Managers, despite of their level within the organization, have to do planning because planning is the integral activity of successful business operations.
Planning is the process of analyzing the present conditions inside and outside the company and developing the future course, the company should move to.
Planning is closely related to the overall corporate culture, strategy and mission; a lot of factors need to be taken into account when developing the plan.
Managerial planning can be divided into nine major steps:
- Identification of the issues and concerns the company experiences currently and is likely to experience in the close future.
- Evaluation of the established laws and policies that might guide or restrict the decisions.
- Collection of information and resources necessary for planning activity and plan implementation.
- Assessment and evaluation of the current plans.
- Development of the alternative plans to address the unexpected issues.
- Estimation of the effects each alternative might have on the company.
- The identification of the best alternative.
- Developing the plan and making it available for review.
- Implementation and monitoring of the plan’s effectiveness.
There are different forms of planning and each organization uses the one that is more appropriate for the situation. For example, there is the resource planning (employees as well as financial), budgeting, crisis management, daily/weekly/monthly/yearly planning, and many other forms of planning which are vital for company to operate. In addition, planning has different levels of complexity depending on how important are the outcomes of the planning. The receptionist might plan her daily activities while the human resource manager might plan the development of the new career advancement practice and at the same time, the top manager is planning to enter the new market segment. These three examples all involve planning activity, but the processes of reaching the decision are very different in complexity. Receptionist can successfully plan her day based on the previous days. Human resource manager will need several weeks to collect the information about the available practices, evaluate the inner practice, identify the best alternative and plan on how to implement this alternative into the company structure. Top manager might need several months to draw the plan because a lot of factors need to be taken into account including the environment inside the company, the position of the company on the global market, competitors and many other important issues. The higher rank the manager occupies within the company the more time planning process will take.
Higher level managers have the most difficult task – to plan the course the company will take. Their plans and decision will influence many parties including employees, partners and customers. The receptionist has the right to make mistakes because these mistakes will not affect anybody besides the receptionist herself. Top manager does not have this right to make mistakes because one wrong step might be devastating for the company.
As it was already noted in the beginning, there are different types of plans which should be used depending on the situation the company is facing. It is not possible to completely avoid crisis situations, however, the crisis planning helps managers to be prepared for unexpected events. Crisis planning should be developed and reviewed regularly to include the new factors that might influence the company’s operations (new legislation, for example). Financial plans or budgets are developed by the financial managers who have the responsibility to allocate the resources, plan potential expenses and income. Obviously, financial planning should be done regularly. Integration plans (when the company enters the new market or the new policy is offered to the employees) are the hardest to implement because they lead to the changes within the company.
Top managers of multinational companies assume the huge responsibility for their companies’ future and planning is very essential for successful integration into global markets. Chupa Chups Company has grown internationally since 1958. The success of this company is attributed to its aggressive approach in developing countries through partnerships with local firms. This step required a lot of planning and thorough reasoning. Top management faced several problems while integrating into local economies and planning has helped to identify, understand and solve the problems. Chupa Chups has developed the multinational strategy based on the centralized structure and promoting the learning from experiences (Buckley 1999). The operations, marketing in particular, were not adjusted to the local markets and it impacted the company’s profits. Analysis of the situation and planning helped the top management to introduce knowledge sharing system among all of their facilities. The result was increased profits and market share.
Proper planning has also helped Sainsbury to overcome the crisis and re-gain the market share. Crisis planning is one of the most difficult and highly important for companies because any factor can appear devastating if not foreseen by management. Managing Director Stuart Mitchell has noted that Sainsbury’s the aim is to be the UK consumer’s first choice for food shopping. The management is committed to understanding the needs of different customer sectors and shaping the offer to respond through products, facilities and service. On the regular basis Sainsbury’s managers invite the experts to the company who conduct the SWOT analysis (Drummond 2001). Based on this analysis the planning for future is done. For example, SWOT analysis has located the following opportunity: Sainsbury has financial strength to acquire more supermarket chains, and possibly the opening of smaller stores to service local neighborhoods. The planning helped top management to decide which option is more attractive: to acquire large supermarket chains or to shift the emphasis to the smaller rural stores. Consequently, both option have been approved and planning of all details (based on the marketing research information) helped to avoid numerous potential problems.
When Ford Motor Company saw rapidly changing technologies dramatically impacting how the world did business it also recognized that for the organization to remain competitive incorporating these technologies would be critical. The emergence of e-commerce presented an opportunity to improve company structure for information sharing and process changes that could also enhance relationships with suppliers, dealers and customers. Top management had to plan everything thoroughly in order to create scenarios of what impact various unexpected environmental changes would have. Technology was already revolutionizing business, so what other factors would influence the company.
The idea of moving to a more efficient e-commerce lacked a fully developed implementation plan and did not identify ways to overcome the barriers associated with making the system fully utilized. The plan would mean not only implementing the technology itself, but also having the organization’s seven automotive brands and four divisions that spanned 200 countries with 400,000 employees use it to conduct business (Truitt 2001). There was limited consideration for coordinating communication, generating internal support, and accounting for cultural and functional variances. Beyond internal factors, Ford needed to consider how to make e-commerce work with suppliers, dealers and customers to build the stronger relationships it envisioned. Today Ford has fully used the opportunities offered by e-commerce due to the proper planning activities of top management.
In conclusion, the above examples of how planning has benefited the international companies to operate better on the global markets prove the importance of planning as the managerial function. Development and integration of the plans is not an easy task but avoiding the planning leaves companies unprotected and raises the risk of being destroyed by the insignificant unexpected changes.
References Buckley, P. & Ghauri, P. (1999). The Global Challenge for Multinational Enterprises (International Business and Management). Pergamon Press. Drummond, G. & Ensor, J. (2001). Strategic Management: Planning and Control. Butterworth Heinemann Publishing. Truitt, W. (2001). Business Planning: A Comprehensive Framework and Process. Quorum Books.
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