CH.

4 PLANNING
 SYNOPSIS
• INTRODUCTION
• CONCEPT
• IMPORTANCE
• FEATURES OF PLANNING
• LIMITATIONS OF PLANNING
• PLANNING PROCESS
• TYPES OF PLANS
• DEFINITION
• “Planning is an intellectual process, conscious
determination of course of action, the basing
of decision on purpose, facts and considered
estimates.”.
Koontz and O‘Donnell
MEANING
● Planning entails deciding what to accomplish
and how to do it ahead of time. It is a
fundamental managerial function.
● It entails establishing goals and devising
strategies for achieving them.
● The plan that is created must be completed
within a certain time frame, yet time is a limited
resource. It should be used with caution.
 IMPORTANCE
• 1.PLANNING PROVIDES DIRECTIONS
• 2.PLANNING REDUCES THE RISKS OF
UNCERTAINTY
• 3.PLANNING REDUCES OVERLAPPING AND
WASTEFUL ACTIVITIES
• 4.PLANNING PROMOTES INNOVATIVE IDEAS
• 5.PLANNING FACILITATES DECISION MAKING
• 6.PLANNING ESTABLISHES STANDARDS FOR
CONTROLLING
 IMPORTANCE OF PLANNING

• 1. Planning provides directions: Planning provides guidance

for action by defining how the task will be done in advance.
Planning ensures that goals are clearly specified so that the
best course of action may be devised. Once the strategies are
in place, the department and individuals may work together.
• 2. Planning reduces the risk of uncertainty: Planning is a task
that allows management to see into the future and predict
changes. Changes and occurrences cannot be avoided, but
managers may anticipate them and adapt their strategies
accordingly by deciding plans and courses of action ahead of
time.
• 3. Planning reduces overlapping and wasteful activities:
The basis for coordinating the actions and efforts of
several divisions, departments, and individuals is
planning. It eliminates ineffective and unnecessary
activities, prevents misunderstandings, and assures
clarity of thinking and action.
• 4. Planning promotes innovative ideas: The first role of
management is planning. Managers are given the
opportunity to generate fresh ideas, which can then be
turned into tangible strategies. It directs all future actions
that will lead to the company's growth and prosperity.
• 5. Planning facilitates decision making:
Setting goals and forecasting future situations
are all part of planning, which aids in making
sensible judgments among various options.
• 6. Planning establishes standards for
controlling: Planning establishes the
benchmarks against which actual performance
is assessed. As a result, planning is a must for
controlling
 FEATURES
• 1.PLANNING FOCUSES ON ACHIEVING
OBJECTIVES
• 2.PLANNING IS A PRIMARY FUNCTION OF
MANAGEMENT
• 3.PLANNING IS PERVASIVE
• 4.PLANNING IS CONTINUOUS
• 5.PLANNING IS FUTURISTIC
• 6.PLANNING INVOLVES DECISION MAKING
• 7PLANNING IS A MENTAL EXERCISE
 FEATURES OF PLANNING

• 1. Planning focuses on achieving objectives: General and goals,

as well as strategies and activities to attain these goals, are
established by organizations.
• 2. Planning is a primary function of management: Planning lays
the groundwork for all other management tasks.
• 3. Planning is pervasive: All levels of management, as well as all
departments within the organization, must plan. Though at
different levels and for different departments, the extent of
planning varies.
• 4. Planning is continuous: The planning cycle is linked to
planning continuity. It indicates that a strategy is devised,
implemented, and then followed by another strategy, and so on.
• 5. Planning is futuristic: The goal of planning is to efficiently
meet future occurrences to an organization's benefit. Planning
entails predicting future events and situations and making
plans based on those predictions.
• 6. Planning involves decision making: Choosing among a
variety of options and activities is the essence of planning.
There is no need to plan if there is just one conceivable aim or
course of action because there is no other option.
• 7. Planning is a mental exercise: Planning necessitates the use
of the mind and foresight. Rather than guesswork, planning is
an intellectual activity that necessitates logical and organized
thought.
 LIMITATIONS
• 1. PLANNING LEADS TO RIGIDITY
• 2.PLANNING MAY NOT WORK IN A DYNAMIC
ENVIRONMENT
• 3.PLANNING INVOLVES HUGE COSTS
• 4.PLANNING IS A TIME-CONSUMING
• 5.PLANNING DOES NOT GUARANTEE SUCCESS
 LIMITATIONS OF PLANNING

• 1. Planning leads to rigidity: A well-defined plan is drawn

up in an organization with specified goals to be reached
within a specific time frame, but managers may not be
able to amend it. Managers must be given some flexibility
to react with changing conditions because the corporate
environment is dynamic.
• 2. Planning may not work in a dynamic environment:
Planning is based on anticipating future events, and
because the future is unpredictable and dynamic, the
organization must react to changes. However, planning will
not always be able to adequately predict future events.
• 3. Planning reduces creativity: Top management plans and intermediate
management executes the plan, but they are not allowed to depart from
the plan, limiting the creativity of these managers.
•
• 4. Planning involves huge costs: The plan's formulation entails a significant
financial investment. To determine data, detailed strategies necessitate
scientific computations, all these leads to high costs. Also, the costs of
preparation may not always be justified by the benefits gained.
• 5. Planning is time consuming: Many factors must be considered when
developing a strategy, making it a lengthy process.
• 6. Planning does not guarantee success: Only carefully planned and
implemented plans can lead to the success of a business. Managers are
prone to implementing previously successful ideas, but a plan that worked
in one context may not work in another.
 PLANNING PROCESS
• 1.SETTING OBJECTIVES
• DEVELOPING PREMISES
• IDENTIFYING ALTERNATIVE COURSES
• EVALUATING ALTERNATIVE COURSES
• SELECTING AN ALTERNATIVE
• IMPLEMENTING THE PLAN
• FOLLOW-UP ACTION
 PLANNING PROCESS

• 1. Setting Objectives:
• ● Specify the goals that the company wishes to attain.
• ● Establish goals for the overall organization, as well as individual
departments, units, and personnel. Clearly state the organization's
objectives and define how all departments will contribute to the
overall goals.
• ● Objectives must be communicated to each unit and to personnel
at all levels so that they are aware of how their actions contribute
to the achievement of the goals.
• ● Managers must engage in the goal-setting process and give ideas.
• ● For example, setting sales goals, launching a new product, or
expanding into new markets.
• 2. Developing Premises:
• ● Because planning is a future-oriented activity and the future is
uncertain, managers must make certain assumptions while creating
organisational plans
• ● These assumptions about the future are referred to as premises, and
they serve as the foundation for creating plans.
•
• ● All planning managers should be familiar with the same assumption,
and they must all agree on it.
• ● Forecasting, for example, is a technique for accumulating data to create
premises. For various goals, an organisation employs numerous forecasts
such as policy changes, new markets, product demand, and so on.
• ● For successful plans, forecast accuracy is required.
• 3. Identifying Alternative Courses of Action:
• ● After the objectives have been established,
assumptions are formed, and different courses of
action are chosen.
• ● Managers must identify all possible courses of
action for accomplishing the organization's
objectives.
• ● The course of action could be standard or novel.
By integrating more people and sharing their ideas,
an innovative course can be implemented.
• 4. Evaluating Alternative Courses of Action:
• ● The next stage is to weigh the benefits and
drawbacks of each prospective course of action.
• ● Each proposal's positive and negative characteristics
must be assessed considering the goals to be met.
• ● For example, in financial decisions, the risk-return
trade-off is critical. The larger the risk, the higher the
return. To assess such suggestions, extensive
calculations of earnings, taxes, earnings per share, and
dividends are performed, followed by a judgement.
• 5. Selecting the Best Alternative:
• ● From all the options, the best strategy is chosen and
implemented.
•
• ● The optimal strategy is the one that is the most
practicable, profitable, and has the fewest drawbacks.
• ● Because a mathematical analysis is not always possible,
the manager's expertise, judgement, and intuition play a
vital part in determining the best viable option.
• ● Rather than choosing the optimal option, a combination
of plans may also be chosen if possible.
• 6. Implementing the Plan
• ● In this step, the best plan is implemented,
i.e., the plan is put into action.
• ● Managers start organizing & assembling
resources for implementing the plans.
• ● For example, if output is to be increased,
more labour and machinery will be necessary.
This phase would also entail the hiring of more
labour and the acquisition of machinery.
• 7. Follow Up Action
• ● Involves monitoring the implemented plans
and ensuring that the activities are being
performed according to the schedule.
• ● Continuous monitoring is required to
identify deviations from plans, and corrective
action is required to meet organizational
goals.
• TYPES OF PLAN
• A plan is a commitment to taking a certain course of action to achieve specific goals. Depending on the
use and length of the planning period, plans can be categorised into Single-use and Standing plans.
• 1. SINGLE USE PLAN
•
• ● A single-use plan is a set of instructions designed to handle a one-time problem. It was created for a
one-time endeavour or event with a single goal in mind.
• ● A plan like this is made to satisfy the requirements of a certain situation.
• ● A single use plan's duration varies based on the type of project; for example, a single event plan may
last one day, but a single project plan may last one week or months.
• ● An outline for a marketing campaign, for example. After the campaign is over, the short-term strategy
will no longer be useful save as a guide for future planning.
•
• 2. STANDING PLANS
• ● Standing plans are used for actions that occur on a regular basis over time.
• ● It is created once and retains its worth over time as it undergoes changes and upgrades from time to
time.
• ● It is created once and then adjusted as needed to satisfy business requirements.
• ● Policies, procedures, methods, and norms are all part of the standing plans.
• OBJECTIVES
• STRATEGY
• POLICY
• PROCEDURE
• METHOD
• RULE
• PROGRAMME
• BUDGET
• Based on what the plans seek to achieve, plans can be classified as
• I. Objectives:
• ● Objectives are the desired outcomes that management hopes to attain
through its activities.
• ● They could be intended to reflect the anticipated future position that
management aspires to. Setting organizational objectives is the first and
most important phase in the planning process.
•
• ● Objectives must be stated, i.e., they must be quantifiable and documented
in the form of a written declaration of desired outcomes to be achieved
within a certain time frame.
• ● For example, a 20% return on investment, a 10% increase in sales target,
and so forth. The goals should be clear and attainable
•
• II. Strategy:
•
• ● Strategy refers to long-term decisions that define an organization's
direction and scope.
• ● These are the plans that an organization develops to deal with a
variety of conditions, threats, and opportunities.
• ● Internal strategy refers to the process of an organization's
managers developing a new business strategy, whereas external
strategy refers to the process of developing strategies in response to
competitors' strategies.
• ● For example, selecting an advertising medium, distribution
networks, and so on.
•
• III. Policy:
• ● Policies are general statements that guide thinking or
channelize energies towards a particular direction. It
provides a basis for interpreting strategy.
• ● Policies exist for all levels and departments within an
organization, including large and small policies.
• ● Policies establish the boundaries within which a
management can operate.
• ● They are adaptable because they can be altered as needed.
• ● For example, selling things on a cash-only basis, purchasing
from multiple vendors, and so forth.
• IV. Procedure:
• ● Procedures are step-by-step instructions that
specify how a task should be completed.
• ● They specify which tasks should be completed,
and in which order.
• ● In general, the sequence of actions to be taken in
order to implement a policy and achieve
predetermined goals is termed as procedure.
• ● For example, a company's recruitment procedure.
• V. Rules:
• ● Rules are specific statements that specify
what should be done and what should not be
done in certain situations.
• ● Rules are rigid and do not allow for
flexibility, ensuring organizational discipline.
• ● For example, ‘Smoking is prohibited in the
office.'
• VI. Method:
• ● Methods describe the prescribed ways or manners in
which a work can be completed considering the goal.
• ● Choosing the right methodology saves time, money,
and efforts while increasing efficiency.
• ● The methods are adaptable in nature.
• ● For example, numerous training methods are used
by an organization to train its personnel, such as
apprenticeship training, induction programmes, and so
on.
• VII. Programme:
• ● A programme may include a complete list of
project objectives, policies, processes, regulations,
tasks, and the physical and human resources needed
to carry out any course of action.
• VIII. Budget:
• ● A budget is a numerical description of expected
results for a specific time in the future.
• ● For example, a sales budget or a production
budget.
 Difference between
Policy & Objectives
Basis Policies Objectives
Meaning A policy is a standing plan for Objectives are the end part of
recurring questions the planning
Nature Policy is expressed in the form Objectives are more
of general guidelines fundamental than policies
Purpose Policies lay down the broad Objectives focus on desired
parameters within which future position that the
managers are expected to management would like to
work reach.
Scope Policy is often related to one Medium-term or short-term
particular objective
Formation Policies are formed by top, Objectives are generally
middle and lower level formed by a body of top levels
managers. managers.
Example Purchasing policy, recruitment An online educational portal
policy, pricing policy, etc., aims to increase its
subscriptions by 10% in the
new session
 Difference between
Policies & Strategies
Basis Policies Strategies
1.Meaning A policy is a standing plan Strategies refers to plans
for recurring questions prepared to face threats
and challenges
2.Nature Policy expressed in the They are non-repetitive
form of general guidelines plans, may need frequent
changes.
3.Purpose Policies lay down the broad Strategies strive to create
parameters within which an identity of a business in
managers are expected to its environment.
work
4.Scope Policy is often related to It is temporary in nature
one particular objective
5.Example Purchasing policy, Pricing strategy.
recruitment policy, Pricing
policy, etc.,
 Difference between Policies & Rules
Basis Policies Rules
1.Meaning A policy is a standing plan for Specific statements that tell
recurring questions people what is to be done and
what is not to be done
2.Nature Policy is expressed in the form Rules are both specific and
of general guidelines rigid

3.Purpose Policies lay down the broad Rules help to maintain

parameters within which discipline and ensure smooth
managers are expected to functioning of the enterprise
work

4.Scope Policy is often related to one Rules are formulated within

particular objective the policy and can be changed
only when there is a change in
the policy

5.Example Purchasing policy, recruitment No use of mobile phones

policy, pricing policy, etc., during working hours.
Difference between Procedures & Rules
Basis Procedures Rules
1.Meaning Procedures specify series Specific statements that
of steps required to be tell people what is to be
taken in chronological done and what is not to be
order. done
2.Nature They determine the exact Rules are both specific and
manner in which a task is rigid
to be performed.
3.Purpose They facilitate Rules help to maintain
implementation of policies discipline and ensure
smooth functioning of the
enterprise
4.Flexibility They are uniform and allow Rules are formulated
no discretion during within the policy and can
implementation be changed only when
there is a change in the
policy
5.Example Procedure for admission or No use of mobile phones
purchase during working hours.
Difference between Procedures & Methods
Basis Procedures Methods
1.Meaning Procedures specify series Methods prescribe the way
of steps required to be in which a specific task or a
taken in chronological procedure must be
order. performed.
2.Nature They determine the exact Methods are specific but
manner in which a task is flexible
to be performed.
3.Purpose They facilitate Methods help carry out job
implementation of policies efficiency
4.Scope They are uniform and allow Methods can be modified
no discretion during in the light of changes that
implementation take place in business
environment.
5.Example Procedure for admission or Methods of payment of
purchase fees, RTGS, Credit cards
etc.,
Difference between Policies & Procedures
Basis Policies Procedures
1.Meaning A policy is a standing plan Procedures specify series
for recurring questions of steps required to be
taken in chronological
order.
2.Nature Policy is expressed in the They determine the exact
form of general guidelines manner in which a task is
to be performed.
3.Purpose Policies lay down the broad They facilitate
parameters within which implementation of policies
managers are expected to
work
4.Scope Policy is often related to They are uniform and allow
one particular objective no discretion during
implementation
5.Example Purchasing policy, Procedure for admission or
recruitment policy, pricing purchase
policy, etc.,
 Difference between Procedures &
Strategies
Basis Procedures Strategies
1.Meaning Procedures specify series Strategies refers to plans
of steps required to be prepared to face threats
taken in chronological and challenges
order.
2.Nature They determine the exact They are non-repetitive
manner in which a task is plans, may need frequent
to be performed. changes.
3.Purpose They facilitate Strategies strive to create
implementation of policies an identity of a business in
its environment.
4.Scope They are uniform and allow It is temporary in nature
no discretion during
implementation
5.Example Procedure for admission or Pricing strategy.
purchase
 Difference
Basis
between
Rules
Rules & Methods
Methods
1.Meaning Specific statements that Methods prescribe the way
tell people what is to be in which a specific task or a
done and what is not to be procedure must be
done performed.
2.Nature Rules are both specific and Methods are specific but
rigid flexible
3.Purpose Rules help to maintain Methods help carry out job
discipline and ensure efficiency
smooth functioning of the
enterprise
4.Scope Rules are formulated Methods can be modified
within the policy and can in the light of changes that
be changed only when take place in business
there is a change in the environment.
policy
5.Example No use of mobile phones Methods of payment of
during working hours. fees, RTGS, Credit cards
etc.,