Planning

Planning is the function of management that involves setting objectives and

determining a course of action for achieving those objectives. Planning
requires that managers be aware of environmental conditions facing their
organization and forecast future conditions. It also requires that managers be
good decision makers.

Planning is a process consisting of several steps. The process begins

with environmental scanning which simply means that planners must be
aware of the critical contingencies facing their organization in terms of
economic conditions, their competitors, and their customers. Planners must
then attempt to forecast future conditions. These forecasts form the basis for
planning.

Planners must establish objectives, which are statements of what needs to

be achieved and when. Planners must then identify alternative courses of
action for achieving objectives. After evaluating the various alternatives,
planners must make decisions about the best courses of action for achieving
objectives. They must then formulate necessary steps and ensure effective
implementation of plans. Finally, planners must constantly evaluate the
success of their plans and take corrective action when necessary.

Importance of Planning

Planning is definitely significant as it directs us where to go, it furnishes direction and

decreases the danger of risk by making predictions. The significant advantages of
planning are provided below:

 Planning provides directions: Planning assures that the objectives are

certainly asserted so that they serve as a model for determining what action
should be taken and in which direction. If objects are well established, employees
are informed of what the company has to do and what they need do to
accomplish those purposes.
 Planning decreases the chances of risk: Planning is an activity which permits
a manager to look forward and predict changes. By determining in prior the tasks
to be completed, planning notes the way to deal with changes and unpredictable
effects.
 Planning decreases overlapping and wasteful activities: Planning works as
the foundation of organising the activities and purposes of distinct branches,
departments, and people. It assists in avoiding chaos and confusion. Since
planning guarantees precision in understanding and action, work is conducted on
easily without delays.
 Planning encourages innovative ideas: Since it is the primary function of
management, new approaches can take the form of actual plans. It is the most
 challenging project for the management as it leads all planned actions pointing
to growth and of the business.
 Planning aids decision making: It encourages the manager to look into the
future and make a decision from amongst several alternative plans of action. The
manager has to assess each option and pick the most viable plan.
Advantages and disadvantages of planning
Advantages of Planning
Planning does provide benefits that facilitate progress even when faced with
uncertainty and a constantly changing environment. Some of the benefits include
the following:
 Planning provides a guide for action. Plans can direct everyone’s actions toward
desired outcomes. When actions are coordinated and focused on specific
outcomes they are much more effective.
 Planning improves resource utilization. Resources are always scarce in
organizations, and managers need to make sure the resources they have are
used effectively. Planning helps managers determine where resources are most
needed so they can be allocated where they will provide the most benefit.
 Plans provide motivation and commitment. People are not motivated when they
do not have clear goals and do not know what is expected of them. Planning
reduces uncertainty and indicates what everyone is expected to accomplish.
People are more likely to work toward a goal they know and understand.
 Plans set performance standards. Planning defines desired outcomes as well as
mileposts to define progress. These provide a standard for assessing when things
are progressing and when they need correction.
 Planning allows flexibility. Through the goal-setting process, managers identify
key resources in the organization as well as critical factors outside the
organization that need to be monitored. When changes occur, managers are
more likely to detect them and know how to deploy resources to respond.
Disadvantages of planning
 Planning prevents action. Managers can become so focused on
planning and trying to plan for every eventuality that they never get
around to implementing the plans. This Is called “death by planning.”
Planning does little good if it does not lead to the other functions.
 Planning leads to complacency. Having a good plan can lead managers
to believe they know where the organization is going and how it will
get there. This may cause them to fail to monitor the progress of the
plan or to detect changes in the environment. As we discussed earlier,
planning is not a one-time process. Plans must be continually adjusted
as they are implemented.
 Plans prevent flexibility. Although good plans can lead to flexibility, the
opposite can also occur. Mid- and lower-level managers may feel that
they must follow a plan even when their experience shows it is not
working. Instead of reporting problems to upper managers so changes
can be made, they will continue to devote time and resources to
ineffective actions.
  Plans inhibit creativity. Related to what was said earlier, people in the
organization may feel they must carry out the activities defined in the
plan. If they feel they will be judged by how well they complete
planned tasks, then creativity, initiative, and experimentation will be
inhibited. Success often comes from innovation as well as planning,
and plans must not prevent creativity in the organization.
Steps in planning

Following are the steps in the planning process:

Setting Objectives: The idea behind planning is to achieve desired

objectives. Therefore, the first step is to clearly define and describe the
objectives of the organization. Firstly, the major objectives should be
specified, and then they should be broken down into individual, sectional and
departmental objectives. Objectives serve as guidelines for discussion-
making in terms of resource allocation. Work schedule, nature of actions,
etc., are kept in mind while setting objectives. All efforts must be made to
anticipate the problems and relevant opportunities that are likely to arise in
the future. For example, an enterprise ABC Ltd. Is opening their new branch
of laptops, firstly they have to specify the objective, i.e., to sell 3,000 units
this year, which is double the previous year’s sales. For achieving this aim,
they have to distribute this objective into various departments, such as
production, marketing, sales, and finance departments. By distributing the
main objective into departmental objectives, the company will face fewer
problems in managing its organization.

Developing Planning Premises: The next step in planning is to establish

premises. Planning premises are the anticipated environment in which the
plans are expected to operate. These include assumptions and forecasts in
the future and knowing conditions that will affect the course of the plan. In
short, these provide the environment and the boundaries within which the
plans will be executed. Planning premises may be classified as internal and
external premises, controllable, semi-controllable, and uncontrollable
premises, tangible and intangible premises, and the last foreseeable and
unenforceable premises. For example, ABC Ltd. Company has set the
objective to sell 3,00,000 units of laptops this year. For this, they need to
gather information by forecasting, as it is an important technique in
developing premises. The enterprise has set this objective after forecasting
the increase in demand for laptops due to work from the home policy. An
accurate forecast is very important for successful plans.
Identifying alternative courses of action: After setting the
objectives and making assumptions about the future. The next step is
to determine alternative courses of action through which the
organization can achieve its objectives. In order to identify the various
alternative courses of action, it is required to collect all necessary
information from primary and secondary sources. The information
collected must be correct and believable. The only information which
is directly and strategically related to the achievement of the desired
objective should be considered. For every plan, there are several
options. All the alternative courses of action should be identified. For
example, ABC Ltd. should have an innovative way that can be
adopted by involving employees and consumers in sharing their own
ideas. The company has many alternatives like decreasing prices,
increasing advertisement, promotion, and after-sale service. In
important projects, the enterprise generates more alternatives
through discussion amongst the members of the organization.

Evaluating alternative courses: After identifying different

alternatives the next step is to evaluate each alternative. Evaluation
means the study of the performance of various actions. All the
possible alternatives should be evaluated keeping in mind their
expected cost and benefit to the organization. Comparison among the
alternatives should be made in terms of factors, such as the risk
involved, planning premises, goals to be achieved, etc. The positive
and negative points of each alternative must be thoroughly examined,
and thereafter planner should make a choice. For example, ABC Ltd.
Should evaluate all the possible alternatives and check their positive
and negative points.

Selecting an alternative: After evaluating various alternatives, the

next step is to select the most suitable force of action. The basic,
detailed, and derivative plans, such as policies, rules, programs, and
budgets should be formulated. This is because the derivative plans
help in the implementation of the basic plans. Most of the plans may
not always be subjected to mathematical analysis. In these cases, the
subject and the management experience, judgment, and at times
institute play an important role in setting the most suitable
alternative. Many times combination of plans is also selected instead
of selecting one best course. For example, ABC Ltd. Will start T.V
advertisements, online marketing, and direct contact with MNCs to
increase sales, as selecting the most suitable alternative will increase
the profit of the company.
Implementing the plan: This step is concerned with transforming
the plan into action. The plan must be communicated to the
employees in detail. This, in turn, will help to secure cooperation from
them. Useful suggestions from employees must be considered, and
they should be motivated to execute the plan to the fullest of their
abilities. The plan has to be effectively implemented by the real
executor. This step would also involve organizing labour and
purchasing machinery. For example, ABC Ltd. Starts hiring more
salesmen in the company to contact and connect with more MNCs.
The company will start creating more interesting advertisements on
the online platform. They will establish more service workshops in
various cities.

Follow-up- action: After implementing the plan, the last step is to

periodically review the existing plan to ensure that the plan is
effective. The plan must be consistently monitored, and in case of any
deficiency, it should be modified and adjusted. For example, a proper
feedback mechanism was developed by ABC Ltd. So that they can
take all the complaints and reviews from their consumers and provide
a better service experience. Actual customer response, revenue
collection, employee response, etc., are very important for the
company.

Types of planning
Strategic Plans

Strategic plans are designed with the entire organization in mind and begin
with an organization’s mission. Top-level managers, such as CEOs or
presidents, will design and execute strategic plans to paint a picture of the
desired future and long-term goals of the organization. Essentially, strategic
plans look ahead to where the organization wants to be in three, five, even
ten years. Strategic plans, provided by top-level managers, serve as the
framework for lower-level planning.

Strategic planning is a process in which an organization’s leaders define their

vision for the future and identify their organization’s goals and objectives.
The process includes establishing the sequence in which those goals should
be realized so the organization can reach its stated vision. Strategic planning
is forward looking. It differs from traditional business planning, which
typically focuses on short-term, tactical goals, such as how a budget is
divided up. The time covered by a business plan can range from several
months to several years.

The product of strategic planning is a strategic plan. It is often reflected in a

plan document or other media. These plans can be easily shared, understood
and followed by various people including employees, customers, business
partners and investors.

Tactical Plans

Tactical plans support strategic plans by translating them into specific plans
relevant to a distinct area of the organization. Tactical plans are concerned
with the responsibility and functionality of lower-level departments to fulfill
their parts of the strategic plan.

Tactical planning is the step taken after a business or team creates a

strategic plan to break that plan into smaller objectives and goals. A tactical
plan is used to define goals and determine how they will be achieved through
actions and steps. Most tactical plans outline specific steps or actions that
will be taken to meet the goals of the larger strategic plan. These actions or
steps are then often delegated to the appropriate team members or
employees to ensure they are met in a timely fashion. In most cases, tactical
planning is implemented when a business or team needs to respond to an
immediate issue or situation. For example, a company that wants to win a
bid from another business must create a viable proposal that will be
successful. This proposal is often created using a tactical strategy, which
includes several small actions, such as reducing the price of the bid, to help
the company win the bid from the competition.

Operational Plans

Operational plans are the plans that are made by frontline, or low-level,
managers. All operational plans are focused on the specific procedures and
processes that occur within the lowest levels of the organization. Managers
must plan the routine tasks of the department using a high level of detail.

Operational planning is a documented plan that outlines the goals and key
objectives of an organization, and how they can be achieved. It ensures that
team members understand their responsibilities as well as what they need to
do.

The operational plan guides and helps the teams to stay on the required
project timeline and to make crucial decisions about the company’s long-
term goals.
 Steps in Planning Process

Following are the steps in the planning process:

Setting Objectives: The idea behind planning is to achieve desired

objectives. Therefore, the first step is to clearly define and describe the
objectives of the organization. Firstly, the major objectives should be
specified, and then they should be broken down into individual, sectional and
departmental objectives. Objectives serve as guidelines for discussion-
making in terms of resource allocation. Work schedule, nature of actions,
etc., are kept in mind while setting objectives. All efforts must be made to
anticipate the problems and relevant opportunities that are likely to arise in
the future. For example, an enterprise ABC Ltd. Is opening their new branch
of laptops, firstly they have to specify the objective, i.e., to sell 3,000 units
this year, which is double the previous year’s sales. For achieving this aim,
they have to distribute this objective into various departments, such as
production, marketing, sales, and finance departments. By distributing the
main objective into departmental objectives, the company will face fewer
problems in managing its organization.

Developing Planning Premises: The next step in planning is to establish

premises. Planning premises are the anticipated environment in which the
plans are expected to operate. These include assumptions and forecasts in
the future and knowing conditions that will affect the course of the plan. In
short, these provide the environment and the boundaries within which the
plans will be executed. Planning premises may be classified as internal and
external premises, controllable, semi-controllable, and uncontrollable
premises, tangible and intangible premises, and the last foreseeable and
unenforceable premises. For example, ABC Ltd. Company has set the
objective to sell 3,00,000 units of laptops this year. For this, they need to
gather information by forecasting, as it is an important technique in
developing premises. The enterprise has set this objective after forecasting
the increase in demand for laptops due to work from the home policy. An
accurate forecast is very important for successful plans.

Identifying alternative courses of action: After setting the objectives

and making assumptions about the future. The next step is to determine
alternative courses of action through which the organization can achieve its
objectives. In order to identify the various alternative courses of action, it is
required to collect all necessary information from primary and secondary
sources. The information collected must be correct and believable. The only
information which is directly and strategically related to the achievement of
the desired objective should be considered. For every plan, there are several
options. All the alternative courses of action should be identified. For
example, ABC Ltd. Should have an innovative way that can be adopted by
involving employees and consumers in sharing their own ideas. The
company has many alternatives like decreasing prices, increasing
advertisement, promotion, and after-sale service. In important projects, the
enterprise generates more alternatives through discussion amongst the
members of the organization.

Evaluating alternative courses: After identifying different alternatives the

next step is to evaluate each alternative. Evaluation means the study of the
performance of various actions. All the possible alternatives should be
evaluated keeping in mind their expected cost and benefit to the
organization. Comparison among the alternatives should be made in terms of
factors, such as the risk involved, planning premises, goals to be achieved,
etc. The positive and negative points of each alternative must be thoroughly
examined, and thereafter planner should make a choice. For example, ABC
Ltd. Should evaluate all the possible alternatives and check their positive and
negative points.

Selecting an alternative: After evaluating various alternatives, the next

step is to select the most suitable force of action. The basic, detailed, and
derivative plans, such as policies, rules, programs, and budgets should be
formulated. This is because the derivative plans help in the implementation
of the basic plans. Most of the plans may not always be subjected to
mathematical analysis. In these cases, the subject and the management
experience, judgment, and at times institute play an important role in setting
the most suitable alternative. Many times combination of plans is also
selected instead of selecting one best course. For example, ABC Ltd. Will
start T.V advertisements, online marketing, and direct contact with MNCs to
increase sales, as selecting the most suitable alternative will increase the
profit of the company.

Implementing the plan: This step is concerned with transforming the plan
into action. The plan must be communicated to the employees in detail. This,
in turn, will help to secure cooperation from them. Useful suggestions from
employees must be considered, and they should be motivated to execute the
plan to the fullest of their abilities. The plan has to be effectively
implemented by the real executor. This step would also involve organizing
labour and purchasing machinery. For example, ABC Ltd. Starts hiring more
salesmen in the company to contact and connect with more MNCs. The
company will start creating more interesting advertisements on the online
platform. They will establish more service workshops in various cities.

Follow-up- action: After implementing the plan, the last step is to

periodically review the existing plan to ensure that the plan is effective. The
plan must be consistently monitored, and in case of any deficiency, it should
be modified and adjusted. For example, a proper feedback mechanism was
developed by ABC Ltd. So that they can take all the complaints and reviews
from their consumers and provide a better service experience. Actual
customer response, revenue collection, employee response, etc., are very
important for the company.

Environmental scanning

It is a process of gathering information about the events and their

relationship with the internal and external environment of the organization.
The primary aim of environmental scanning is to find out the future
prospects of business organization. As a significant resource to the
management, the Environmental Scanning Committee enables the
management to make decisions from fundamental analysis of historical
events to estimate future events. The committee also helps in creating
action plans to address these upcoming events, analyzing action plans and
arranging appropriate resources for those plans, and putting management in
contact with fellow employees with the knowledge set to provide quality data
for decision making. The process of collecting, evaluating, and delivering
information for a strategic purpose is defined as environmental scanning.
The process of environmental scanning requires both accurate and
personalized data on the business environment in which the organization is
operating or considering entering.

Characteristics of Environmental Scanning

The characteristics of environmental scanning are as follows:

Continuous Process- The analysis of the environment is a continuous process

rather than being sporadic. The rapidly changing environment has to be
captured continuously to be on track.

Exploratory Process- Scanning is an exploratory process that keeps

monitoring the environment to bring out the possibilities and unknown
dimensions of the future. It stresses the fact that “What could happen” and
not ”What will happen”.
Dynamic Process- Environmental scanning is not static. It is a dynamic
process and depends on changing situations.

Holistic View- Environmental Scanning focuses on the complete view of the

environment rather than viewing it partially.

Components of Environmental Scanning

Internal Environmental Components- The components that lie within the

organization are internal components and changes in these affect the
general performance of the organization. Human resources, capital resources
and technological resources are some of the internal environmental
components.

External Environmental Components: The components that fall outside the

business organization are called external environmental components.
Although the components lie outside the organization, they still affect the
organizational activities. The external components can be divided into
microenvironmental components, and macro environmental components.

Process of Environmental Analysis

Scanning- The process of analyzing the environment to spot the factors that
may impact the business is known as Environmental Scanning. It alerts the
enterprise to take suitable strategic decisions before it reaches a critical
situation.

Monitoring- The data is gathered from various sources and is utilized to

monitor and find out the trends and patterns in the environment. The main
sources of collecting data are spying, publication talks with customers,
suppliers, dealers and employees.

Forecasting- The process of estimating future events based on previously

analyzed data is known as environmental forecasting.

Assessment- T In this stage, the environmental factors are assessed to

identify whether they provide an opportunity for the business or pose a
threat.

Importance of Environmental Scanning

Goal Accomplishment: The objectives of an organization cannot be fulfilled

unless it adapts itself to environmental changes. One has to adjust the
strategies to fit in the changing demands of the environment.
Threats and Weakness Identification: For an organization to grow, it must
minimize its threats and identify its weaknesses. This is made possible with
the help of environmental scanning with which better strategies can be
developed.

Future Forecast: Environmental changes are often unpredictable. An

organization cannot anticipate all the future events but based on the
analysis, it can make better strategic decisions in the future. Hence,
environmental analysis helps to forecast the prospects of the business.

Market Knowledge: Every organization must be aware of the ongoing

changes in the market. If it fails to incorporate strategic changes due to
changing demands, it will not be able to achieve its objectives.Focus on the
Customer: Environmental scanning and analysis make an organization
sensitive to the changing needs and expectations of the customer.

Opportunities Identification: With the analysis of the current environment, an

organization will be able to identify the possible opportunities and take
necessary steps.

Decision making process

Decision making is the process of making choices by identifying a decision,

gathering information, and assessing alternative resolutions.

Decision making in management is the process of making a choice between

two or more options. This involves evaluating the pros and cons of various
choices and choosing the best option to achieve a desired outcome. In
management decision making is about acting in a way that meets
organizational goals and objectives.

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature
of the decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what
information is needed, the best sources of information, and how to get it.
This step involves both internal and external “work.” Some information is
internal: you’ll seek it through a process of self-assessment. Other
information is external: you’ll find it online, in books, from other people, and
from other sources.
Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths
of action, or alternatives. You can also use your imagination and additional
information to construct new alternatives. In this step, you will list all
possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if

you carried out each of the alternatives to the end. Evaluate whether the
need identified in Step 1 would be met or resolved through the use of each
alternative. As you go through this difficult internal process, you’ll begin to
favor certain alternatives: those that seem to have a higher potential for
reaching your goal. Finally, place the alternatives in a priority order, based
upon your own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the
alternative that seems to be best one for you. You may even choose a
combination of alternatives. Your choice in Step 5 may very likely be the
same or similar to the alternative you placed at the top of your list at the end
of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether
or not it has resolved the need you identified in Step 1. If the decision
has not met the identified need, you may want to repeat certain steps of the
process to make a new decision. For example, you might want to gather
more detailed or somewhat different information or explore additional
alternatives.

Techniques of Decision making

SWOT Analysis

SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is one of the

most known decision-making techniques that involves evaluating your
internal and external factors to inform decision-making. This tool helps
managers to identify and prioritize critical issues and factors that impact
their decision-making. The main areas of a SWOT matrix represent four
crucial considerations in any decision:

Strengths: This refers to the positive characteristics that are present

internally. They may set you apart from the competitors and enable a
competitive edge. For instance, if your team wants to take up a new project,
the presence of skilled and self-motivated employees is a strength.

Weaknesses: On the other hand, weaknesses refer to internal factors that

can hurt your case. If your team is embarking on a new project, lack of
sufficient resources can be a weakness that sets you back compared to
others.

Opportunities: These are the areas where you can shine. Opportunities are
external factors that can enable your success. For example, an easy
partnership with another team that provides the capital for your employees
to execute the project is a great opportunity.

Threats: Threats refer to external factors that can hurt your performance.
The presence of a strong competitor, unfavorable market trends, and a
negative public reputation are some threats that can derail your plans.

A SWOT analysis calls for carefully considering these factors to develop a

clear roadmap. The highlight is the focus on internal and external factors
along both the axes – positive and negative. Thus, it enables managers to
spot and use opportunities while developing safeguards from threats.

Cost-Benefit Analysis

Cost-benefit analysis is one of the decision-making techniques that involves

evaluating the costs and benefits of a potential decision to determine if it is a
viable option. You go through the perks and costs of every option to find the
best equation. This tool is handy when you are looking to start a new project
or adopt a new structure for your team. The tool helps assess the trade-off
between potential costs and benefits and make informed choices about
pursuing a particular course of action. The advantage of a cost-benefit
analysis is that it enables you to make objective decisions based on complex
data rather than subjective opinions..

Pareto Analysis

The Pareto analysis, also known as the 80/20 rule, calls for prioritizing
suitable options for your team. The method relies on the Pareto principle,
which states that 80% of results come from 20% of causes. The idea came
when an Italian economist noted that 20% of people owned 80% of land.
Thus, the key to success lay in the hands of those 20%.

The Pareto analysis method of decision-making begins by analyzing the

primary factors in any situation. Further, they are studied, ranked, and sorted
to obtain the “vital few.” Addressing these critical areas becomes the key
focus area. Managers can apply this decision-making technique in problem-
solving, resource allocation, and quality management.

Brainstorming

Brainstorming is one of the decision making techniques that involves

generating a large number of ideas and solutions in a group setting. This
engaging decision-making technique helps managers tap into their team’s
collective creativity and consider a wide range of options. The benefit of
brainstorming is that it encourages collaboration and innovation, leading to
more informed and effective decision-making. This technique can be applied
in problem-solving, strategic planning, and product development. However,
brainstorming can be often affected by collective biases and groupthink.
Treading the fine line to maintain balance is essential as a manager.

Nominal Group Technique

The nominal group technique is one of the decision-making techniques that

involves gathering input from a group of people in a structured manner.
Managers can use this to include different perspectives in decisions. For
instance, you are choosing the mode of work for your team. Team member A
favors remote work because they can skip the troublesome commute. Team
member B, conversely, prefers working from the office because they can
focus better in the setting. Team member C calls for a hybrid approach, as
they emphasize connecting regularly with your team while working
comfortably. As a manager, now you understand the various opinions to
make a decision that caters to all in some manner. The key benefit of using
the nominal group technique is that it enables managers to tap into the
collective wisdom of their team, leading to more informed and effective
decision-making.

Root Cause Analysis

Root cause analysis involves identifying and addressing the underlying

causes of a problem rather than just its symptoms. Picture this: Your team is
consistently missing deadlines. But you keep on asking them to get things
done. And so it goes. But here’s another way: you try to figure out why they
are missing deadlines. Upon talking to them, you discover they are
overburdened with work. Then, you can take appropriate actions to help
them solve this challenge. The benefit of using root cause analysis is that it
enables managers to solve problems at their source, leading to long-term
solutions and reduced risk of future problems. Managers can apply this
decision-making technique in problem-solving, quality management, and
continuous improvement.