Planning Process

Planning Process

agarbandhu

Leaders are proactive. They make change happen instead of reacting to change. The future requires corporate leadership with the skills to integrate many unexpected and seemingly diverse events into its planning.

Every organization must plan for change in order to reach its ultimate goal. Effective planning helps an organization adapt to change by identifying opportunities and avoiding problems. It sets the direction for the other functions of management and for teamwork.

Planning improves decision-making. All levels of management engage in planning.

Strategic Planning
Strategic planning produces fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it. It requires broad-scale information gathering, an exploration of alternatives, and an emphasis on the future implications of present decisions.

Top level managers engage chiefly in strategic planning or long range planning. They answer such questions as "What is the purpose of this organization?" "What does this organization have to do in the future to remain competitive?"

Top level managers clarify the mission of the organization and set its goals. The output needed by top management for long range planning is summary reports about finances, operations, and the external environment.

Strategic planning is the process of developing and analyzing the organization's mission, overall goals, general strategies, and allocating resources. A strategy is a course of action created to achieve a long-term goal. The time length for strategies is arbitrary, but is probably two, three, or perhaps as many as five years.

It is generally determined by how far in the future the organization is committing its resources. Goals focus on desired changes. They are the ends that the organization strives to attain. Traditionally strategic planning has been done annually.

However, many companies are doing away with annual business plans altogether and moving to a system of continuous planning, to permit quicker response to changing conditions. Thus, the strategic plan involves adapting the organization to take advantage of opportunities in its constantly changing environment.

"digital strategy."
Philip Kotler suggest that strategic planning will be replaced by "digital strategy." They make the argument that business change originates with technology -- particularly with new computer-based products and services that transform industries, the way American Airlines' SABRE system transformed travel.

Top management must formulate digital strategies (software and digitally delivered services) that not only support business but also actually dictate how business is done.

The planning process is rational and amenable to the scientific approach to problem solving. It consists of a logical and orderly series of steps. Strategic planning sets the stage for the rest of the organization's planning.

The tasks of the strategic planning process include:
*Define the mission.

*Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying opportunities and threats.

*Set goals and objectives.

*Develop related strategies (tactical and operational). *Monitor the plan.

Define the mission. A mission is the purpose of the organization. It is why the organization exists. Thus, planning begins with clearly defining the mission of the organization. The mission statement is broad, yet clear and concise, summarizing what the organization does. It directs the organization, as well as all of its major functions and operations, to its best opportunities. Then, it leads to supporting tactical and operational plans, which, in turn leads to supporting objectives.

A mission statement should be short - no more than a single sentence. It should be easily understood and every employee should be able to recite it from memory.

An explicit mission guides employees to work independently and yet collectively toward the realization of the organization's potential. The mission statement may be accompanied by an overarching statement of philosophy or strategic purpose intended to convey a vision for the future and an awareness of challenges from a top-level perspective.

Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying opportunities and threats.

A situation or SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is critical to the creation of any strategic plan. The SWOT analysis begins with a scan of the external environment.

Organizations must examine their situation in order to seek opportunities and monitor threats. Sources of information include customers (internal and external), suppliers, governments (local, state, federal, international), professional or trade associations (conventions and exhibitions), journals and reports (scientific, professional, and trade).

SWOT is the assumptions and facts on which a plan will be based. Analyzing strengths and weaknesses comprises the internal assessment of the organization.

Assess the strengths of the organization.

What makes the organization distinctive?

How efficient is our manufacturing?

How skilled is our workforce?

What is our market share?

What financing is available?

Do we have a superior reputation?

Assess the weaknesses of the organization.

What are the vulnerable areas of the organization that could be exploited?

(Are our facilities outdated? Is research and development adequate? Are our technologies obsolete?)

What does the competition do well?
Analyzing opportunities and threats comprises the external assessment of the environment. Identify opportunities.

In which areas is the competition not meeting customer needs?

(What are the possible new markets? What is the strength of the economy? Are our rivals weak? What are the emerging technologies? Is there a possibility of growth of existing market?)

Identify threats.

In which areas does the competition meet customer needs more effectively?

(Are there new competitors? Is there a shortage of resources?

Are market tastes changing? What are the new regulations? What substitute products exist?)

The best strategy is one that fits the organization's strengths to opportunities in the environment.

The SWOT analysis is used as a baseline for future improvement, as well as gap analysis. Comparing the organization to external benchmarks (the best practices) is used to assess current capabilities. Benchmarking systematically compares performance measures such as efficiency, effectiveness, or outcomes of an organization against similar measures from other internal or external organizations. This analysis helps uncover best practices that can be adopted for improvement. .

Benchmarking with other organizations can help identify a gap. Gap analysis identifies the progress required to move the organization from its current capabilities to its desired future state. In this way, the organization can adapt to the best practices to improve organizational performance.

Set goals and objectives. Strategic goals and objectives are developed to bridge the gap between current capability and the mission. They are aligned with the mission and form the basis for the action plans.

Objectives are sometimes referred to as performance goals. Generally, organizations have long-term objectives for such factors as return on investment, earnings per share, or size. Furthermore, they set minimum acceptable standards or common-sense minimums. In addition, certain limitations, either explicit or implicit, such as "must provide jobs for existing employees" may exist.

Objectives elaborate on the mission statement and constitute a specific set of policy, programmatic, or management objectives for the programs and operations covered in the strategic plan. They are expressed in a manner that allows a future assessment of whether an objective has been achieved.

Develop related strategies (tactical and operational). Tactical plans are based on the organization's strategic plan. In turn, operational plans are based on the organization's tactical plans. These are specific plans that are needed for each task or supportive activity comprising the whole.

Strategic, tactical, and operational planning must be accompanied by controls. Monitoring progress or providing for follow-up is intended to assure that plans are carried out properly and on time. Adjustments may need to be made to accommodate changes in the external and/or internal environment of the organization. A competitive advantage can be gained by adapting to the challenges.

Tactical Plans
Top level managers set very general, long-term goals that require more than one year to achieve. Examples of long-term goals include long-term growth, improved customer service, and increased profitability. Middle managers interpret these goals and develop tactical plans for their departments that can be accomplished within one year or less.

In order to develop tactical plans, middle management needs detail reports (financial, operational, market, external environment). Tactical plans have shorter time frames and narrower scopes than strategic plans. Tactical planning provides the specific ideas for implementing the strategic plan. It is the process of making detailed decisions about what to do, who will do it, and how to do it.

Operational Plans
Supervisors implement operational plans that are short-term and deal with the day-to-day work of their team. Short-term goals are aligned with the long-term goals and can be achieved within one year.

Supervisors set standards, form schedules, secure resources, and report progress. They need very detailed reports about operations, personnel, materials, and equipment. The supervisor interprets higher management plans as they apply to his or her unit.

Thus, operational plans support tactical plans. They are the supervisor's tools for executing daily, weekly, and monthly activities. An example is a budget, which is a plan that shows how money will be spent over a certain period of time.

Other examples of planning by supervisors include scheduling the work of employees and identifying needs for staff and resources to meet future changes. Resources include employees, information, capital, facilities, machinery, equipment, supplies, and finances.

Operational plans include policies, procedures, methods, and rules. The terms themselves imply different degrees of scope. A policy is a general statement designed to guide employees' actions in recurring situations. It establishes broad limits, provides direction, but permits some initiative and discretion on the part of the supervisor.

Thus, policies are guidelines. A procedure is a sequence of steps or operations describing how to carry out an activity and usually involves a group. It is more specific than a policy and establishes a customary way of handling a recurring activity.

Thus, less discretion on the part of the supervisor is permissible in its application. An example of a procedure is the sequence of steps in routing of parts. A method sets up the manner and sequence of accomplishing a recurring, individual task. Almost no discretion is allowed. An example of a method is the steps in cashing a check.

A rule is an established guide for conduct. Rules include definite things to do and not to do. There are no exceptions to the rules. An example of a rule is "No Smoking."

Monitor the plan. A systematic method of monitoring the environment must be adopted to continuously improve the strategic planning process. To develop an environmental monitoring procedure, short-term standards for key variables that will tend to validate the long-range estimates must be established. Although favorable long-range values have been estimated, short-term guidelines are needed to indicate if the plan is unfolding as hoped.

Next, criteria must be set up to decide when the strategy must be changed. Feedback is encouraged and incorporated to determine if goals and objectives are feasible. This review is used for the next planning cycle and review.

Key Concepts.
Benchmarking is the process of finding and adapting best practices to improve organizational performance.
Budget is a plan adjusting expenses to available income over a fixed time period.
Goal is the end that the organization strives to attain.
Method is a sequence of steps describing how to carry out an individual task.
Mission is an organization's purpose or reason for existing.
Operational Plans are short-term and deal with the daily, weekly, and monthly activities.
Plan is a scheme for accomplishing the goals of the organization.
Policy is a general statement designed to guide employees' actions in recurring situations.
Procedure is a sequence of steps describing how to carry out an activity involving group effort.
Rule is an established guide for conduct.
Strategic Planning is the process of developing and analyzing the organization's mission, overall goals, general strategies, and allocating resources.
Strategy is a course of action created to achieve a long-term goal.
Tactical Planning is the process of making detailed decisions about what to do, who will do it, and how to do it.

Bojourn.................!!!!!!!!!!!!!!!!! agarbandhu