MMM132 Lecture Notes - Lecture 6: Digic, Cost Leadership, Strategic Management
12 Jun 2018
School
Department
Course
Professor
MMM132 Management
Kieu Trang Nguyen
Study notes
TOPIC 6- Foundations of planning
1.Discuss the nature and purposes of planning
*WHAT IS PLANNING?
Planning:
The primary management function
Planning involves:
• defining the organisation’s objectives or goals
• establishing an overall strategy for achieving those goals
• developing a comprehensive hierarchy of plans to integrate and coordinate activities
Planning establishes the basis for all the other things managers do as they organise, lead
and control.
Plaig is deidig o the ogaisatios ojeties o goals ad gettig the jo doe
establishing an overall strategy for achieving those goals and developing a comprehensive
hierarchy of plans to integrate and coordinate activities.
Planning can be informal or formal. Smaller businesses often use informal planning where
little is said or written down and the planning is general and lacks continuity.
Formal planning, however, defines specific goals that are to be met in a specific time period.
They are written down and made available to organisation members. Then managers
develop specific plans that clearly define what the organisation will do to move from where
it is to where it wants to be.
*REASONS FOR PLANNING
Managers should plan for at least four reasons, as seen here in Figure 4.1
1. Planning establishes coordinated effort. It gives direction to both managers and non
managerial employees so each knows what he or she must contribute— individually and
as a group—to reah the ogaisatios goals. Plaig stiulates ita- and inter-
department coordination of activities, which fosters teamwork and cooperation.
2. Planning reduces uncertainty. It forces managers to look ahead, anticipate change,
consider the impact of change and develop appropriate responses. It also clarifies the
consequences of the actions managers might take in response to change.
3. Planning reduces overlapping and wasteful activities. Coordination before the fact is
likely to uncover waste and redundancy.
4. Finally, planning establishes the goals or standards that facilitate managerial control to
ensure the plans are carried out and the goals are met.
*FORMAL PLANNING AND ORGANISATIONAL PERFORMANCE
Does it pay to plan? In a nutshell, yes.
First, the data generally support the position that organisations should have formal plans
and that these plans generally translate into higher profits, higher return on assets and
other positive financial results.
Second, the quality of the planning process and appropriate implementation of the plan
probably contribute more to high performance than the extent of planning does.
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Document Summary
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