UNIT II PLANNING

MEANING OF PLANNING- Planning is deciding in advance what is to be done, when

where, how and by whom it is to be done. Planning bridges the gap from where we are to
where we want to go. It includes the selection of objectives, policies, procedures and
programmes from among alternatives. A planning is a predetermined course of action to
achieve a specified goal. Planning is the primary function of management.
 According to Haimann- “Planning is the function that determines in advance what
should be done. It consist of selecting the enterprise objectives, policies, programmes,
procedure and other means of achieving these objectives”
 According to Koontz and O' Donnell, "Planning is an intellectual process, alert
determination of course of action, the basing of decision on purpose, facts and
considered estimates.
NATURE OF PLANNING
1. Planning is an Intellectual Process- Planning is an intellectual process of thinking in
advance. It is a process of deciding the future on the series of events to follow. It is a
process where a number of steps are to be taken to decide the future course of action.
2. Planning is a Primary Function of Management- planning is basis of management
process. All other functions of management are designed to attain the goals under set
planning. Without planning there is nothing to organize and control.
3. Planning is a continuous Process- Planning is a continuous process and there is no end
to it. It involves continuous collection, evaluation and selection of data, and scientific
investigation and analysis of the possible alternative courses of action and the selection
of the best alternative.
4. Planning is forward looking- planning involves anticipating the future course of
events. Therefore forecasting is best essence of planning. Forecasting involves the
assessing the uncertain future and making provision of it
5. Planning is goal oriented- planning is not an end in itself. Rather it is a means towards
the accomplishment of objectives. Planning is made to achieve desired objective of
business All plans emanate form objectives
6. Planning involves choice- planning is essentially choosing among alternatives course
of action. There is no used for planning if there is only one way of doing something.
IMPORTANCE OF PLANNING
1) Increases efficiency- Planning makes optimum utilization of all
available resources. It helps to reduce wastage of important resources and avoids their
duplication. It aims to give highest returns at the lowest cost. Planning thus increases
the overall efficiency.
2) Reduces business-related risks-There are many risks involved in any
modern business. Planning helps to forecast these business-related risks. It also helps to
take the necessary precautions to avoid these risks. Thus, planning reduces business
risks.
3) Facilitates proper coordination-Often, the plans of all departments of
an organization are well coordinated with each other. Similarly, the short-term,
medium-term and long-term plans of an organization are also coordinated with each
other. Such proper coordination is possible only because of efficient planning.
4) Gives right direction-it means to give proper information, accurate
instructions and right guidance to subordinates. Direction cannot be done without
planning. It tells us what to do, how to do and when to do it. Therefore, it helps to give
right direction.
5) Keeps good control-In control, the actual performance of an employee
is compared with the plans, and deviations are found out and corrected. It is impossible
to achieve a control without right planning. Planning becomes important to keep a good
control.
6) Helps to achieve objectives-Every organization has certain goals or
objectives or targets. It keeps working hard to fulfill these objectives. Planning helps an
organization to achieve these objectives but with some ease and swiftness.
7) Motivates the personnel-A good plan provides various financial and
non-financial incentives to both managers and employees. These incentives motivate
them to work hard and achieve the objectives of the organization. Thus, planning
through various incentives helps to motivate the personnel of an organization.
8) Encourages creativity and innovation-Planning encourages managers
to express and/or use their creativity and innovation. This brings satisfaction to the
managers and success to the organization.
9) Helps in decision making-A manager makes many different plans.
Then manager selects or chooses the best of all available plans. Doing a selection or
choosing something means to take a decision. So, decision making is facilitated by
planning.

Limitation of planning
1) Costly process:  planning involves too much expenditure. Money & effort both are
required in planning. It includes collecting information, data forecasting & evaluation of
alternatives. So, planning has been accepted as costly process by small & medium size
organization
2) Time consuming:  planning is the time consuming process. It delays the business
activity to come in action. In the process of planning the procedures takes a lot of time
which may create problem to the organization where immediate action has to be made.
So in such situation planning is not suitable.
3) Lack of reliable data and problem of accurate premises: For planning
assumptions have to be developed for future action but future is uncertain and irregular.
To make reliable data and accurate premises is necessary., in the lack of reliable data
and accurate premises, there is chance of business loss and failure
4) Problem of rapid change: Planning is the game of prediction. Rapid changes may
occur in macro and micro level environment of business. planning is to be made in a
flexible way to compress the plans in the future
5) Encourage false sense of security: Planning encourages false sense of security
against future risk and uncertainty. As future is uncertain, it is unpredictable. Therefore,
planning cannot give accurate and reliable results.

Essentials of sound plan

1. It should be based on clearly defined objectives.
2. It must be simple and easy understandable.
3. It should provide proper analysis and classification of actions
4. It should be action oriented
5. It should be flexible and adoptable all changes in the organization
6. It must be economical
7. It should provide standards for the evaluation of performance and
actions.

Types of planning
1. Operational plans- The specific results expected from departments, work groups, and
individuals are the operational goals. These goals are precise and measurable.
An operational plan is one that a manager uses to accomplish his or her job responsibilities.
Supervisors, team leaders, and facilitators develop operational plans to support tactical
plans. Operational plans can be a single use plan or an ongoing plan.

Single use plans apply to activities that do not recur or repeat. A one time occurrence,
such as a special sales program, is a single use plan because it deals with the who, what,
where, how, and how much of an activity. Like budget

Continuing or ongoing plans are usually made once and retain their value over a period
of years while undergoing periodic revisions and updates.

2. Tactical plans- A tactical plan is concerned with what the lower level units within each
division must do, how they must do it, and who is in charge at each level. Tactics are the
means needed to activate a strategy and make it work. Tactical plans are concerned with
shorter time frames and narrower scopes than are strategic plans. These plans usually span
one year or less because they are considered short term goals.

Long term goals, can take several years or more to accomplish. Normally, it is the middle
manager's responsibility to take the broad strategic plan and identify tactical actions.

A strategic plan is an outline of steps designed with the goals of the entire organization as
a whole in mind, rather than with the goals of specific divisions or departments.
 3. Contingency plans- Intelligent and successful management depends upon a
constant pursuit of adaptation, flexibility, and mastery of changing conditions. Strong
management requires a “keeping all options open” approach at all times — that's where
contingency planning comes in.

Contingency planning involves identifying alternative courses of action that can be

implemented if and when the original plan proves inadequate because of changing
circumstances.

Process of planning
1. Determine objectives of plans:

i. Plans are the means to achieve certain ends or objectives. Therefore,

establishment of organizational or overall objectives is the first step in planning.

ii. Setting objectives is the most crucial part of planning. The objectives should
be set in key areas of operations.

iii. They should be verifiable, they should as far as possible be specified in clear
and measurable terms.

iv. The objectives are set in the light of the opportunities perceived by managers.
The objectives must be clear, specific and informative.

v. Establishment of goals is influenced by the values and beliefs of executives,

mission of the organization, organizational resources, and etc.

vi. Objectives provide the guidelines (what to do) for the preparation of strategic
and procedural plans.

vii. One cannot make plans unless one knows what is to be accomplished. They
set the pattern of future course of action.

viii. In order to set realistic objectives, planners must be fully aware of the
opportunities and problems that the enterprise is likely to face.

2. Developing the planning premises:

 i. Before plans are prepared, the assumptions and conditions underlying them must be
clearly defined these assumptions are called planning premises and they can be
identified through accurate forecasting of likely future events.

ii. They are forecast data of an honest nature. Assessment of environment helps to disclose
opportunities and constraints.

iii. Analysis of internal (controllable) and external (uncontrollable) forces is essential for
sound planning premises are the critical factors which lay down the bounder for
planning.

iv. They are vital to the success of planning as they supply per tenant facts about future.
They need revision with changes in the situation. Contingent plans may be prepared for
alternate situations.

3. Reviewing Limitations:
i. In practice, several constraints or limitations affect the ability of an organization to
achieve its objectives.
ii. These limitations restrict the smooth operation of plans and they must be anticipated
and provided for.
iii. The key areas of Imitations are finance," human resources, materials, power and
machinery. The strong and weak points of the enterprise should be correctly assessed.
4. Deciding the planning period:
i. Once the broad goals, planning premises and limitations are laid down, the next step
is to decide the period of planning.
ii. The planning period should be long enough to permit the fulfillment of the
commitments involved in a decision.
iii. This is known as the principle of commitment. The planning period depends on
several factors e.g., future that can be reasonably anticipated, time required to receive
capital investments, expected future availability of raw materials, lead time in
development and commercialization of a new product, etc.
5. Formulation of policies and strategies:
i. After the goals are defined and planning premises are identified, management can
formulate policies and strategies for the accomplishment of desired results.
 ii. The responsibility for laying down policies and strategies lies usually with
management. But, the subordinates should be consulted as they are to implement the
policies and strategies.
iii. Alternative plans of action should be developed and evaluated carefully so as to
select the most appropriate policy for the organization.
iv. Imagination, foresight, experience and quantitative techniques are very useful in the
development and evaluation of alternatives.

6. Preparing operating plans:

i. After the formulation of overall operating plans, the derivative or supporting plans
are prepared. Several medium range and short-range plans are required to implement
policies and strategies.
ii. These plans consist of procedures, programmers, schedules, budgets and rules. Such
plans are required for the implementation of basic plans.
iii. Operational plans reflect commitments as to methods, time, money, etc. These plans
are helpful in the implementation of long range plans.
iv. Along with the supporting, plans, the timing and sequence of activities is determined
to ensure continuity in operations.

7. Integration of plans:
i. Different plans must be properly balanced so that they support one another. Review
and revision may be necessary before the plan is put into operation.
ii. Moreover, the various plans must be communicated and explained to those
responsible for putting them into practice.
iii. The participation and cooperation of subordinates is necessary for successful
implementation of plans.
iv. Established plans should be reviewed periodically so as to modify and change them
whenever necessary.
v. A system of continuous evaluation and appraisal of plans should be devised to
identify any shortcomings or pitfalls of the plans under changing situations.

8. Implementation & Evaluation:

i. This step involves implementation of the chosen solutions, and often begins with
development of an implementation plan.
 ii. This step involves evaluation of the results of implementation to determine whether
the implemented solutions are effective in achieving their goals.

iii. It also involves evaluating the environment to see if it has changed, thereby
rendering the solutions less effective, more effective or irrelevant.

iv. This step may begin with development of an evaluation plan well before evaluation
actually takes place.