What is Planning, Importance, Process

and Types
A plan is a predetermined course of action. It is a blue print for goal achievement.
Simply stated, it is setting goals and deciding how to achieve them. Planning is deciding
in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap
from where we are to where we want to go Planning has a number of characteristics:

● Planning is goal-oriented: All plans arise from objectives. Objectives provide

the basic guidelines for planning activities. Planning has no meaning unless it
contributes in some positive manner to the achievement of predetermined goals.
● Planning is a primary function: Planning is the foundation of management. It is
a parent exercise in management process. It is a preface to business activities.
● Planning is all-pervasive: Planning is a function of all managers. It is needed
and practiced at all managerial levels. Planning is inherent in everything a
manager does.
● Planning is a mental exercise: Planning is a mental process involving
imagination, foresight and sound judgment. Planning compels managers to
abandon guesswork and wishful thinking. It makes them think in a logical and
systematic manner.
● Planning is a continuous process: Planning is continuous. It is a never-ending
activity. It is an ongoing process of adjustment to change. There is always need
for a new plan to be drawn on the basis of new demands and changes in the
circumstances.
● Planning involves choice: Planning essentially involves choice among various
alternative courses of action. If there is one way of doing something, there is no
need for planning. The need for planning arises only when alternatives are
available.
● Planning is forward looking: Planning means looking ahead and preparing for
the future. It means peeping into the future, analyzing it and preparing for it.
Managers plan today with a view to flourish tomorrow. Without planning,
 business becomes random in nature and decisions would become meaningless,
ad hoc choices.
● Planning is flexible: Planning is based on a forecast of future events. Since
future is uncertain, plans should be reasonably flexible. When market conditions
change, planners have to make necessary changes in the existing plans.
● Planning is an integrated process: Plans are structured in a logical way
wherein every lower-level plan serves as a means to accomplish higher level
plans. They are highly interdependent and mutually supportive.
● Planning includes efficiency and effectiveness dimensions: Plans aim at
deploying resources economically and efficiently. They also try to accomplish
what has been actually targeted. The effectiveness of plans is usually dependent
on how much it can contribute to the predetermined objectives.

Importance of Planning
Planning helps an organisation in the following ways:

● Planning provides direction: Planning provides direction and a sense of

purpose for the organisation. Without plans and goals, organisations merely
react to daily occurrences without considering what will happen in the long-run.
Plans avoid this drift situation and ensure that short-range efforts will support and
harmonize with future goals. It helps an organisation decide what to do and when
to do it. It reduces aimless activity and makes action more meaningful.
● Planning provides a unifying framework: A plan helps people to set priorities
and put effort accordingly. A plan tells everyone what the organisation hopes to
achieve and what the contribution of each department must be, and who is to
utilize resources to achieve the goals. Plans help in coordinating effort at various
levels. In the absence of a plan, the organisation would be pulled in different
directions, creating confusion and misunderstanding at various levels.
● Planning is economical: Effective plans coordinate organisational work and
eliminate unproductive effort. Guess work is banished. Facilities are employed to
the best advantage. Waste motions and idle facilities are removed By focusing
attention on what is to be done, how and when it is to be done, plans help an
 organisation to economically utilize the physical and financial resources. This,
ultimately, improves efficiency of operations.
● Planning reduces the risks of uncertainty: Planning helps an organisation to
cope with an uncertain future. It helps management to anticipate the future and
prepare for the risks by making necessary provisions to meet the unexpected
turn of events. Planning minimizes the chances of mistakes and unpleasant
surprises because objectives, policies and strategies are formulated after a
careful scrutiny of internal as well as external environment. Planning, thus, seeks
to minimize risk while taking advantage of opportunities.
● Planning facilitates decision making: Decision-making involves searching of
various alternative courses of action, evaluating them and selecting the best one.
Planned targets serve as the criteria for the evaluation of different alternatives so
that the best one may be chosen. If there are no plans for the future, there are
few guidelines for making current decisions. For example, decisions have to be
made in present for a product to be introduced three years in the future. When
future plans exist, decisions consistent with the future plans are made. Further,
without plans, people will make decisions according to their own preference
rather than those of the organisation.
● Planning encourages innovation and creativity: Planning involves looking
ahead and preparing for the future. The process of looking ahead, forces an
organisation to be alert of opportunities and threats in the environment. It forces
managers to find out new and improved ways of doing things in order to remain
competitive and avoid the threats in the environment. It compels the managers
to be creative and innovative all the time. Planning helps managers to visualize
problems early and take suitable remedial steps. It helps them exploit
opportunities and come out as ‘winners’ in a competitive world.
● Planning improves morale: Once members know what is expected of them,
they can contribute better. When goals are properly defined, work assignments
can be fixed and everyone can begin to contribute to the achievement of these
goals. This produces improvements in morale. Further, planning permits
employees to participate in the thinking process. This helps them develop a
 broad mentality. Also, when the plan is actually translated into action, they feel
that it is their own plan. Positive attributes are, thus, developed.
● Planning facilities control: Planning and controlling functions are said to be
‘Siamese twins’ (inseparable twins). There is nothing to control without planning
and without proper control, planning proves to be a wasteful and an unproductive
exercise. Plans serve as yardsticks for measuring performance. They help in
channelizing behaviour in the right direction. They help in preventing mistakes,
oversights and deviations.

Management Principles - Types Of Plans

Plans commit the various resources in an organization to specific outcomes for the
fulfillment of future goals. Many different types of plans are adopted by
management to monitor and control organizational activities. Three such most
commonly used plans are hierarchical, frequency-of-use (repetitiveness) and
contingency plans.

Strategic Plans
Strategic plans define the framework of the organization’s vision and how the
organization intends to make its vision a reality.

​ It is the determination of the long-term objectives of an enterprise, the

action plan to be adopted and the resources to be mobilized to achieve these
goals.
​ Since it is planning the direction of the company’s progress, it is done by the
top management of an organization.
​ It essentially focuses on planning for the coming years to take the
organization from where it stands today to where it intends to be.
​ The strategic plan must be forward looking, effective and flexible, with a
focus on accommodating future growth.
​ These plans provide the framework and direction for lower level planning.

Tactical Plans
Tactical plans describe the tactics that the managers plan to adopt to achieve the
objectives set in the strategic plan.

​ Tactical plans span a short time frame (usually less than 3 years) and are
usually developed by middle level managers.
​ It details specific means or action plans to implement the strategic plan by
units within each division.
​ Tactical plans entail detailing resource and work allocation among the
subunits within each division.

Operational Plans
Operational plans are short-term (less than a year) plans developed to create
specific action steps that support the strategic and tactical plans.

​ They are usually developed by the manager to fulfill his or her job
responsibilities.
​ They are developed by supervisors, team leaders, and facilitators to support
tactical plans.
​ They govern the day-to-day operations of an organization.
​ Operational plans can be −
​ Standing plans − Drawn to cover issues that managers face
repeatedly, e.g. policies, procedures, rules.
​ Ongoing plans − Prepared for single or exceptional situations or
problems and are normally discarded or replaced after one use, e.g.
programs, projects, and budgets.
 Process of Planning
The process of planning consists of the following steps:

● Establishing objectives: The first step in the planning process is to identify the
goals of the organisation. The internal as well as external conditions affecting the
organisation must be thoroughly examined before setting objectives. The
objectives so derived must clearly indicate what is to be achieved, where action
should take place, who is to perform it, how it is to be undertaken and when is it
to be accomplished. In other words, managers must provide clear guidelines for
organisational efforts, so that activities can be kept on the right track.
● Developing premises: After setting objectives, it is necessary to outline
planning premises. Premises are assumptions about the environment in which
plans are made and implemented. Thus, assumptions about the likely impact of
important environmental factors such as market demand for goods, cost of raw
materials, technology to be used, population growth, government policy, etc. on
the future plans are made. Plans should be formulated by the management,
keeping the constraints imposed by internal as well as external conditions in
mind.
● Evaluating alternatives and selection: After establishing the objectives and
planning premises, the alternative courses of action have to be considered. The
pros and cons as well as the consequences of each alternative course of action
must be examined thoroughly before a choice is made.
● Formulating derivative plans: After selecting the best course of action, the
management has to formulate the secondary plans to support the basic plan. The
plans derived for various departments, units, activities, etc., in a detailed manner
are known as ‘derivative plans’. For example, the basic production plan requires
a number of things such as availability of plant and machinery, training of
employees, provision of adequate finance, etc. To ensure the success of a basic
plan, the derivative plans must indicate the time schedule and sequence of
performing various tasks.
● Securing cooperation and participation: The successful implementation of a
plan depends, to a large extent, on the whole-hearted cooperation of the
employees. In view of this, management should involve operations people in the
planning activities.
● Providing for follow-up: Plans have to be reviewed continually to ensure their
relevance and effectiveness. In the course of implementing plans, certain facts
may come to light that were not even thought of earlier. In the light of these
changed conditions, plans have to be revised. Without such a regular follow-up,
plans may become out-of-date and useless. Moreover, such a step ensures the
implementation plans along right lines.