Swaraj Institute of Management Principle and Practices of Management

PLANNING
 MEANING OF PLANNING,
 DEFINITION OF PLANNING,
 TYPES OF PLANNING PROCESS,
 LIMITATION OF PLANNING

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Swaraj Institute of Management Principle and Practices of Management

DEFINITION OF PLANNING:
PLANNING
According to James Lundy:

“Planning means the determination of what is to be done, how

MEANING OF PLANNNING: it is to be done, who is to do it, and how results are evaluated.”

Planning may be defined as deciding in advance what According to Henry Feyol:

to be done in future. It is the process of thinking before doing. It “Planning is deciding the best alternatives among others to
involves determination of goals as well as the activities required to be perform different managerial operation in order to achieve the pre-
undertaken to achieve the goals. determined goals.”
In the planning process managers anticipate the future
and accordingly decide what activities must be undertaken. Planning NATURE OF PLANNING:
deciding in advance – What to do, How to do, When and by whom.
1. PLANNING IS GOAL ORIENTED:
CONCEPT OF PLANNING
Organization is set up with a general purpose in view.
Specific goals are set out in the plans along with the activities to
be achieving the goals. Thus, planning is purposeful. Planning has
no meaning unless it contributes to the achievement of
GAP predetermined organizational goals.

2. PLANNING IS A PRIMARY FUNCTION:

HOW TO BRIDGE THE GAP?
Planning lays down the base for other functions of
management. All other functions are performed within the
framework of plans drawn. Thus, planning precedes other
function. The other functions of management are interrelated and
(Current Status) (Future Image) equally important. However, planning provides the base of all the
other functions.
Where we are? Where we want to go?
3. PLANNING IS PERVASIVE:

Planning is required at all levels of management as well as in

all departments of the organization. It is neither an exclusive
function of top management nor of any particular department. But
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 Swaraj Institute of Management Principle and Practices of Management

the scope of planning differs at different level and among different intellectual activity of thinking rather than doing, because planning
departments. determines the action to be taken.

4. PLANNING IS FLEXIBLE: OBJECTIVE OF PLANNING:

Plans are drawn on the basis of forecasts. Since the future is
1. REDUSE UNCERTAINTY:
uncertain, planning must cope with change in future condition.
Future is uncertain. Planning may convert the uncertainty into
Activities planned with certain assumptions about the future may
certainty. This is possible to some extent by, planning which is
not come true.
reducing uncertainty.
5. PLANNING IS CONTINUOUS:
2. BRING CO0OPERATION AND CO-ORDINATION:
Plans are prepared for the specific period of time, may be for Planning can bring co-operation and co-ordination among various
month, a quarter, or a year. At the end of that period there is need sectors of the organization. The rivalries and conflicts among
for a new plan to be drawn on the basis of new requirements and departments could be avoided through planning.
future conditions. Hence planning is never ending activity. It is a
continuous process. 3. ECONOMY IN OPERATION:
As already pointed out, planning selected best alternative among
6. PLANNING IS FUTURISTIC:
various alternatives this will lead to the best utilization of
Planning essentially involves looking ahead and future. The recourses. The objectives of the organization are achieved easily.
purpose of planning is to meet future event effectively to the best
advantage of an organization. Through forecasting future events 4. ANTICIPATE THE UNPREDICTABLE CONTINGENCIES:
and conditions are anticipated and plans are drawn accordingly. Some events could not be predictable. These events are termed as
contingencies. These events may affect the smooth functioning of
7. PLANNING INVOLVES CHOICE: an enterprise.

Planning essentially involves choice from among various

5. ACHIVING THE PRE-DETERMINED GOALS:
alternatives and activities. If there is one possible goal or only
Planning activities are aimed at achieving the objectives of the
one possible course of action, there is no need for planning
enterprise. The timely achievements of objectives are possible only
because there is no choice.
effective planning.
8. PLANNING IS A MENTAL EXERCISE:
6. REDUCE COMPETITION:
Planning requires application of the mind involving foresight, The existence of competition enables the enterprise to get a
intelligent imagination and sound judgment. It is basically an chance for growth. At the same time, stiff competition should be
avoided. It is possible, to reduce competition through planning.

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 Swaraj Institute of Management Principle and Practices of Management

TYPES OF PLANS: a. OBJECTIVE:

Effective management implies management by objective.

1. STANDING OR REPEATED USE PLAN:-
Objectives are goal established to guide of the enterprise. So, all
These plans are prepared by managers at different levels. They are planning work must spell out in clear terms the objectives to be
intended for repeated use and are designed to deal with recurring realized from proposed business activities.
problems. When a particular and familiar problem arises, a
standing plan provides a ready guide to action. They form one of b. POLICIES:
the important means for building predictable patterns of behaviour
Planning also requires laying down of policies for the easy
in a business firm. When a group of people live together or work
realization of the objectives of business. Policies provide a
together, they must be able to anticipate each other’s action. This
standing answer to recurring questions and problems. They are
is especially necessary for interdependent activities which require
basic guides to action.
such ability to anticipate.

c. PROCEDURES AND METHODS:

Objectives and policies will lose much of their significance, if the

Types of planning is cannot lay down the procedure and methods for work
Plans performance. Procedures will indicate and outline a series of task
for a specific course of action. Method is the manner of work
performance and follows the set procedures.

d. RULES:

Standing or Single Use or Contingency A rule specifies necessary course of action in respect of a
Repeated use Operating Plans situation. It acts as a guide and is in the nature of a decision
made by the management. This decision lays down what is to be
1. Objectives 1. Programmes
done and what is not to be done In a particular situation. The
2. Policies 2. Budgets rules prescribe a definite and rigid course of action without any
scope for deviation or discretion entails penalty.
3. Procedures 3. Projects
e. STRATEGY:
4. Rules
They are device formulated from the competitive standpoint by
5. Strategy
being fully informed somehow about the planning secrets of the
competitors. They are a kind business spying and are applied as

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the situation demands. So, the success of the plan requires that it So, it is include In a single-use plan. The task of management is
should be strategy oriented. made easier by setting up the work in a project.

2. SINGLE - USE OR OPERATING PLANS: 3. CONTINGENCY PLANS:

Contingency plans as the name suggest are the plans which are
Standing plan established a structure of customary behaviour for the formulated in some contingency. The plan is short term and time
desired results. They are highly useful devices for managerial is deciding factor in the implementation of this plan. These are
decision-making. However, besides these standing plans, a manager most important and prior in nature. Decision taken during this is
can resort to single- use plans to decide in advance the action to be generally non- programmed but some time programmed decisions
taken to meet a particular problem or a problems arising within a are also taken. Organizations usually plan in advance to face any
given period. Once the problem is over or met or the time is passed, a contingency to avoid chance to bear losses. These plans are
new plan is devised for the next period or problem. This type of extremely risky in nature.
planning is called single-use plans.
EXAMPLE: In most organization contingency fund and contingency
a. PROGRAMMES: stock of inventory are maintained in advance in order to face any
Programmes are precise plans of action followed in proper contingency in a near future. Sometimes government makes some
sequence in accordance with objectives, policies and plans to control the market price of the commodity in contingency like
procedures. Thus, a programme lays down the principle steps to natural calamities like earthquake, flooding etc. And manmade
be undertaken to accomplish an objective and sets an contingencies like strikes, wars, and riots etc.
approximate time for its fulfillment. A programme may
accordingly be a major or a minor one, a long-term one or a PLANNING PROSESS:
medium or short-term one. It is included in a single-use plan
because it will not be used in the same form once its task is 1. PERCEPTION OF OPPORTUNITIES:
over.
Perception of opportunities is not strictly a planning process.
b. BUDGETS: However, this awareness is very important for planning process
Budget estimates the men, money, material and equipment, in because it leads to formulation of plans by providing clue whether
numerical terms, required for the implementation of plans and opportunities exist for taking up particular plans. From this point of
programmes. It covers a particular period and when the period is view, it can be considered as the beginning of planning process.
over, a fresh budget comes into being. Budget, thus, is the main Perception of opportunities and the ability to see them clearly and
instrument of a single-use plan. completely, knowledge of where the organization stands in the light
c. PROJECTS: of its strengths and weaknesses, an understanding of why the
A project is particular job that need to be done in connection with organization wants to solve uncertainty, and a vision of what it
a general programme. So, a single step in a programme is set up a expects to gain.
project. A period has a distinct object and a clear cut termination.

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2. ESTABLISHING OBJECTIVES: attempt is made do evaluated how each alternative contributes to

the organizational objectives in the light of its resources and
At this stage, major organizational and unit objectives are set. constraints.
Objectives specify the results expected and indicate the end
points of what is to be done, where the primary emphasis is to be 6. CHOICE OF ALTERNATIVE:
placed, and what is to be accomplished by the various types of
plans. After the evaluation of various alternatives, the fit one is selected.
Sometimes evaluation shows that more than one alternative is
equally good. In such a case, a planner may choose more than
3. PLANNING PREMISES:
one alternative. There is another reason for choosing more than
After determination of organizational goals, the next step is one alternative. Alternative course of action is to be undertaken in
establishing the planning premise that is the condition under which future which is not constant. A course of action chosen keeping in
planning assumptions – the expected environmental and internal view the various planning premises may not be the best one if
condition. Thus planning premises are external and internal. there is change in planning premises. Therefore, planner must be
External premises includes total factor in task environment like ready with the alternative, normally knows as contingency plan,
political, social, technological, competitors plans and actions, which can be implemented in changed situations.
government policies, etc. Internal factors include organizations
7. FORMULATION OF SUPPORTING PLANS:
policies, resources of various types and the ability of the
organization to withstand the environmental pressure. After formulating the basic plan, various plans derived so as to
support the main plan. In an organization there can be various
4. IDENTIFICATION OF ALTERNATIVES:
derivative plans like planning for buying equipments, buying raw
Based on the organizational objectives and planning premises, materials, recruiting and training personnel, developing new
various alternatives can be identified. The concepts of various product, etc. these derivative plans are formulated out of the main
alternatives suggest that a particular objective can be achieved plan and therefore, they support it.
through various actions.
8. ESTABLISHING SEQUENCE OF ACTIVITIES:
EXAMPLE: If an organization has set its objectives to grow further, it
can be achieved in several ways like expanding in the same field of After formulating basic and derivative plans, the sequence of
business or product line, diversifying in other areas, joining hands with activities is determined so that plans are put into action. Based on
other organizations, or taking over another organization and so on. plans at various levels, it can be decided who will do what and at
what time. Budgets for various periods can be prepared to give
5. EVALUATION OF ALTERNATIVES:
plans more concrete meaning for implementation.
Various alternatives which are considered in terms of preliminary
criteria may be taken for detailed evaluation. At this stage, an

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Perception of Opportunities LIMITATIONS OF PLANNING:

1. RIGIDITY:

The existence of a plan puts managerial activities in a rigid

Establishing Objectives
framework. Programmes are carried out according to the plan and
deviations are considered to be highly undesirable. This attitude
makes managers and employees inflexible in their operations.

Planning Premises 2. MISDIRECTION:

Planning may be used by a particular individual and groups to serve

their own interest. Attempts are made by them to influence setting of
objectives, formulation of plans and programs to suit their limited
Identification of Alternatives
aims and objects, ignoring the interest of the organization. As a
result planning may not serve any useful purpose.

3. TIME CONSUMING:
Evaluation of Alternatives
Planning is a time consuming process. It requires collection of
information, its analysis and interpretation. The process may take
consideration time. Thus, planning is not practicable during
Choice of Alternatives emergencies and crisis when quick decisions are needed.

4. LACK OF ACCURATE INFORMATION:

Planning is concerned with future activity and hence, its quality will
Formulation of Supporting Plans be determined by the quality of forecast of future events. As no
manager can predict completely and accurately the events of future,
the planning may pose problems in operation. This problem is
further increased by inaccurate planning premises.
Establishing Sequence of Activities 5. PROBLEMS OF CHANGE:

The problem of change is often complex in long-range planning.

Fig: Planning Process Present conditions tend to weigh heavily in planning and
overshadowing future needs, may sometimes result in error of

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judgments. Such factors as technology, consumer tastes and 7. EXTERNAL INFLEXIBILITIES:

desires, business conditions and many others change rapidly and
often unpredictably. In such conditions, planning activities taken Besides the internal inflexibilities, managers are confronted with
in one period may not be relevant for another period because the much external inflexibility and they do not have these.
conditions in the two periods may be quite different.
EXAMPLE: Managers have little or no control over social economic,
6. INTERNAL INFLEXIBILITIES: technological and political forces. Whether these change quickly or
slowly, they do stand in the way of effective planning.
Managers while going through the planning process have to work
in a set of given variables. These variables often provides less a. POLITICAL CLIMATE:
flexibility in planning which is needed to cope up with the change in Every organization, to a greater or lesser degree, is faced with
future events. the inflexibility of the political climate existing at any given time.
Attitudes of government towards business, taxation policy,
a. PSYCHOLOGICAL INFLEXIBILITIES: regulation of business etc. generate constraints on the
organizational planning process. Government being major
Psychological inflexibility is in the form of resistance to change. supplier or certain raw materials, finance institution through
Managers and employees in the organization may develop patterns financial institution may affect the business organization
of through and behavior that are hard to change. They look more in considerably.
terms of present rather than future. b. TRADE UNION:
The existence of trade union, particularly those organized at the
b. POLICY AND PROCEDURAL INFLEXIBILTY:
national level, tends to restrict freedom of planning. Apart from
Another internal inflexibility emerges because of organizational
wages and other associated benefits, they affect the planning
policies and procedure. Once these are established, they are
process by putting limitations and the work that can be
difficult to change. Though these policies, procedures, and rules
undertaken by the organization. They set up the work rule and
are meant to facilitate managerial action by providing guidelines,
productivity. To that extent, managers are not free to make
they often tend to be too exacting and numerous that they leave
decisions of their choice.
very little scope for managerial initiative and flexibility.
c. TECHNOLOGICAL CHANGES:
c. CAPITAL INVESTMENT:
The rate and nature of technology changes also present very
In most cases, once funds are invested in fixed assets, the ability to
definite limitations upon planning. An organization is engaged in
switch future course of action becomes rather limited, and
its process with a given technology. When there is a change in
investments itself becomes a planning premises. During the entire
technology, it has to face numerous problem resulting into higher
life of the fixed assets, this inflexibility continuous unless the cost of production and less competitive competence in the
organization can reasonably liquidate its investment or change its market. However, the organization cannot change its technology
course of action, or unless it can afford to write off the investment. so frequently. Thus, higher rate of technology changes more
would be the problem of long- range planning.

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