Objectives may be quantitative e.g. sales target, or qualitative e.g. making
the customer happy or increasing employee moral. Quantitative is
prepared because of measurability and objectivity. Objectives form some
kind of hierarchy ranging from broad aims to very specific or unit
objectives or from short to long term objectives. While the general and
overall objectives tend to be responsibility of top level management. The
specific objective is the responsibility of lower level management.

TWO WAYS IN WHICH OBJECTIVES ARE SET:

Top- Down: In this approach the objectives originates from the top.
Bottom- Up: In this the objectives originate from lower level
management .The objectives flow up. The subordinate initiate the
objectives.
There are arguments for and against this kind of approach.

PROCESS OF
PLANNING.
3. PREMISING
Trying to develop planning guides
refers to setting guidelines e.g.
policies, plans, forecast and the
assumptions which the planning
should observe. It is important in
coordinating the planning function. It
normally draws the attention of the
environment and analyzed carefully.

PROCESS OF
PLANNING.
4. IDENTIFICATION OF THE
ALTERTNATIVE COURSES OF ACTION
Normally done for
each of the
objectives .It is necessary to identify or
develop several alternative courses of
action because the future is uncertain and
only one way of doing things is not the
best. It is rare for an alternative to be
achieved only in one way, several
alternatives should be identified if the
decision should be the best possible.

PROCESS OF
PLANNING.
5. EVALUATING THE ALTERNATIVES
This is where now you evaluate and criticize the
alternative. Each of them is evaluated to
determine the best alternative. The evaluation
may be done giving attention to both qualitative
and quantitative factors. Choose the best
alternative taking into account cost benefit
analysis. Maximize benefit over cost. Do
marginal revenue Vs marginal cost analysis .This
evaluation may be difficult if alternatives are
many especially if alternatives involve many
variables. In doing this evaluation Operations
Research which is a mathematical tool to
analyze. Personal judgment will play a big role.

PROCESS OF
PLANNING.

6.) SELECTING THE BEST CAUSE OF ACTION

Making the decision on the course of action to follow. The alternative
which emerges the best evaluation in the evaluation exercise is
chosen for implementation. Managers use several approaches for
choice:-Through experience
-Through experimentation
-Through research and analysis
Through experience: This is where the manager relies on past
success or mistakes.
Through experimentation: manager tries various alternatives to
see which one is the best. Can be very expensive and time consuming.
Through research and analysis: Involves comprehending a
problem and carry out some research before solution is given. It has
the following advantages: - Lends itself to the use of mathematical
tools like Operation Research.

PROCESS OF PLANN.
7.) FORMULATING THE DERIVATIVE PLANS
Are the ones through which the master plan would
be implemented. This requires breaking the main
plan into sub plans e.g. plan of achieving a
maximum profit break it down to sales, marketing,
price promotion plan etc
8.) NUMBERIZING PLANS BY BUDGETING
This is quantifying the plans by use of budgets.
Budget for each of the items and have a time
frame for the budget activities.

9.) BEGIN THE PROCESS OF IMPLEMENTATION