PLANNING (EN)

CONCEPT OF PLANNING

 Planning is defined as the process of setting objectives for a given time

period, formulating various courses of action to achieve them and then selecting
the best possible alternative from among the various courses of action available.
 Planning is deciding in advance what to do and how to do. It is one of the
basic managerial functions. Planning is closely connected with creativity and
innovation.
 Planning seeks to bridge the gap between where we are and where we want
to go. It requires taking decisions since it involves making a choice from alternative
courses of action.
 Planning, thus, involves setting objectives and developing appropriate
courses of action to achieve these objectives. It is concerned with both ends and
means i.e. what is to be done and how is to be done.
 Planning will be a futile exercise if it is not acted upon or implemented.

STEPS IN PLANNING PROCESS

1. Setting objectives: The first and foremost step is setting objectives. Objectives
may be set for the entire organization and each department or unit within the
organization. They specify what the organization wants to achieve. For example,
increase in sales by 20%. If the end result is clear it becomes easier to work
towards the goal.

2. Developing Premises: Planning premises are the assumptions made about the
future. Assumptions are made in the form of forecasts about the demand for the
product, interest rates, government policy, etc. Planning premises are base
material upon which plans are to be drawn.

3. Identifying alternative courses of action: As there may be many ways to

achieve the objectives, all the alternative courses of action should be identified
and thoroughly discussed among managers. They could be routine or innovative.

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4. Evaluating alternative courses of action: The positive and negative aspects of
each alternative are evaluated in the light of objectives to be achieved.
Alternatives are evaluated in the light of their feasibility and consequences.

5. Selecting an alternative: This is the real point of decision-making. The best

plan would be the most feasible, profitable and with least negative consequences.
The manager has to apply permutations and combinations and select the best
course of action.

6. Implementing the plan: It means putting the plan into action. This is the step
where other managerial functions also come into the picture. This step would also
involve organising for labour and purchase of machinery.

7. Follow up action: It involves seeing that activities are performed according to

plans. Monitoring the plans is equally important to ensure that objectives are
achieved.

FEATURES OF PLANNING

1.Planning focuses on achieving objectives: Specific goals are achieved with the
help of well defined plans. Thus, planning is purposeful. Planning has no
meaning unless it contributes to the achievement of predetermined organizational
goals.

2. Planning is futuristic: It involves looking ahead and preparing for future to

meet future events effectively to the best advantage of the organisation. It implies
peeping into the future, analyzing it and predicting it. For example, sales
forecasting is the basis on which a business from prepares its annual plan for
production and sales.

3. Planning involves decision making: It involves evaluation of each alternative

course of action and choosing the most appropriate one. If there is only one
possible goal or a possible course of action, there is no need for planning because
there is no choice.

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4.Planning is mental exercise: Planning is intellectual activity thinking rather
than doing. requires application mind involving foresight, intelligent imagination
and sound judgement. Planning requires logical and systematic thinking rather
than guess work or wishful thinking.

5.Planning is primary function management: It lays down the basis for other
functions management. All other managerial functions are performed within the
framework of plans drawn. Thus, planning precedes other functions. This is
referred to as 'primacy planning’.

6. Planning is pervasive: It required in types organizations, at levels of

management and in departments of organization. Top management undertakes
planning for the whole organisation. Middle management does the departmental
planning. At lowest level, day-to-day operational planning done by supervisors.

7. Planning is continuous: A plan is framed and implemented for specific period

time and followed by another plan and so on. Plans are prepared for a specific
period of time, maybe for a month, a quarter, or a year. At the end of that period
there is need to draw new plans on the basis of new requirements and future
conditions. Hence, planning is a continuous process.

IMPORTANCE OF PLANNING

1.Planning provides direction: Planning provides directions by deciding in

advance what action should taken. If there was no planning, employees would be
working different directions and the organisation would not able to achieve
desired goals.

2. Reduces the risks of uncertainty: Planning reduces the risks of uncertainty by

anticipating changes and developing managerial responses to them. Planning
cannot eliminate changes/uncertainties but can predict them and prepare
contingency plans to deal with them.

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3. Reduces overlapping and wasteful activities: Planning reduces overlapping
and wasteful activities by coordinating activities of different divisions,
departments and individuals. It ensures clarity in thought and action, work is
carried on smoothly without interruptions. Useless and redundant activities are
minimized or eliminated.

4. Promotes innovative ideas: Since planning is the first function of management,

new ideas can take the shape of concrete plans. It is the most challenging activity
for the management as it guides all future actions leading to growth and
prosperity of the business.

5. Facilitates decision making: Planning facilitates decision making by making a

choice from among the alternative courses of action. Planning involves setting
targets and predicting future conditions, thus helping in taking rational decisions.

6. Establishes standards for controlling: Planning establishes standards against

which actual performance is measured. A comparison of actual performance with
the standards helps to identify the deviations and to take corrective action. Thus,
planning is a prerequisite for controlling. If there is any deviation it can be
corrected. If there were no goals and standards, then finding deviations which are
a part of controlling would not be possible.

LIMITATIONS OF PLANNING
1. Planning leads to rigidity: Plan is drawn with specific targets within a
specific time frame. Once the plans are drawn, the managers may not be able to
change them. Following a pre-decided plan, when circumstances have changed,
may not turn out to be in the organizations interest.

2. Planning may not work in a dynamic environment: The organisation has to

constantly adapt itself to changes. It becomes difficult to accurately assess future
trends in the environment. If economic policies are modified or political
conditions in the country are not stable or there is a natural calamity. Competition
in the market can also upset financial plans, sales target may have to be revised
and, accordingly, cash budgets also need to be modified since they are based on
sales figures. Planning cannot foresee everything and thus, there may be obstacles
to effective planning. 4.
3. Planning reduces creativity: It is mostly done by the top management; rest of
the members just carry out orders and think on the same lines as others. They are
neither allowed to deviate from plans nor are they permitted to act on their own
Thus, their initiative or creativity gets lost or reduced.

4. Planning involves huge costs: It involves huge cost in terms of time and
money. There are number of incidental costs as well like expenses on boardroom
meetings, discussions with professional experts etc. and preliminary
investigations to find out the viability of the plan. Sometimes costs incurred may
not justify the benefit derived from the plan.

5. Planning is time consuming: Sometimes plans to be drawn up take so much of

time that there is not much time is left for its implementation.

6. Planning does not guarantee success: Managers have a tendency to rely on

previously tried and tested successful plans which may not work again. This kind
of complacency and false sense of security may actually lead to failure instead of
success.

TYPES OF PLANS

Single use plans: It is developed for a one-time event or project. Such a course of
action is not likely to be repeated in the future. Example: Budget, Programme.

Standing plans: These are used for activities that occur regularly over a period of
time. It is designed to ensure that internal operations of an organisation run
smoothly. Example: Policy, Procedure, Method and Rule.

Note: Objective and Strategy are not classified under single use plans or standing
plans.

Objectives: Objectives are the end results of the activities that an organisation
seeks to achieve through its existence. Objectives serve as a guide for overall
planning of the enterprise. They are expressed in quantitative terms in the form of
written statement. They define the future state of affairs or the desired future
position that management would like to reach. Example:- To increase sale by 10%.
Strategy: It lays down the broad contours of an organisation's business and
defines organisation’s direction and scope in the long run.

Strategy is a comprehensive plan that serves as a means to accomplish

organisational objectives. It includes:

(i) Determining long term objectives

(ii) adopting a particular course of action and
(iii) allocating resources necessary to achieve the objective.

Whenever a strategy is formulated, the business environment needs to be taken

into consideration. Example: Marketing strategy of an organisation- which
channel of distribution to use? What is the pricing policy? And how to advertise
the product?

Policy: Policies serve as a guideline for implementing a strategy. They are

expressed in the form of general statements that guides managerial decision
making and action. It is a general response to particular problem. It defines the
broad parameters within which a manager may function.

Example: Recruitment policy, Pricing policy.

• Method: Method is the prescribed way or manner in which a task has to be

performed considering the objective. It deals with a task comprising of one step of
a procedure and specifies how this step is to be performed. Selection of right
method saves time, money and effort and increases efficiency.

Example: For imparting training to higher level managers- orientation

programmes, lectures and seminars can be organized whereas on the job methods
are appropriate at the lower level.

• Procedure: It consists of sequence of routine steps performed in a chronological

order to carry out activities within a broad policy framework. It details the exact
manner in which any work is to be performed. Policies and procedures are
interlinked with each other. Procedures are steps to be carried out within a broad
policy framework. 6.
Example: Procedure for reporting progress in production.

Budget: A budget is a statement of expected results for a given future period

expressed in numerical terms.

Example: Sales budget, Cash budget, etc.

A budget is a statement of expenses, revenue and income for a specified period. A

budget is also a control device from which deviations can be taken care of. But
making a budget involves forecasting, therefore, it is a fundamental planning
instrument.

• Rules: Rules are the simplest form of plans which specifies the action that must
or must not be taken i.e. the Do's and Dont's that guide the behaviour of people.
They are expressed in specific forms and a penalty is generally imposed on
violation of a rule. Rule is a specified statement that informs what is to be done or
not to be done. It is a guide to behaviour. A rule does not allow for any flexibility
or discretion.

Example: No smoking in office. Rules are usually the simplest type of plan
because there is no composition or change unless a policy decision is taken.

Programme: It is detailed statement about a project which outlines the objectives,

policies, procedures, rules, resources required and the budget to implement any
course of action. The minutest details are worked out i.e. procedures, rules,
budgets, within the broad policy framework.

Example: Construction of a shopping mall, opening a new department, etc.

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