Chapter 8 – Planning and Controlling
How and Why Managers Plan
Planning is the process of setting objectives and determining how to accomplish them.
• When Planning is done well it creates a solid platform for the other management functions:
organizing – allocating and arranging resources to accomplish tasks; leading – guiding the
efforts of human resources to ensure high level of task accomplishment; and controlling –
monitoring task accomplishments and taking necessary corrective action.
Objectives are specific results that one wishes to achieve.
A plan is a statement of intended means for accomplishing objectives.
Benefits of Planning
• Planning improves focus and flexibility. An organization with focus knows what it does
best, knows the needs of its customers, and knows how to serve them well. An individual
with focus knows where he or she wants to go in a career or situation, and is able to retain
that objective even when difficulties arise. An organization with flexibility is willing and able
to change and adapt to shifting circumstances, and operates with an orientation toward the
future rather than the past. An individual with flexibility adjusts career plans to fit new and
• Planning improves action orientation. Good planning makes us more (1) results
orientated- creating a performance-oriented sense of direction; (2) priority oriented – making
sure the most important things get first attention; (3) advantage oriented – ensuring that all
resources are used to best advantage; and (4) change oriented – anticipating problems and
opportunities so they can be best dealt with.
• Planning improves coordination. Good planning throughout an organization creates a
means-end chain or hierarchy of objectives in which lower level objectives lead to the
accomplishments of higher level ones.
• Planning improves Time Management. In daily living and in management, it is
important to distinguish between things that you must do (top priority), should do (high
priority), would be nice to do (low priority), and really don’t need to do (no priority).
www.notesolution.com • Planning improves control. Without planning, control lacks a framework for measuring
how well things are going and what could be done to make them go better. Without control,
planning lacks the follow-through needed to ensure that things work out as planned.
Rational Comprehensive Planning (RCP) focuses on a logical decision-making approach and
advocates a holistic approach to problem solving.
• RCP uses conceptual or mathematical models that relate ends (objectives) to means
(resources and constraints) with heavy reliance on statistical analysis.
• RCP is simple but unrealistic.
• Incremental planning’s strengths is that, rather than trying to be both rational and
comprehensive, it looks at decision making as it generally occurs – quickly and with
Types of Plans Used By Managers
Short – Range and Long – Range Plans
• Short-range plans cover one year or less, intermediate-range plans cover one to two years,
and long-range plans look three or more years into the future.
• Top management is most likely to be involved in setting long-range plans and directions for
the organization as a whole, while lower management levels focus more on short-range plans
that help achieve long-term objectives.
Strategic and Operational Plans
• A strategic plan indentifies long-term directions for the organization. Strategic planning by
top management involves determining objectives for the entire organization and describing
what and where the organization wants to be in the future.
• An operational plan identifies activities to implement strategic plans. Operational plans
www.notesolution.com define what needs to be done in specific functions or work units to implement strategic plans.
Typical operational plans in a business firm include: production plans-dealing with the
methods of technology needed by people in their work; financial plans-dealing with money
required to support various operations; facilities plans-dealing with facilities and work
layouts; marketing plans-dealing with the requirements of selling and distributing goods or
services; and human resource plans-dealing with the recruitment, selection, and placement
of people into various jobs.
Policies and Procedures
• A policy is a standing plan that communicates broad guidelines for decisions and actions.
• A procedure or rule precisely describes actions that are to be taken in specific situations.
They are often found stated in employee handbooks or manuals as “SOPs”- standard
Budgets and Projects
• A budget is a plan that commits resources to projects or activities. They are powerful tools
that allocate scarce resources among multiple and often competing uses.
• A fixed budget allocates a fixed amount of resources for a specific purpose. A flexible budget
allows the allocation of resources to vary in proportion with various levels of activity.
• A zero-based budget allocates resources as if each budget were brand new. There is no
guarantee that any past funding will be renewed; all proposals compete anew for available