Management planning process is a step by step guide to creating a realistic organizational plan to meet set goals after assessment of available resources. It takes into consideration both long-term and short-term corporate strategies and spells out the vision and the direction to which the company is headed. Organizational planning ensures;
- Proper Resource Utilization; since resources are scarce, planning provides invaluable information to top decision-makers on how the available ones will be utilized. Whatever the project is, maximum productivity should be ensured from minimum resource utilization.
- Establishment of goals; planning sets up challenging but realistic goals to every team member in the organization. Setting individual goals ensures employees are not complacent in service delivery.
- Uncertainty and risk management; Risk management is very important for any organization to succeed. Sometimes things happen the unexpected way. Planning, therefore, helps put in place the ‘what if’ scenario thus cushioning on the adverse effects that might result due to severe unforeseen consequences.
Management planning process, therefore, involves the following nine steps;
Nine Steps for Management planning process
1. Venture Awareness and Resources Allocation
The awareness of the business venture and taking action towards the attainment of set objectives is the first step in the management planning process. Awareness enables the decision-making authority to identify available and future opportunities and plan on their effective utilization
Venture awareness also entails the understanding of organizational goals. A detailed overview of each goal should be looked at and anticipated outcomes analyzed. At this stage, objectives should be described in quantitative terms. E.g. in 12 months period, the anticipated profit margin should rise by approximately 30 per cent.Again it is important to note that the set goals should be allocated adequate human and financial resources for effective completion
2. Gathering Adequate Information
Before initiating the actual plan, always have all the relevant information that regards the business operation. All the facts and figures should be detailed, target customers identified and their tastes and preferences noted. The guidelines under which goods and services are provided should also be set and the current market value of products measured against expected returns projected costs and expenses.
When gathering information, management should be well aware of goal related tasks so as to align them with objectives and the required resources i.e. in terms of staff and financing.
3. Setting Objectives
These are setting goals that the organization strives to achieve by utilizing its available resources. They are the end products that should be attained through proper planning.
Understanding objectives enable each employee to muster his/her role in attaining general goals. They should, therefore, be properly formulated and well communicated to all employees.
Objectives and tasks should be set in their order of importance. The most important tasks should be assigned first priority and completed first.
No one knows what will happen in future a reason why management planning process is essential. When formulating a management plan, forecasting is essential. Forecasting is the assumption of future events by keenly observing present variables and constituting a plan that is likely to meet the desired expectations.
The following should be taken into consideration (if in production industry) when anticipating for the future;
- Likely production volume and the expected demand for general production
- Likely costs and product pricing
- Government’s economic policies and varying patterns in consumer preferences
- Source of funding
- Availability of raw materials and labor
- Importance of technology in meeting the set objectives
The successful implementation of the whole management planning process will entirely hinge on forecasting and some of the factors that have been listed above. Accurate anticipation and forecasting will lead to a reliable set out management plan.
5. Determining The Absolute Course of Action
The next step is to choose the absolute course of action. Different organizations may use different alternative to achieve similar results but a good manager should analyze all available options and make a final selection that will be appropriate in terms of resource utilization and convenience. According to O’Donnell, there is always a plan against which there are no reasonable alternatives. This, therefore, means that all positives and negatives of a particular course of action should be analyzed and weighed before the final verdict on selection is taken
6. Evaluate The Course Of Action
After determining the absolute course of action, the next important step is to do an evaluation. Evaluation involves analysis of the performance of different actions. Different factors are measured against each other and the most convenient course of action in terms of resources and timeline preferred. E.g. one course of action may require large investments and it’s profitable in the long run while the other might require very little resources but low-profit margins in the long run. Therefore, appropriate analysis is vital in identifying the best course of action.
7. Establishing The Contingency Plans
The management planning process does not end after establishing the appropriate course of action. Contingency plans should also be put in place in case the main course of action does not materialize. This should just act as secondary plans in support of the principal plan.
8. Plan Implementation
This is the second-last step in the process of Management planning. At this stage, the plan is put into action so that the business objectives are realized. For successful implementation of the already set out plan, policies and procedures should be put in place. Plan execution should be for all operational staff, managers, partners and other relevant collaborative partners.
9. Monitoring and Evaluation
The effectiveness of management planning and the execution process must be assessed if possible regularly. Depending on evaluation results, managerial guidelines or principles may need adjustments or modifications before final plan execution. Also, the management plan may need to be tailored to meet societal, political or economic changes that affect the organization as a whole.
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