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The purpose of this report is to identify different types of planning that organisations use in order to achieve there objectives and goals. This report will also evaluate the purposes and benefits of formal planning in relation to the chosen organisation, British Airways.
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Organisations set goals as a way of expressing what they would hope the business to achieve in the future. A goal can be best described as ‘A desired state of affairs which an organisation attempts to realise.’ (Etzioni 1964, p 6). Mission planning is similar to that of setting goals but these aims are somewhat vaguer and are usually on a more global level (Barney and Griffin, 1992). Goals and mission statements along with effective decision making are essential tools that organisations can use to plan what the direction the company will follow in order to exploit its maximum potential and ensure success.
This main part of this report will look at the different types of plans that organisations may use. It will also highlight the types of information that may be sought by organisations, such as British Airways, and the ways in which that information could be gathered to inform planning.
The chosen company for the purpose of this assignment is the airline and holiday company, British Airways.
British Airways is a Public Limited Company. The current name and structure was established in 1976, although previous ventures date back to 1910. It is the UK’s largest international scheduled airline. The British Airways group consists of British Airways Plc and a number of subsidiary companies, for example British Airways Holidays Ltd.
The company are affected by three main environmental factors these are:
- Minimising Carbon Emissions and noise pollution.
- Competition from budget airlines.
- Increasing safety procedures for passengers
These environmental factors have been incorporated into the mission statement of B.A which is “Our vision is to become the world’s most responsible and safe airline and not only to be seen as just a UK carrier, but a global airline that is based in Britain” (Chief Executive, British Airways Annual Report 2007/2008). Also within the annual report, B.A has set out three main goals that they hope to achieve within a three year time scale. These are:
- To be established within Terminal 5, at London Heathrow.
- To order new aircraft for their fleet.
- To be the employer of choice within the airline market.
Purpose and Potential Benefits of Formal Planning.
While some organisations use informal planning (usually smaller companies), it is for the most part, formal planning that is used. The purpose of formal planning in organisations is to give clear guidelines of what a company hopes to achieve and to provide direction and a timescale for these achievements to be accomplished. Plans also give a purpose to the people within in organisations (i.e. management and employees) as they provide what is expected from those involved and give them targets to work towards. Effective planning can help the organisation run smoothly as they provide a step by step approach to what needs to be done.
Planning in organisations is normally done at management level and according to Henri Fayol (1916) it is one of 5 major functions that management should undertake.
According to Boddy there are four main benefits of planning (2005). These are; plans can clarify direction, motivate people, help use resources efficiently and provide a way to measure progress. However planning has many more benefits such as it allows managers within organisations to establish where the organisation is at, at any given time. Plans also promote teamwork within managers and employees as the plan may specify that certain groups of people are required to work on a task, when in the absence of a plan those people might have undertaken tasks individually, this will also see that targets and goals are met quicker.
These benefits of planning will only be evident if it is carried out correctly. If plans are not properly drawn up or implemented they have the effect of wasting time and resources, it can also lead to the lack of staff motivation. It is therefore essential that plans are thought over carefully and that those making them understand that they must be achievable and realistic.
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With reference to the British Airways, it can been seen that planning is essential in relation to them achieving there goals. For example BA have just released their plans for the next 3 years entitled BP11 (BA annual report, 2007/2008). This 3 year plan sets out what they are aiming to achieve and how they want to achieve it. It is important for BA to draw up planning reports so that shareholders and staff understand what is expected to happen both in the short term and the long term.
Types of Plans.
There are many different types of planning that organisations can use. For the purpose of this report three different types of planning that may be beneficial to British Airways will be discussed.
Business Plan – This is a document that sets out what markets the business intends to operate in, how it will do so and what finance they require (Blackwell, 2004). These plans are mainly used to provide information for shareholders and to generate interest from investors who may be willing to help fund a project set out in the plan. This is shown in British Airways’ business plan, it states that they want to expand their fleet of aircraft subject to raising the appropriate finances. Issuing this as a plan may attract people who want to invest or increase their shareholders as shows that the airline is going to expand. Business plans can also be used in an organisation for internal purposes. For example lower level management may need to get financial support from more senior levels and will need to provide a business plan to show what they intend to do with any given funds.
Strategic Plan – These are plans for the whole organisation not just individual departments. A strategic plan can be described as ‘determining the basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources for carrying out these goals’ (Chandler, 1962). This basically means the organisation will identify where it wants to be and which route it must take in order to get there. The basis for British Airways’ strategic plan can be seen in their mission statement. The statement illustrates where the airline wants to end up and what they have to achieve in order to meet these goals.
Specific Plan – This type of plan is exactly what is says, specific. They are concise, and to the point, because of this they are easy to follow and they leave little room for error. An example of a specific plan can be seen when referring to BA. They have a plan to cut their carbon emissions by 7% by 2011 (annual report, 2007/2008). This plan is short and simple and would be easy for the whole company and its shareholders to understand. Specific plans will not work in situations where the future is unpredictable due to their lack of flexibility (Boddy, 2005 p 170).
Information Required and How to Gather it.
In order for organisations to create plans they need to gather information. The information must of the right kind if it is to be used in planning to ensure efficiency as wrong information will be costly to rectify. Information can be gathered from a number of sources by using informal or formal analysis.
The main types of information that will be sought by BA would be information about their competitors and information about customers. This is because British Airways aim to be the airline of choice (annual report 2007/2008) so information regarding the customer’s thoughts of aspects such as service are vital. BA’s main threat come from competitors so they would want information on them in order to see what they are offering that might steal custom.
British Airways gather their information using a formal analysis approach. The types of formal analyses they will use are Industry surveys, Market research (by way of questionnaires provided on their flights and on their web-site), the SWOT analysis model (see appendix 1) and the PESTEL analysis model (see appendix 2).
To conclude this report, it can be seen that planning is a must for any organisation. If applied correctly, planning can inevitable help the organisation fulfil its mission and goals in a smooth and efficient manner. The type of plan to use will depend highly on the organisation and what it wants to achieve, although most organisations such as British Airways will use a variety of planning types. Gathering useful and relevant information is paramount to effective and precise planning as if the information is not of the right kind or incorrect plans will be made on the wrong basis which may be detrimental to the organisation in the future.
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