May 15, 2012

Organization and Management: Planning

Banking Diploma Courses under The Institute of Bankers, Bangladesh (IBB)

Organization and Management-JAIBB

Q.1 What do you meant by Planning? Discuss its nature.

Ans.: Simply stated, planning means deciding future course of action i.e. making plans for attaining organization’s objectives. Planning is the process of determination of organization’s objectives and selecting the course of action i.e. plans for attaining them.

According to Weihrich and Koontz – “Planning involves selecting mission and objectives and actions to achieve them. If requires decision making i.e. choosing from among alternative future course of action.

According to Robert Albanese, “Planning is the process or activity of determining in advance specifically what should be done in order to achieve particular goals, how it should be done, when or where it should be done and who should do it.”

Nature of Planning:

(1) Primary or Basic Function: It is a primary function because it is the foundation on which all other managerial function rest.

(2) Pervasive Function: Each and every manager has to perform this function regardless of his level and area of specialization.

(3) Purposeful: Planning begins with some goals or objective that an organization wishes to achieve.

(4) Interdependent Activity: Planning in one development is dependent on the planning of other department.

(5) A Process: Planning is a process in which managers anticipate future by analyzing environmental factors, set goals or objectives.

(6) Planning is a Path Finder Process: It is the process by which answers to questions like where, when, how etc.

(7) It is a continuous and never ending process.

(8) It is a dynamic process.

(9) It is an intellectual process because it requires managers to think intelligently and rationally before doing.

(10) Futuristic: Every plan is prepared to face and win over the future challenges and threats.

(11) Time Bound: It is always time bound. It may be of short range or medium range or long range.

(12) Planning involves Decision Making: It is a process of selecting one best course of action out of the available alternatives.

(13) Planning and Action are Twins: Planning alone cannot serve any purpose. Planning presupposes necessary action for its implementation. Both must go hand in hand.

(14) Planning and Controlling are Inseparable: Plans furnished the standards against which actual performance is measured and controlled.

(15) Forecasting is the Basis of Planning: Future course of action are decided on the basis of information and knowledge provided by forecasting.

Q.2 What are the essential elements of Planning?

Ans.: The main components or elements of planning are as follows:-

(1) Objectives: Objectives are the desired results that an organization wants to achieve within a specified time period.

(2) Strategies: Strategy means the long range approach for dealing with the organization’s competitive environment with a view to win over competitors in business.

(3) Policies: Policies are the guidelines set to provide direction in decision making. These set the boundaries around which decisions are made.

(4) Procedures: Procedures are the chronological sequence of steps or actions to be taken to accomplish a specific test or job.

(5) Method: A method is a prescribed way of completing a step in a procedure.

(6) Rules: Rules are guiding statements that direct action or behaviour of individuals in a given situation.

(7) Standards: Standard is a measure against which the level of performance is measured or evaluated.

(8) Programmes : A programme is a sequence of action steps arranged in the priority necessary to accomplish an objective.

(9) Schedules: A Schedule is a plan which indicate the time of

(i) commencement of task.

(ii) passing through the different stages or processes.

(iii) Finalizing the task.

(10) Budgets: A budget is a numerical plan containing expected results in quantitative or numerical terms.

(11) Projects: A project is a programme with less significant objectives, generally a shorter period of time and usually less detail.

Q.3 What are the steps involved in the Planning Process?

Ans.: Steps in Planning:
(i) Environment Scanning

(ii) Setting Objectives

(iii) Establishing Planning Promises

(iv) Searching Alternatives

(v) Evaluating the Alternatives

(vi) Selecting the Most Appropriate Alternative or Plan

(vii) Formulating Derivative Plans

(viii) Budgeting i.e. Committing Resources

(ix) Implementing the Plans

(x) Follow-up Action

Q.4 Write the essentials of an Effective Planning.
Ans.: Planning or a plan can be more effective if the following factors are taken into consideration:-

(i) Well Defined Objectives

(ii) Simple and Easy to Understand

(iii) Comprehensive (Cover each and every aspect)

(iv) Flexible (Capable of being modified)

(v) Balanced (Balance between objectives and resources)

(vi) Economical

(vii) Stable

(viii) Continuity

(ix) Unity (Operate under one overall plan)

 (x) Consistency

(xi) Written

(xii) Practicable

(xiii) Logical and Rational

(xiv) Accountability for Implementation

Q.5 What is MBO? Explain its characteristics and objectives.

Ans.: MBO: The modern model of objective setting is known as the “Management by Objectives” or “MBO”. This model was first discussed by Peter Drucker in 1954 in his book – “The Practice of Management”.

Meaning and Definition of MBO: MBO is a process where by both superior and subordinate managers jointly identify their common goals or their work unit and define each employee major areas of responsibility and goals with his active participation.

Carlisle“Management by Objective is a process by which the members of a work unit individually meet with their superior to establish performance related goods.”

Boone and Koontz – “MBO is a prgramme designed to improve employee’s motivation by having them participate in setting their own goals, letting them know in advance precisely have they will be evaluated.”

Characteristics of MBO :

· A Philosophy of Management

· Goal Oriented Approach

· An Interactive Approach

· A Comprehensive Approach

· A System Approach

· Applies to Total Management System

· Aims at Optimum Results

· Simple Universal Approach

· Multiple Uses

· Participation and Involvement

· Common Objectives and Individual Goals


· Mutual understanding between superior and subordinate.

· Employees know their expected efforts and their contribution in overall performance.

· Employees participate in formulation of the plan.

· Employees know the results of their efforts.

· Employees want to be fairly rewarded for their performance.
Objectives of MBO :

(i) To set organizational units and individual goals by active participation of the all concerned.

(ii) To set verifiable and measurable goals.

(iii) To measure and judge performance.

(iv) To relate individual performances to organizational goals.

(v) To clarify both the job to be done and the expectation of accomplishment.

(vi) To foster the increasing competence and growth of subordinates.

(vii) To enhance communications between superiors and subordinates.

(viii) Serve as a basis for judgment about salary and promotion.

(ix) To stimulate the subordinates motivation.

(x) To serve as device for organizational control.

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