PLANNING

 Planning
o Planning is the management function of determining in advance what a group should
accomplish and how the goals are to be attained. In other words, what is to be done,
how, where, when and by whom must it be worked out in advance.

o Planning involves around three principal factors:

 Predetermination of desired goals and how they are to be attained
 It is done for others by specialist
 It provides the basis for group action and sets targets and objectives in clear
statements that must be accomplished.

o The Process of Planning:

 Choosing objectives -expressed very simply, objectives are goals sought to be
attained through proper planning. Objectives maybe specific or general in
character.
 Communicating objectives – one common clause behind the failure of planning
is the lack of proper understanding on the part of the personnel of company
objectives. This could be eliminated through proper communication. A two-way
communication of objectives is essential to the fulfillment of any plan.
 Recognizing assumptions – the assumptions on which the plan rests must first
be recognized and then clarified if predictions are to prove fairly accurate.
 Forecasting – it is the estimation of future values of an economic variable or
variables from known values of the same or another variable or variables on the
assumption that a best-known relationship of lag by the first variable continues
to exist.
 Formulating policies – policies furnish the framework for plans. For business
policy, it serves as a useful guide for the organization’s thought and action in the
accomplishment of the objectives.
 Identifying alternatives – It maybe found necessary to formulate alternatives
when the projected course of action seem incapable of generating desired
results.
 Evaluation of alternatives – proper evaluation with respect to their practicality,
feasibility and potentiality for attaining the stated goal.
 Choosing a plan of action - after the evaluation of alternatives and objectives
chosen and communicated, a plan of action becomes necessary. As such, rules
and procedures are formulated for carrying out plans into execution.
 Drawing up the budget – this is a detailed plan of future receipts and
expenditures for successive periods of time so that profits are maximized. More
generally, a budget is any plan pertaining to one or more of the financial aspects
of a business.
 Establishing deadlines -Any plan and its implementation must take place within
a time schedule.
 Advantages of Planning:
o Competitive advantage
 Such planning may involve an expansion of production by adding a new line of
products, changes in methods and processes involved in production, or styling of
its products in anticipation of new tastes, preference or desires of its customers.
Improvement of product or service, method and facilities is the cornerstone of
good and progressive management.
o Relief from pressure
 In the absence of plans with which to guide the executives under tremendous
pressure, there could result a bottleneck in the functioning of the organization
so that these executives could not suffer from mental breakdown, collapse, high
blood pressure or heart attacks. Planning provides for orderliness within the
organization. Through planning, those in authority can spread the work load to
their subordinates through proper delegation of responsibility, an essence of
good management.
o Coordination
 Through proper planning,, coordination is assured within the organization which
refers to “that element of precision which makes sure the right thing will be at
the right place at the right time”. Effective coordination of the activities of a
business enterprise can be insured through proper planning.

 Types of Planning
o Strategic planning – this type of planning focuses attention on the organization’s general
objectives which may have to undergo change as dictated by changing conditions and
availability of resources to meet these objectives. This type of planning is characterized
mainly by the presence of uncertainty, nevertheless, it is accompanied by some degree
of measurable risk. Some constraint may appear in the form of political, social and
environmental factors.

o Management Control planning – it is involved in the efficient use of resources at the

command of the organization in the pursuit of the organization’s goals and objectives.

o Operational Control planning – this specifies the procedure that are important and
necessary for the purpose of effectively carrying day-to-day operations. The personnel
involved in planning include high-level management, staff managers, line managers and
specialist.

 Areas of Planning
o Managerial functions – Planning precedes organizing, directing, and controlling.
Organizing provides the resources to carry out the plans of planning, directing carries
them out, and controlling aids in comparing the degree to which plans have been
successful. With these considerations duly examined the manager can take the
 necessary corrective actions in regard to future plans. Thus, before an organization
structure can be installed, it must be designed and planned.

o Basic business factors – another important area of planning pertains to certain basic
factors which are generally observed in almost every aspect of business activity. The
solution to such problem which, in economics, is termed as distribution could be
approached through careful planning.

o Specific project – in the case of a company intending to expand its volume of production
to take advantage of increasing market potential, there must be specific projects for such
contemplated undertaking.

 Factors affecting Planning

o Conditions – businesses are sometimes susceptible to marked changes and
developments so much so that if they are unable to meet and solve them, many aspects
of its operations may become seriously impaired.

o The time factor – in planning, the executive faces a span of time within which to carry
out the plans into execution.

o Resources available – a lack of raw materials from one time to another could cause a lag
in production, just as the business could lose a market.

o Skills and attitude of management – the key to good planning lies equally among others
in the skill and attitude of top management toward planning.

o Political, social and environmental conditions in a country which does not sanction the
existence of a private free enterprise, most planning is done by the government. In other
words, businessmen and entrepreneurs are denied such a right – a right that is reserved
exclusively for the government. This is observed under authoritarian forms of
government.

 In the light of intelligent thinking on management-labor relations, many laws

have been enacted by various law-making bodies in the many parts of the world
whereby labor is vested with certain rights and accordingly protected by the
governments. One example is the right to form labor unions. Through labor
unions represented by their officers, the exercise of collective bargaining
becomes assured.

o Physical facilities – Modern production is anchored on the better use of existing plants
and equipment through improved science and technology.
 Equally important is plant location for the present – and the future – when the
company expand its operation and production. Thus, the problem of where to
 locate the industry is a vital one which must be incorporated in any
organizational plan.

o Collection and analysis of data – planning depends for the effectiveness on the quality
and quantity of data involved in the planning process. Such information and data must
be carefully organized, arranged and properly evaluated.
 Information used in planning may be classified as internal and external.
 Internal data consists of records of costs, production, sales, labor
requirements, and other strategic data and information describing the
situation obtaining in the company. Vital internal information also
includes knowledge of targets, quotas, objectives, company
expectations (forecasts) and entire network of plans and operational
activities.
 External sources – bring the business executive information on industry,
economy and governmental laws, rules and regulations affecting his
business. These external sources cover a wide array of journals,
periodicals. Newsletter, and other publications.

 Kinds of Planning
o Operational planning – sometimes called as “short-term”planning – is concerned with
the establishment of objectives, plans and programs covering a relatively short period of
time.
o Long-term planning – this kind of planning is acutely important in the oil industry, where
the lead time in developing a major field of constructing refinery can be a decade or
more.

 Other kinds of Planning

o Organizational Planning
 Objectives of the organization
 Funds needed
 Classification of functions
 Manpower requirements
 Working relationships between those in the organization
 Physical facilities, machines and equipment
 Methods and procedures
 Sequential flow of operations
 Flow of authority, coordination and control
 Policies, rules and regulations, and standards for effective performance

o Administrative Planning
 Personal leadership
 Teamwork
 Group management
 Delegation
  Executive administrative planning experience

o Production planning
 Inventory control – regulating the quantities of stock and replenishing and
issuing of materials and tools.
 Routing – designating the processing methods and the operation sequence for
the manufacture of each part, assembly, or product.
 Scheduling – establishing the rate of output and the beginning and ending dates
of production.
 Dispatching – carrying out manufacturing orders through clerical work in the
plant.
 Production control – following up and checking to assure achievement of the
planned output goals.

o Manpower Planning - Manpower resources are not so plentiful that business

organization can afford to ignore the need for planning for their most effective use.
Labor of various kinds and qualities must be found and made available at appropriate
needs in accordance with the requirements of business and industry. Many jobs require
training and education in skills and abilities. To fill each position correctly and properly
requires the intricate recruiting, selection, placement, and training activities in which
modern personnel administration departments can offer much help. Some companies
offer apprenticeships to those showing potentials for development.

o Financial planning – the chief executive of a corporation is the one finally responsible for
the deployment, employment and disposition of all the company’s resources and
directly guide financial planning and directly develop fiscal policy.

 The Need for Scientific Planning and Planners

o Scientific planning may be defined as “planning based on facts, classified and organized
through a series of logical steps”.
 Its use has gained wide acceptance evidently because solutions to problems are
sought from data supplied by careful experiments.

o The Planners – in line with the task and responsibility imposed upon them, must take
into account all aspects that pertain to a dynamic environment, the extent and
complexity of the problems sought to be solved, and the critical part to be played by
the profit factor in achieving the desired rate of growth.