Planning

Meaning

• “Planning is deciding in advance what should be done”.

• “Involves selecting missions and objectives as well as the actions to achieve

them, which requires decision – making that is, choosing a course of action
from among alternatives”.

• “Planning is outlining a future course of action in order to achieve an

objective”.

• “Planning is looking ahead”

• “Planning is getting ready to do something tomorrow”.

• “Plan is a trap laid down to capture the future”.

Definition

“Planning is deciding in advance what to do, how to do it, when to do it and who is
to do it. It bridges the gap from where we are to where we want to go” – Koontz
and O’Donnell.

“Planning is a mental predisposition to do things in orderly way, to think before

acting and to act in the light of facts rather than guess” – Urwick.

“Planning is deciding the best alternative among others to perform different

managerial operations in order to achieve the predetermined goal” – Henry Fayol.

“Planning is deciding in advance what is to be done. It involves the selection of

objectives, policies, procedures and programmes from among alternatives” – M.E.
Hurley.

“Planning is a concept of executive action that embodies the skills of anticipating,

influencing and controlling the nature and direction of changes” – Mc Farland.

“Planning is the process of thinking through and making explicit the strategy, action
and relationships necessary to accomplish an overall objective or purpose” –
Cleland and King.

“Planning is selecting and relating of facts in the visualization and formation of

proposed activities believed necessary to achieve desired results” – George R.
Terry.

“Planning is a thinking process, the organized foresight, the vision based on fact
and experience, that is required for intelligent action” – Alford and Beaty.
Purpose of planning

Absence of planning, events are left to change

i. To achieve objectives rise questions like –

• Why am I making this plan

• What am I trying to accomplish

• What resources do I need to execute the plan

These questions force you to be clear about the objectives. Systematic planning
starts with a clear statement of objectives.

ii. To make the things happen

• To meet the uncertainties

• To plan out to solve the problems

• Foresee the future and predict the consequences of actions

iii. To cope with changes

• Market competitions

• Preserve on the resources increase

• Product life – cycle are becoming shorter due to rapid technological

changes.

• Built in the plans to meet the unexpected changes

iv. To control the events

 • Planning and control

• Planning provides necessary yardsticks to measure the

performance.

Principles of planning

Effectiveness in planning depends on the understanding of the following principles –

i. Take time to plan

• Hasty planning with in correct information.

• Any plan is a decision regarding a future course of action.

ii. Planning can be top down and bottom up

• Over all plan thus formulated by the top mgmt is spilt into departmental
plans.

• Plans for production, marketing, finance, personnel etc. – top down approach
planning.

• Top mgmt needs information from lower level – that is, about the realities at
the ground level in terms of strengths and weakness. In this bottom up
approach, the initiative for planning comes from the lower levels in the
organization.

iii. Involves and communicate with all those concerned

• To improve the quality of the product (quality control plan) may require the
co-operation of the people in the production, finance, marketing
departments.

• It is necessary to involve the concerned people in those departments

iv. Plans must be flexible and dynamic

• Adequate flexibility has to be built into a plan, in a dynamic environment,

to meet the unexpected changes.

v. Evaluate and revise

• Evaluation of the plan at regular intervals is necessary to make sure that

it is contributing to the objectives.

• From time to time look back to evaluate and revise the plan.
Relationship of planning and controlling

New plans

Planning implementation controlling:

no undesirable deviations

of plans comparing plans

from plans

with results

undesirable deviation

Corrective action

Types of plans

Plans can be classified as –

1. Mission or purpose

2. Objectives or goals

3. Strategies

4. Polices

5. Procedures

6. Rules

7. Program

8. Budgets

1. Mission or purpose
 • Identifies the basic purpose or functions or tracks of an enterprise or agency
or any part of it.

2. Objectives or goals

• Ends towards which activity is aimed.

• They represent not only the end point of planning but also the end toward
which organizing, staffing, leading and controlled are aimed.

3. Strategies

• The determination of basic long – term objectives of an enterprise and

adoption of course of action and allocation of resources necessary to achieve
these goals.

4. Policies

• General statements or understandings the guide or channel thinking in

decision – making.

5. Procedures

• Plans that establish a required method of handling future activities.

6. Rules

• Spell out specific required actions or non-actions, allowing no discretion.

7. Programs

• A complex of goals, policies, procedures, rules, task assignments, steps to be

taken, resources to be employed and other elements necessary to carryout a
given course of action.

8. Budget

• A statement of expected results expressed in numerical terms.

Steps in Planning

1. Being aware of opportunity

2. Setting objectives or goals

3. Considering planning premises

4. Identifying alternative

5. Comparing alternatives in light of goals

 6. Choosing an alternative

7. Formulating supporting plans

8. Quantifying plans by making budgets.

1. Being aware of opportunity

In light of:

• the market

• competition

• what customers want

• our strengths

• our weakness

2. Setting objectives or goals (establish goals)

• Where we want to be and what we want to accomplish and when

3. Considering planning premises (establish planning premises)

• In what environment – internal or external

• Will our plans operate?

• Internal premises – include sales forecasts, policies of the organization, skills,

attitudes and beliefs of the people, the resources of the organizations.

• External premises – relate to those factors in the environment outside the

organization. They include technological changes, general economic
conditions, govt. policies and attitude towards business, demographic trends,
socio – cultural changes in the society, political stability, production cost and
their behavior, degree of competition in the market, availability of various
resources etc.

• Premises are tangible and intangible – Tangible factors quantitative

Intangible factors non – quantitative

 4. Identifying Alternatives
• What are the most promising alternatives to accomplishing our objectives.

5. Comparing alternatives in light of goals

• Which alternatives will give us the best chance of meeting our goals at the
lowest cost and highest profit.

6. Choosing an alternative
• Selecting the course of action we will pursue.

7. Formulating supporting plans

• Such as plans to – buy equipments, buy materials, hire and train workers,
develop a new product.

8. Quantifying plans by making budgets.

Develop such budgets as – volume and price of sales, operating expenses necessary
for plans, expenditures for capital equipment.

Strategic Planning

Strategic planning is long – term / range planning.

“The process of determining the major objectives of an organization and the policies
and strategies that will govern the acquisition, use and disposition of resources to
achieve those objectives”.

Two function of strategic planning

i. Anticipates future opportunities and threats

ii. Provides clarity of purpose and direction

Characteristic or features of planning

i. Planning is the primary function

ii. Goal – oriented

iii. All – pervasive (done at all levels)

 iv. Intellectual activity

v. Future oriented

vi. Integrated approach (must be a link between the plans of different depts.)

vii. Continuous process

Merits of planning

i. Focuses on objectives

ii. Helps to avoid “no work or work pressure”

iii. Helps to avoid wastage of resources

iv. Ensures efficiency as well as effectiveness.

v. Reduces rise and uncertainty

vi. Provides for co-ordination

vii. Facilitates control

viii. Planning also provide scope for decentralization.

Demerits of planning

i. Uncertain nature

ii. Expensive

iii. Rigidity

iv. Loss of initiative

v. Ignorance of sub ordinates interest

vi. Complacent attitude

Special Aspects of Planning

1. Forecasting

2. Premising
 3. Management Information System (MIS)

1. Forecasting
Meaning

• Forecasting is an integral part of the planning process. Since plans have to

operate in future, it becomes imperative for management to make an
accurate forecast of likely future events and conditions with which enterprise
plans may have confrontation, in future. In fact, the more accurate the
forecasting is, the more sound will be the planning premises on which the
plans will be based.

• Forecasting is the heart of planning process, and the best laid plans of the
enterprise might fail when substantial inaccuracies are discovered
subsequently in the forecasts of future conditions made by the management.

Techniques of forecasting

Forecasting implies making an estimation of relevant feature conditions and events.

Some techniques for making a best estimation of relevant future conditions and
events are –

i. Historical analysis of past events – in some country and other countries,

as to some extent, history is likely to repeat itself.

ii. Astrological analysis of relevant future conditions – managements in

the western countries even have been depending on astrological forecasts
of likely business conditions and events.

iii. Mathematical and statistical techniques – e.g. index numbers, time –

series analysis, cor-relation and regression techniques, probability etc.

iv. Collections of data through surveys – making forecasts on the basis of

collected data.

v. Seeking opinions of experts – experts from the field of finance, marketing,

technology politics, taxation etc. might management in better
appreciating and judging future business conditions.

2. Premising
Premises is a key step in planning process

Premising refers to establishment of assumptions by management about

relevant future conditions – economic, social, political, technological etc. on
which the plans will be based. Premising is based on forecasting.

Process of Plan Development

Development of Plans Building

Premising Secondary Foundation

Forecasting Primary Foundation

Classification of planning premises into following categories:

1. Internal and external premises

2. Controllable and uncontrollable premises

3. Quantitative and qualitative premises

1. Internal and external premises

a) Internal premises : are relevant internal conditions of the enterprise on which

plans will be based.

• Management strategies, policies and programmes

• Organizational structure flexibilities

• Human relations in the enterprise

• Manpower potential

• Availability of finance

• Approved sales forecasts etc.

 b) External premises: are relevant external conditions of the enterprise on which
plans will be based.

• Political conditions

• Social conditions

• General economic conditions

• Technological conditions

• Competitive conditions

• Factors market conditions (eg. Labour availability, raw materials

availability etc.)

2. Controllable and uncontrollable premises

Controllable premises are those over which management has control, while
uncontrollable premises are those which are beyond the control of management.
There may be semi – controllable premises also, which are partly within the control
of management and partly beyond the control of management.

Controllable premises –

• Advertising programmes and policies

• Expansion programmes

• Policy of centralization / decentralization

Uncontrollable premises –

• Acts of good

• Population growth

• Price trends

• Political environment

• Technological environment

Semi – controllable premises –

• Labour turnover
 • Labour efficiency

• Pricing policy

3. Quantitative and qualitative premises

Quantitative premises are those factors which can be expressed numerically,

while qualitative premises are factors which could not be so expressed.
Quantitative premises are tangible, while qualitative premises are intangible

Quantitative premises

• Finance availability

• Sales forecasts

• Population trends

• Price trends

• Plant capacity utilization

Qualitative premises

• Human relations in the enterprise

• Morale of employees

• Prestige or reputation of the enterprise

• Political stability

3 Management Information System (MIS)

MIS is an assemblage of personnel and facilities organized into an integrated
system by which – relevant, adequate and timely information is supplied to
executive.

Steps in MIS

MIS can be built around electronic computers, in case of a big organization.

MIS consists of following steps

a. Assembly - collection of data

b. Processing – editing of data, their classification and summation

c. Storage and retrieval – indexing, coding, filing of information and getting

back information.

d. Evaluation – determination of accuracy and relevance of data

e. Dissemination – supplying the relevant information in the proper form and at

the right time.

Criteria for evaluating information supplied by MIS

a. Quantity of information

b. Quality of information

c. Relevance of information

d. Timeliness of information

Advantage of MIS

a. Sound Planning and decision – making

b. Prevents unnecessary duplication of efforts

c. Facilitates decentralization

4.Management by Objectives (MBO)

5.SWOT Analysis
SWOT analysis is a key concept in the world of corporate planning, strategy
formulation and other practical spheres of management.

Concept of SWOT

Strength – S

Weakness – W

Opportunity – O

Threats – T
S Internal environment

O External environment

Purpose of SWOT

i. To capitalize on the strengths of the company

ii. To overcome the weakness of the company

iii. To exploit fully the opportunities available in the external environment

iv. To manage successfully the threats posed by the external environment