Definition of Planning:--

Planning is deciding in advance what to do, how to do, when to do it and who is to do it,
planning bridges the gap from where we are, to where we want to go. It makes it possible for
things to occur which would not otherwise happen. --- Koontz and O’Donnell

Planning involves the development of forecasts, objectives, policies, programs, procedures,

schedules and budgets --- Louis A Allen

Characteristics of planning (ACDF 2GI4P3S)

Action Oriented Inter-Dependent
Continuous Integrated
Decision Making Inseparable
Flexible Primary Function
Future Oriented Pervasive
Goal Oriented Participative
Intellectual Process Selective

1. Action –Oriented :--

Planning helps to define the future course of action and these actions must be realistic
(neither impossible nor too easy to achieve).
2. Continuous :--
Planning is a never ending function due to the dynamic business environment. Plans are
subjective to be changed during the execution of plan because of new requirements and
changing conditions after due revaluation by the respective managers.
3. Decision Making :--
Planning essentially involves choice among various alternatives. Thus, decision making
is an integral part of planning. A manager is surrounded by no. of alternatives. He has to
pick the best depending upon requirements & resources of the enterprises.
4. Flexible:--
Planning is done for the future. Since future is unpredictable, planning must provide
enough room to cope with the changes in customer’s demand, competition, govt.
policies etc. Under changed circumstances, the original plan of action must be revised
and updated to make it more practical.
5. Future Oriented :--
Plans are always future oriented. We anticipate future needs and make use of available
resources (optimum utilization of resources) to satisfy the future demands.
6. Goal Oriented : --
Planning is made to achieve desired objective of business. Planning identifies the action
that would lead to desired goals quickly & economically. It provides sense of direction to
various activities.
7. Intellectual Process :--
Planning is a mental exercise involving creative thinking, sound judgment and
imagination.It is not a mere guesswork but a rotational thinking. Planning is always
based on goals, facts and considered estimates.
8. Inter-Dependent :--
Planning needs co-operations of various sections/departments of the organization to
achieve the goals and objectives of the organization.
9. Integrated :--
Planning is about preparation of sound policies, programs, procedures, strategies for
accomplishment of the organizational objectives. Planning integrates all other functions
of management .
10. Inseparable:--
Planning and control are inseparable. Unplanned action cannot be controlled and
controlled action will direct the organization to fulfill their objectives .
11. Primary Function :-
The functions of management are broadly classified as planning, organisation, direction
and control. It is thus the first function of management at all levels. Since planning is
involved at all managerial functions, it is rightly called as an essence of management.
12. Pervasive :--
It is required at all levels of management and in all departments of enterprise.The top
level may be more concerned about planning the organization as a whole whereas the
middle level may be more specific in departmental plans and the lower level plans
implementation of the same.
13. Participative :--
Planning involves the participation of various managers from various departments in the
organization to plan for the organizational objectives to be achieved by optimum
utilization of resources.
14. Selective :--
Planning involves choosing the best alternative course of action from various plans
available so that the selected plan is viable to the organization to achieve its objectives
10 Essential elements of business plan
1. Mission statement and/or vision statement so you articulate what you’re trying to create;
2. Description of your company and product or service;
3. Description of how your product or service is different;
4. Market analysis ( type of market, current position of market, who are your competitors)
5. Description of your management team, including the experience of key team members and
previous successes;
6. How you plan to market the product or service;
7. SWOT Analysis
8. Develop a cash flow statement --- (inflows and outflows and your needs for future)
9. Revenue projections; and
10. Summary/conclusion or an executive summary at the beginning of the plan --- ( company’s
mission statement,
11. short description of its products and services,
12. why you’re starting your company and your experience in the industry)

Importance of planning:--
1. Brings economy in operations:--
Planning helps to choose best course of action that will help the organization to attain best
results at minimum cost possible, there by brings about economy in operations.

2. Encourages innovation and creativity :--

Managers who are involved in the planning process need to be innovative and creativity to add
new ideas and process to be followed to achieve best results.

3. Ensures efficient use of resources :--

Planning process ensures efficient use of all resources of the organization in accomplishment of
the organizational goals and objectives. In planning process the best plan out of various
alternative plans is chosen, in which resources are used efficiently for the best output.

4. Facilitates unity of direction and coordination :--

All the plans selected in the organization ensures co-ordination of all inter-dependent
activities/departments and provides the correct direction in which all employees should work
for the common goals of the organization.
5. Facilitates control :--
Planning is done for future activities, that determine the work to be done, how to do it, by
whom it should be done, time and cost incurred etc. Planning will help to have control over all
the activities, compare the actual result with desired result and take corrective actions to
remove deviations.
6. Facilitates management by exception :--
Planning ensures that top management is not involved in day to day activities and intervenes
only when things do not happen as per the planning schedule.
7. Facilitates delegation :--
Different levels of employees in the organization are involved in the planning process only when
there is delegation of authority to them for getting things done.
8. Focuses on organizational goals :--
Planning process makes the objectives more clear to all levels of employees in the organization
and guide them in right path to attain best results.
9. Helps in avoiding business failures :--
As planning involves selection of opportunities, unit of action, coordination of activities,
economy in operations, there is great possibility to avoid failures in business.
10. Improves adaptability :--
Planning is continuous process, thus plans have to be changed according to the environmental
changes and market conditions. This improves the adaptability nature of the managers .

11. Improves competitive strength :--

Planning improves competitive strength of the firm by anticipating the technological changes,
discovering new opportunities for growth, improvement in quality , forecast the strategies of
competitors and try to be the market leaders.

12. Improves motivation :--

Planning process involves participation of all managers in determination of policies, programs
etc, it helps to keep high levels of motivation and morale among the workers.

13. Management by objectives :--

The attainable objectives are set and clearly stated so that management plan all activities,
allocate required resources and guide them to take right action steps to achieve organizational
objectives.

14. Planning offsets future uncertainty and change :--

Every business organization works in a dynamic environment. Planning process brings in high
degree of uncertainty and helps to foresee the risks , threats in future and choose the best way
to avoid or prepare the organization to face those situations.
Steps in Planning Process
1. Recognizing and identifying the opportunities :--
The first step in planning process is the awareness of business opportunity and the need for
taking action. Present and future opportunities must be found so that planning may be
undertaken for them. The trend of economic situation should also be visualized. Before
venturing into new areas the pros and cons of such projects should be evaluated. A beginning
should be made only after going through a detailed analysis of the new opportunity.

2. Collecting and analyzing information :--

Before actual planning is initiated relevant facts and figures are collected. All information
relating to operations of the business should be collected in detail. The type of customers to be
dealt with, the circumstances under which goods are to be provided, value of products to the
customers, etc. should be studied in detail.
The collected information should be analyzed to find the relation between various factors.

3. Determination of objectives
Planning starts with the determination of objectives. The tie between planning and objectives
helps employees to understand their duties. Objectives are the guides of employees. It is
essential that objectives should be properly formulated and communicated to all members of
the organization.

4. Determining planning premises

Planning is always for uncertain future. Though nothing may be certain in the coming period but
still certain assumptions will have to be made for formulating plans. The behaviour of certain
variables is forecasted for constituting planning premises.
Forecasts will generally be made for the following:
(a) The expectation of demand for the products.
(b) Supply of funds
(c) Change in consumer tastes and preferences
(d) Economic policies of government
(e) Political stability ...etc

5. Determining alternative course of action

There are a number of ways of doing a thing. The planner should study all the alternatives and
then a final selection should be made. Best results will be achieved only when best way of doing
a work is selected. According to Koontz and O’Donnell, “There is seldom a plan made for which
reasonable alternatives do not exist.” All the pros and cons of methods should be weighed
before a final selection.
6. Selecting best alternative

Every alternative plan should be evaluated in a systematic manner to know its respective strengths
and weakness. The best plan should be chosen after studying all the alternative plans.

7. Determining secondary plans

After formulating the basic plan, various plans are derived so as to support the main plan. In an
organization there can be various derivative plans like planning for buying equipments, buying
raw materials, recruiting and training personnel, developing new product, etc. These derivative
plans are formulated out of the main plan and, therefore, they support it.

8. Implementation of plans
The planning should be put into action so that business objectives may be achieved. The
implementation will require establishment of policies, procedures, standards and budgets.
These tools will enable a better implementation of plans. It requires delegation of authority to
respective employees and proper co-ordination among various activities/departments to get the
best results and attainment of organizational objectives.

9. Feedback and future evaluation

To ensure proper implementation of the plans, management has to gather feedback in a timely
manner at every step in the plan so that it will help to evaluate the efficiency of the plan and
take corrective actions if any.
Types of planning

Standing / Repeated Plans Single Use Plans

1. Objectives 1. Programs
2. Policies 2. Budget
3. Procedures 3. project
4. Methods
5. Rules
6. Strategies
Standing Plans:

 Standing plans are often developed once and then modified to suit the business'
needs as required.
 Standing plans serve as guidelines for managerial decisions.
 Help in tackling similar and frequently occurring problems.

Objectives:

 Objectives are goals the management wants the organization to achieve

 Once the short-term and mid-term objectives are achieved, again a new set of
objectives are framed.

Policies:

 Policies are statements, written and documented, which are implied to all employees in
the organization.
 Policies act as guidelines to take right decisions at the right time to accomplish the
objectives of the organization.
 Policies are general guidelines.
 Example == internet and e-mail usage policy

Procedures:

 It is a series of related actions that must be taken to accomplish a particular task.

 Organizations usually have many different sets of procedures covering the various tasks
to be accomplished.
 They help in streamlining day-to-day activities in the organization.
 Procedures needs to be changed in order to be updated with the latest technologies.
 Example == procedure to apply for loans in the company
Methods:

 It is a specific manner to perform a given task

 In modern organization, methods define the way clerical, administrative and managerial
activities have to be performed.

Rules:

 A rule indicates what an organization member should or should not do and allows no
room for interpretation.
 Rules are written formally in the organization.
 Any violation of rule attracts disciplinary actions in the organization.
 Example == no smoking in the area of work

Strategy:

 Strategy define course of action to be followed to achieve long term objectives of the
organization.
 They help to find alternative ways during crises period.
 They help to face the challenges in the competitive environment.
 Strategies have to changed according the changes in the external and internal
environment where the business is being carried out.

Single Plans:
These are designed to meet specific requirement. These plans are developed only once. These
plans help to handle non-repetitive or specific problems.

Programs:

 Plans for achieving one-time organizational goal

 It defines the course of action to be followed to accomplish the organizational goal.
 Example== building headquarters of the organization

Budget:

 A budget is a financial statement and /or quantitative statement prepared prior to a

defined period of time, of the policy to be pursued during that period for the purpose of
attaining a given objective
 There should be an active involvement of top management while preparing a budget.

Advantages and disadvantages of planning

 Advantages Disadvantages
Focus on objectives Time taking process
Minimize the uncertainties Can be a costlier process
Better utilization of resources Plans, when rigid makes administration more
difficult
Economy in operation Some unplanned opportunities might be missed
Better co-ordination At times, planning may not be useful during crises
period
Encourage innovation and creativity Planning is difficult in rapidly changing business
environment
Facilitate control Managers tend to plan to face today’s competition
but forget about tomorrow’s survival
Management by exception
Facilitate delegation

Management By Objective (MBO)

It is process of defining objectives within an organization so that management and employees
agrees to the objectives and aim to increase their performance levels to achieve the
organizational objectives.

Process of MBO
1. Set organizational goal: The top management sets the goals that the organization needs
to achieve in a specific period of time. In certain organizations middle level management
people work top-level management persons to set the goals of the organization.
2. Joint goal setting:Managers and sub-ordinates must understand the goals and have
clear picture about their duties and responsibilities and define their personal goals that
have to be achieved. These goals must be finalized after a mutual discussion.
3. Performance review: Review of the performance of the employees is must and be
carried out in timely manner to know the level of satisfaction on performance.
4. Set check posts: At certain check points, the actual performance is measured against
the desired performance and necessary corrective actions will be taken, if required.
5. Feedback: Employees need regular feedback about their performance. This keeps them
motivated to perform much better and correct the areas of improvement.