OE-1.2 Planning & Decision Making

What this is and why it exists

Planning is the function that decides what the other four will be busy with. That is why it comes first, and why a weak plan makes every later function busy with the wrong thing.

There are three tools here and students routinely stop after the first one. SWOT lists factors. PEST scans the outside world. TOWS is the one that actually generates strategy, by crossing them.

Stopping at SWOT and wondering why no strategy appeared is the commonest mistake in this unit, so the tools are treated in that order below.

The vocabulary

• Plan — a decision taken in advance.
• Policy — a standing plan, meant to apply repeatedly.
• SWOT — strengths, weaknesses, opportunities, threats.
• PEST — political, economic, social and technological forces outside the firm.
• TOWS matrix — pairing those factors to produce options.
• Objective — a goal stated so you can tell whether you reached it.
• Management by Objectives — running an organisation on such goals.
• Programmed decision — a recurring decision with a rule attached.
• Non-programmed decision — a novel one, needing judgement.

The mental model

Planning is deciding in advance. That sounds obvious until you notice how much of an organisation runs without it, reacting to whatever arrived this morning.

Plans come in kinds, from one-off projects to standing rules. Policies are the standing kind, and here is the useful reframe: a policy is a plan, not a law. That changes how you argue with one. Plans are made for reasons, and when the reason no longer holds, the plan can be revisited.

Then scanning. SWOT and PEST are two structured ways of looking outward before deciding. Their value is largely in the habit of writing every box down, because the box you leave empty is usually the one that hurts. An honest weaknesses column is worth more than a long strengths column.

And then TOWS, which is the step people skip. Pair the factors — a strength against an opportunity, a weakness against a threat — and each pairing suggests an option. That is what turns four lists into actual choices. Without it the analysis is a poster.

Objectives are goals stated so that you can tell whether you reached them. Management by Objectives is a whole approach built on that. It is worth understanding properly rather than as history, because its descendants run most technology companies. The idea is unchanged: state the goal so its achievement is checkable, then manage against it.

Planning also has a concrete end that surprises people. Where a factory sits and how its floor is arranged are planning problems, and the cost of getting them wrong is permanent.

Finally, decisions. The distinction worth carrying is programmed against non-programmed — recurring with a rule, or novel and needing judgement. It tells you what can be delegated, which is most of what a manager needs from this idea.

What you should now be able to explain or do

Run a planning process from purpose to plan. Say why a policy is a plan rather than a law. Fill in SWOT and PEST honestly, including the boxes you would rather leave empty. Use TOWS to turn those factors into options, and say why analysis alone produces none. State an objective so its achievement is checkable, and connect MBO to its modern descendants. Classify a decision as programmed or not, and say what that implies for delegation.

Check yourself