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Chapter 2

2.1 Definition and Characteristics
2.2 Planning Process (Steps in Planning)
2.3 Essentials of a Good Plan
2.4 Vision and mission Statements
2.5 Planning with relation to hospitality industry
2.6 Meaning and Process of MBO
2.7 Meaning and steps in Decision Making

Definition - “PLANNING “is the process of thinking about and organizing the activities required to achieve a desired goal.
Meaning- Planning involves the creation and maintenance of a plan. As such, planning is a fundamental property of intelligent behaviour. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans; that is, it combines forecasting of developments with the preparation of scenarios of how to react to them.
Characteristics of Planning
Characteristics of Planning are as follows-
1. First and foremost managerial function:
Planning provides the base for other functions of the management, i.e. organising, staffing, directing and controlling, as they are performed within the periphery of the plans made.
2. Goal oriented:
It focuses on defining the goals of the organisation, identifying alternative courses of action and deciding the appropriate action plan, which is to be undertaken for reaching the goals.
3. Pervasive:
It is pervasive in the sense that it is present in all the segments and is required at all the levels of the organisation. Although the scope of planning varies at different levels and departments.
4. Continuous Process:
Plans are made for a specific term, say for a month, quarter and year and so on. Once that period is over, new plans are drawn, considering organisation’s present and future requirements and conditions. Therefore, it is an ongoing process, as the plans are framed, executed and followed by another plan.
5. Decision making:
Decisions are made regarding the choice of alternative courses of action that can be undertaken to reach the goal. The alternative chosen should be best among all, with least number of negative and highest numbers of positive outcomes.
6. Intellectual Process:
It is a mental exercise at it involves the application of mind, to think, forecast, imagine intelligently and innovate etc.
7. Futuristic:
In the process of planning we take a sneak peek of future. It encompasses looking into future, to analyse and predict it, so that the organisation can face the future challenges effectively.
Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The activity helps managers analyse the present condition to identify the ways of attaining the desired position in future. It is both, the need of the organisation and the responsibility of managers.
The Basic Steps in the Management Planning Process
Management planning is the process of assessing an organization's goals and creating a realistic, detailed plan of action for meeting those goals. Much like writing a business plan, a management plan takes into consideration short- and long-term corporate strategies. The basic steps in the management planning process involve creating a road map that outlines each task the company must accomplish to meet its overall objectives.
1. Establish Goals
The first step of the management planning process is to identify specific company goals. This portion of the planning process should include a detailed overview of each goal, including the reason for its selection and the anticipated outcomes of goal-related projects. Where possible, objectives should be described in quantitative or qualitative terms. An example of a goal is to raise profits by 25 percent over a 12-month period.
2. Establishing planning premises (Identify Resource)
Each goal should have financial and human resources projections associated with its completion. For example, a management plan may identify how many sales people it will require and how much it will cost to meet the goal of increasing sales by 25 percent.
3. Deciding the planning period (Create Assignments and Timelines)
As the company prioritizes projects, it must establish timelines for completing associated tasks and assign individuals to complete them. This portion of the management planning process should consider the abilities of staff members and the time necessary to realistically complete assignments. For example, the sales manager in this scenario may be given monthly earning quotas to stay on track for the goal of increasing sales by 25 percent.
4. Developing the alternatives (Identify Alternative Courses of Action)
Even the best-laid plans can sometimes be thrown off track by unanticipated events. A management plan should include a contingency plan if certain aspects of the master plan prove to be unattainable. Alternative courses of action can be incorporated into each segment of the planning process, or for the plan in its entirety.
5. Selecting the course of action (Establish Evaluation Methods)
A management planning process should include a strategy for evaluating the progress toward goal completion throughout an established time period. One way to do this is through requesting a monthly progress report from department heads.
Derivatives plans
Bringing Plans or Strategies in Action, Implementing Them
Preview of plans
Review The Plans And Recheck With Result
1. It should be based on clearly defined objectives.
2. It must be simple.
3. It must be rational and appropriate.
4. It should be comprehensive.
5. It should provide for a proper analysis and classification of actions.
6. It must be flexible.
7. It must be balanced.
8. It must use all available resources and opportunities to the utmost before creating new authorities and new resources
9. It should be free from social and psychological blazes of the planners as well as of subordinates
10. There should be proper coordination among short term and long term plans
Vision and mission Statements
The Mission Statement concentrates on the present; it defines the customer (s), critical processes and it informs you about the desired level of performance.
The Vision Statement focuses on the future; it is a source of inspiration and motivation. Often it describes not just the future of the organization but the future of the industry or society in which the organization hopes to effect change.

Mission Statements Vision Statements
About A Mission statement talks about HOW you will get to where you want to be. Defines the purpose and primary objectives related to your customer needs and team values. Vision statement outlines WHERE you want to be. Communicates both the purpose and values of your business.
Answer It answers the question, “What do we do? What makes us different?” It answers the question, “Where do we aim to be?”
Time A mission statement talks about the present leading to its future. A vision statement talks about your future.
Function It lists the broad goals for which the organization is formed. Its prime function is internal; to define the key measure or measures of the organization's success and its prime audience is the leadership, team and stockholders. It lists where you see yourself some years from now. It inspires you to give your best. It shapes your understanding of why you are working here.
Change Your mission statement may change, but it should still tie back to your core values, customer needs and vision. As your organization evolves, you might feel tempted to change your vision. However, mission or vision statements explain your organization's foundation, so change should be kept to a minimum.
Developing a statement What do we do today? For whom do we do it? What is the benefit? In other words, Why we do what we do? What, For Whom and Why? Where do we want to be going forward? When do we want to reach that stage? How do we want to do it?
Features of an effective statement Purpose and values of the organization: Who are the organization's primary "clients" (stakeholders)? What are the responsibilities of the organization towards the clients? Clarity and lack of ambiguity: Describing a bright future (hope); Memorable and engaging expression; realistic aspirations, achievable; alignment with organizational values and culture.
Is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them? The term "management by objectives" was first popularized by Peter Drucker in his 1954.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities.
Process of MBO
The basic steps that are common in all the processes of management by objective (MBO) are:-
1. Central goal setting:
Defining and verifying organizational objectives is the first step in MBO process. Generally these objectives are set by central management of the organization but it does so after consulting other managers. Before setting of these objectives, an extensive assessment of the available resources is made by the central management. It also conducts market service and research along with making a forecast. Through this elaborate analysis, the desired long run and short run objectives of the organization are highlighted. The central management tries to make these objectives realistic and specific. After setting these goals it is the responsibility of the management that these are known to all members and are also under stood by them.
2. Development and individual goal setting:
After organization objectives are established by the central management, the next step is to establish the department goals. The top management needs to discuss these objectives with the heads of the departments so that mutually agreed upon objectives are established. Long range and short range goals are set by each department in consultation with the top management. After the department goals are established, the employees work with their managers to establish their own individual goals which relate with the organization goals. These participative goals are very important because It has been seen that employees become highly motivated to achieve the objectives established by them. These objectives for individuals should be specific and short range. These should indicate the capability of the unit of the individual. Through this process all the members of the organization become involved in the process of goal setting.
3. Revision of job description:
In the process of MBO resetting individual goals involves a revision of job description of different positions in the organization which in turn requires the revision of the entire structure of the organization. The organization manuals and charts may also have to be modified to portray the changes that have been introduced by the process of MBO. The job description has to define the objectives, authority and responsibility of different jobs. The connection of one job with all other jobs of the organization also needs to be established clearly.
4. Matching goals:
The establishment of objectives cannot be fruitful unless the resources and means required to achieve these objectives are provided. Therefore the subordinates should be provided required tools and materials which enable them to achieve the objectives efficiently and effectively. Resource requirements can be measured precisely if the goals are set precisely. This makes the process of resource allocation relatively easy. Resource allocation should be made after consulting the subordinates.
5. Freedom implementation:
The task team of manager and his subordinates should be given freedom in deciding the way to utilize their resources and the way to achieve their objectives. There should be very little or no interference by the seniors as long as the team is working within the framework of organization policies.
6. Establishing check points:
The process of MBO requires regularly meetings between the managers and their subordinates to discuss the progress achieve in the accomplishment of the objective established for the subordinates. For this purpose the mangers need to establish the standards of performance or check points to evaluate the progress of their subordinates. These standards need to be specified as for as possible quantitatively and it should also be ensured that these are completely understood by the subordinates. This practices needs to be followed by all managers and these should lead to an analysis of key results has the targets are represented in terms of the results. The analysis of key results should be recorded in writing and it generally contains information regarding:
(i) The overall objectives related with the job of subordinates.
(ii) The key results which must be achieved by the subordinate to fulfil his objectives.
(iii) The long term and short term priorities, a subordinate needs to adhere to.
(iv.) The extent and scope of assistance expected by a subordinate from his superior and other departmental managers and also the assistance, the subordinates is required to extend to other departments of his organizations.
(v.) Nature of information and the reports receive by the subordinate to carry out self evaluation.
(vi.) The standards use to evaluate the performance of the subordinate.
7. Performance appraisal:
An informal performance appraisal is generally conducted in routine by the manager; a periodic review of performance of the subordinates should also be conducted. Periodic reviews are required as the priorities and conditions change constantly and need to be monitored constantly. These reviews help the mangers as well as the subordinates to modify the objectives or the methods whenever require. This significantly increases the chances of achieving the goals and also ensures that no surprises are found at the time of final appraisal. Periodic performance appraisal needs to be based on measurable and fair standards so that these are completely understood by the subordinates and there are also aware of the degree of performance required at each step.
8. Counselling:
Periodic performance review helps the subordinates in improving his future performance.
Steps in Decision Making
1: Define the problem
The most significant step in any decision making process is describing why a decision is called for and identifying the most desired outcome(s) of the decision making process.
One way of deciding if a problem exists is to couch the problem in terms of what one wanted or expected and the actual situation. In this way a problem is defined as the difference between expected and/or desired outcomes and actual outcomes.
This careful attention to definition in terms of outcomes allows one to clearly state the problem. This is a critical consideration because how one defines a problem determines how one defines causes and where one searches for solutions.
2: Identify available alternative solutions to the problem
The key to this step is to not limit yourself to obvious alternatives or what has worked in the past but to be open to new and better alternatives. How many alternatives should you identify? Ideally, all of them. Realistically, we teach that the decision maker should consider more than five in most cases, more than three at the barest minimum. This gets away from the trap of seeing "both sides of the situation" and limiting one's alternatives to two opposing choices; either this or that.
3: Evaluate the identified alternatives
As you evaluate each alternative, you should be looking at the likely positive and negative cones for each. It is unusual to find one alternative that would completely resolve the problem and is heads and shoulders better than all others. Differences in the "value" of respective alternatives are typically small, relative and a function of the decision maker's personal perceptions, biases and predispositions.
As you consider positive and negative cones you must be careful to differentiate between what you know for a fact and what you believe might be the case.
The decision maker will only have all the facts in trivial cases. People always supplement what facts they have with assumptions and beliefs.
This distinction between fact-based evaluation and non-fact -based evaluation is included to assist the decision maker in developing a "confidence score" for each alternative. The decision maker needs to determine not just what results each alternative could yield, but how probable it is that those results will be realized. The more the evaluation is fact-based, the more confident he/she can be that the expected outcome will occur.
4: Make the decision
When acting alone this is the natural next step after selecting the best alternative. When the decision maker is working in a team environment, this is where a proposal is made to the team, complete with a clear definition of the problem, a clear list of the alternatives that were considered and a clear rationale for the proposed solution.
5: Implement the decision
While this might seem obvious, it is necessary to make the point that deciding on the best alternative is not the same as doing something. The action itself is the first real, tangible step in changing the situation. It is not enough to think about it or talk about it or even decide to do it. A decision only counts when it is implemented. As Lou Gerstner (CEO of IBM) said, "There are no more prizes for predicting rain. There are only prizes for building arks."
6: Evaluate the decision
Every decision is intended to fix a problem. The final test of any decision is whether or not the problem was fixed. Did it go away? Did it change appreciably? Is it better now, or worse, or the same? What new problems did the solution create?