PLANNING

MEANING

• Planning is deciding in advance what to do and how to do.

• Planning seeks to bridge the gap between where we are and where we want to go.
• Planning involves setting objectives and developing appropriate courses of action to achieve these
objectives.
• Planning is closely connected with creativity and innovation.
• It is concerned with both ends and means i.e., what is to be done and how it is to be done.

FEATURES OF PLANNING
1. Planning focuses on achieving objectives:
• Specific goals are set out in the plans along with the activities to be undertaken to achieve
the goals.
• Thus, planning is purposeful.
• Planning has no meaning unless it contributes to the achievement of predetermined
organisational goals.

2. Planning is a primary function of management:

• Planning lays down the base for other functions of management.
• All other managerial functions are performed within the framework of the plans drawn.
• Thus, planning precedes other functions.

3. Planning is pervasive:
• Planning is required at all levels of management as well as in all departments of the
organisation.
• It is not an exclusive function of top management nor of any particular department.
• But the scope of planning differs at different levels and among different departments.

4. Planning is continuous:
• Plans are prepared for a specific period of time, may be for a month, a quarter, or a year.
• At the end of that period there is need for a new plan to be drawn on the basis of new
requirements and future conditions.
• Hence, planning is a continuous process.

5. Planning is futuristic:
• Planning essentially involves looking ahead and preparing for the future.
• Planning is, therefore, regarded as a forward looking function based on forecasting.
• Through forecasting, future events and conditions are anticipated and plans are drawn
accordingly.

6. Planning involves decision making:

• Planning involves choice from among various alternatives and activities.
• Planning presupposes the existence of alternatives.
• Planning, thus, involves thorough examination and evaluation of each alternative,
• And choosing the most appropriate one.
 7. Planning is a mental exercise:
• Planning requires application of the mind involving foresight, intelligent imagination and
sound judgement.
• It is basically an intellectual activity of thinking rather than doing,
• Planning requires logical and systematic thinking rather than guess work.

IMPORTANCE OF PLANNING
1. Planning provides directions:
• By stating in advance how work is to be done planning provides direction for action.
• Planning ensures that the goals or objectives are clearly stated
• Act as a guide for deciding what action should be taken and in which direction.

2. Planning reduces the risks of uncertainty:

• Planning enables a manager to look ahead and anticipate changes.
• By deciding in advance the tasks to be performed,
• Planning shows the way to deal with changes and uncertain events.
• Changes or events cannot be eliminated but they can be anticipated
• And managerial responses to them can be developed.

3. Planning reduces overlapping and wasteful activities:

• Planning ensures clarity in thought and action, work is carried on smoothly without
interruptions.
• Useless and redundant activities are minimised or eliminated.
• It helps in avoiding confusion and misunderstanding.
• It is easier to detect inefficiencies and take corrective measures to deal with them.

4. Planning promotes innovative ideas:

• 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. Planning facilitates decision making:

• Planning helps the manager to look into the future and
• make a choice from amongst various alternative courses of action.
• The manager has to evaluate each alternative and select the most viable proposition.
• Planning involves setting targets and predicting future conditions,
• Thus helping in taking rational decisions.

6. Planning establishes standards for controlling:

• Planning provides the goals or standards against which actual performance is measured.
• By comparing actual performance with some standard, deviations can be identified.
• If there is any deviation it can be corrected.
• Therefore, planning is a prerequisite for controlling.
LIMITATIONS OF PLANNING
1. Planning leads to rigidity:
• Plan is drawn up with specific goals to be achieved within a specific time frame.
• Once plans are drawn, managers may not be in a position to change them.
• This kind of rigidity in plans may create difficulty.
• Following a pre-decided plan in changed circumstances may not turn out to be in the
organisations interest.

2. Planning may not work in a dynamic environment:

• The business environment is dynamic, nothing is constant.
• The organisation has to constantly adapt itself to changes.
• It becomes difficult to accurately assess future trends in the environment.
• Planning cannot foresee everything and thus, there may be obstacles to effective
planning.

3. Planning reduces creativity:

• Planning is an activity which is done by the top management.
• As a consequence, middle management and other decision makers are neither
allowed to deviate from plans nor are they permitted to act on their own.
• Thus, much of the initiative or creativity inherent in them also gets lost or reduced.
• Planning in a way reduces creativity.
• There is nothing new or innovative.

4. Planning involves huge costs:

• When plans are drawn up huge costs are involved in their formulation.
• These may be in terms of time and money.
• Detailed plans require scientific calculations to ascertain facts and figures.
• The costs incurred sometimes may not justify the benefits derived from the plans.
• There are a number of incidental costs like expenses on discussions with professional
experts and preliminary investigations to find out the viability of the plan.

5. Planning is a time-consuming process:

• Sometimes plans to be drawn up take so much of time that there is not much time left
for their implementation.

6. Planning does not guarantee success:

• The success of an enterprise is possible only when plans are properly drawn up and
implemented.
• Managers have a tendency to rely on previously tried and tested successful plans.
• This kind of complacency and false sense of security may actually lead to failure
instead of success.
PROCESS OF PLANNING
1. Setting Objectives:
• The first and foremost step is setting objectives.
• Objectives may be set for the entire organisation and each department or unit within the
organisation.
• Objectives specify what the organisation wants to achieve.
• Objectives should be stated clearly for all departments, units and employees.
• If the end result is clear it becomes easier to work towards the goal.

2. Developing Premises:
• Planning is concerned with the future which is uncertain.
• Therefore, the manager is required to make certain assumptions about the future.
• These assumptions are called premises.
• Assumptions are the base material upon which plans are to be drawn.
• The base material may be in the form of forecasts, existing plans or any past information
about policies.

3. Identifying alternative courses of action:

• Once objectives are set, assumptions are made. Then the next step would be to act upon
them.
• There may be many ways to act and achieve objectives.
• All the alternative courses of action should be identified.
• The course of action which may be taken could be either routine or innovative.

4. Evaluating alternative courses:

• The next step is to weigh the pros and cons of each alternative.
• Each course will have many variables which have to be weighed against each other.
• The positive and negative aspects of each proposal need to be evaluated in the light of
the objective to be achieved.

5. Selecting an alternative:
• This is the real point of decision making.
• The best plan has to be adopted and implemented.
• The ideal plan would be the most feasible, profitable and with least negative
consequences.
• Sometimes, a combination of plans may be selected instead of one best course.
• The manager will have to apply permutations and combinations and select the best
possible course of action.

6. Implementing the plan:

• This is the step where other managerial functions also come into the picture.
• The step is concerned with putting the plan into action, i.e., doing what is required.

7. Follow-up action:
• To see whether plans are being implemented and activities are performed according to
the plans.
• Monitoring the plans is equally important to ensure that objectives are achieved.
TYPES OF PLANS
Single-use and standing plans
Single-use Plan:
➢ A single-use plan is developed for a one-time event or project.
➢ Such a course of action is not likely to be repeated in future, i.e., they are for non-recurring
situations.
➢ The duration of this plan may depend upon the type of the project.
➢ These plans include budgets, programmes and projects.

Standing Plan:
➢ A standing plan is used for activities that occur regularly over a period of time.
➢ It is designed to ensure that internal operations of an organisation run smoothly.
➢ Such a plan greatly enhances efficiency in routine decision-making.
➢ It is usually developed once but is modified from time to time to meet business needs as
required.
➢ Standing plans include policies, procedures, methods and rules.

Objectives
• The first step in planning is setting objectives.
• Objective simply states what organisation wants to achieve, i.e., the end result of activities.
• All other managerial activities are also directed towards achieving these objectives.
• They are usually set by top management of the organisation.
• They serve as a guide for overall business planning.
• Different departments or units in the organisation may have their own objectives.
• Objectives should be measurable in quantitative terms, in the form of a written statement of
desired results to be achieved within a given time period.

Strategy
• A strategy provides the broad contours (outline) of an organisation’s business.
• It refers to future decisions defining the organisations direction and scope in the long run.
• Thus, strategy is a comprehensive plan for accomplishing an organisation objectives.
• This comprehensive plan includes three dimensions,
(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.

Policy
• Policies are general statements that guide thinking or channelise energies towards a particular
direction.
• Policies provide a basis for interpreting strategy.
• They are guides to managerial action and decisions in the implementation of strategy.
• A policy is the general response to a particular problem or situation.
Procedure
• Procedures are routine steps on how to carry out activities.
• They detail the exact manner in which any work is to be performed.
• They are specified in a chronological order.
• They are generally meant for insiders to follow.
• The sequence of steps generally enforce a policy and to attain pre-determined objectives.
• Policies and procedures are interlinked with each other.

Method
• Methods provide the prescribed ways or manner in which a task has to be performed
considering the objective.
• It deals with a task comprising one step of a procedure and specifies how this step is to be
performed.
• The method may vary from task to task.
• Selection of proper method saves time, money and effort and increases efficiency.

Rule
• Rules are specific statements that inform what is to be done.
• They do not allow for any flexibility or discretion.
• It reflects a managerial decision that a certain action must or must not be taken.
• They are usually the simplest type of plans because there is no compromise or change unless a
policy decision is taken.

Programme
• Programmes are detailed statements about a project which outlines the objectives, policies,
procedures, rules, tasks, human and physical resources required and the budget to implement
any course of action.
• Programmes will include the entire gamut of activities as well as the organisation’s policy.
• The minutest details are worked out i.e., procedures, rules, budgets, within the broad policy
framework.

Budget
• A budget is a statement of expected results expressed in numerical terms.
• It is a plan which quantifies future facts and figures.
• It becomes easier to compare actual figures with expected figures and take corrective action
subsequently.
• Thus, a budget is also a control device from which deviations can be taken care of.