PLANNING

Planning
• Planning is the first primary function of
management that precedes all other functions.
• Planning means looking ahead and chalking out
future course of actions to be followed. It is a
preparatory step.
• It is the basic management function which
includes formulation of one or more detailed
plans to achieve optimum balance of needs or
demands with available resources.
 What is Planning?
• Planning is deciding in advance what to do,
how to do it, when to do it, and who is to do
it- Konntz and O’Donnell

• Planning is the process of establishing goals

and a suitable course of action for achieving
those goals- James Stoner.
 Nature & Characteristics of Planning
1. Planning is goal oriented- Planning is goal oriented in the sense that
plans are developed and executed to achieve goals. At first the goals are
set, and then plans are framed to accomplish them.
2. Future oriented- Planning is future related activity. Necessary forecasts
and made about the future and accordingly plans are made. It can be
short term, medium term or long term.
3. Continuous activity- Planning is a continuous activity. It is an ongoing
process. Effective planning requires constant and continuous checking of
events. Accordingly, plans are redrawn depending upon the situation or
circumstances at the time of implementation.
4. Link between past, present and the future- Planning acts as a link
between the past, present and future. Although, planning is a future
related activity, one cannot totally ignore the past and present events
and achievements while planning for the future events or achievements.
 Nature & Characteristics of Planning
5. Primacy of planning- Planning is a primary or basic function of
management. Without planning, it would be difficult to organise, to
direct, and to control. When plans are well defined and clear, it would be
easy to organise the resources, to provide necessary directions and to
take proper control measures.
6. Pervasiveness of planning- Planning is a function of every manager. The
need for planning exists at all levels of management.
7. Intellectual process- A great deal of imagination and intelligence is
needed to prepare sound plans.
8. Integrated process- Every plan needs to be integrated with other plans.
The plan of a section needs to be integrated with those of other section
to achieve the departmental goal. Similarly, plan of one department
needs to be integrated with plans of other department to achieve
organisational goals.
 Advantages
• Minimizes Risks
• Facilitates Coordination
• Facilitates Organising
• Facilitates proper direction
• Facilitates control, decision making.
• Focus on goal
• Generates efficiency
• Encourages Innovation.
 Limitations
• Limitation of Forecasting
• Time consuming
• Expensive
• Generates Rigidity
• Generates Frustration
• Dangers of Over targeting
• Dangers of under targeting.
 Essentials of a Good Plan
1. Simplicity- A plan must be simple, easy to understand so that those who are
implementing it must clearly understand it. Facts, figures and other data
must be well presented.
2. Flexibility- Plans must not be rigid. They must offer flexibility to change as
and when the situation demands so.
3. Suitability- The plan must be suitable. Depending upon the resources and
capabilities, the target must be set. In other words, there must be neither
over-targeting nor under-targeting.
4. Acceptance- The plan must be acceptable to the subordinates. Therefore, it
is advisable to consult the subordinates before setting the targets.
 Essentials of a Good Plan
5. Facilitate Organizing- A good plan should enable proper organising of resources. The
manager should find no difficulty in making arrangement of resources.
6. Provide Direction- A good plan acts as a work map. It should provide proper direction
so that the activities can be conducted smoothly.
7. Facilitate Control- A good plan should facilitate control. If the targets are planned
clearly, it will enable a manager to monitor the performance. This is because the
actual performance can be easily compared with the planned targets and incase of any
deviations corrective measures can be taken.
8. Generate Harmony- A plan should generate team spirit among the different sections
or departments of an organisation. This would be possible if the plans of the
concerned departments are integrated or coordinated.
 Essentials of a Good Plan
9. Generate Efficiency- A good plan must make optimum use of the
available resources. Maximum possible returns must be achieved with
minimum possible costs.

10. Motivate Personnel- A good plan should be realistic and challenging. The
plan prepared by the superior should motivate the subordinates to put in
their best efforts.
 THE PLANNING PROCESS
1. Analysis of Internal Environment- The planner needs to analyse the internal
environment prevailing in the organisation to reveal the strengths and
weaknesses of the organisation. The internal environment consists of manpower,
machines, materials, organisation structure, etc.
2. Analysis of External Environment- A thorough analysis of external
environment must be taken. Relevant data about customer preferences,
government policies, competitive conditions, etc must be collected.
Such analysis would reveal opportunities to be grabbed and threats to
be faced by the organisation.
3. Setting of Objectives- Objectives are set in all key areas of operations
i.e.- Production, Marketing, finance, personnel. Objectives should be
SMART- Specific, Measurable, Achievable, Realistic, and Time Bound.
 THE PLANNING PROCESS
4. Framing Alternate Plans- After setting objectives, the next step is to
determine alternative plans. It is always advisable to prepare alternative
plans rather than preparing single plan. E.g. To increase the market share,
the planner can make alternative plans such as:
Plan I- Increase in advertising.
Plan II- Improvement in quality.
5. Studying Alternate Plans- Once the alternative plans are determined,
they are to be evaluated in terms of costs, benefits, risks, etc. There must
be cost benefit analysis of every alternative plan. This is because some
plan may be more costly to implement, but more beneficial to the
organisation.
 THE PLANNING PROCESS
6. Selecting of the Best Plan- Once, the plans are analysed or evaluated, the
next step is to select the best feasible plan from the alternatives. The
alternative plan which gives maximum benefit at minimum cost is selected.
7. Formulation of Derivative Plans- Several operating plans are required to
implement the overall plan. Such operating plans are short range plans or
sub plans which are useful in day to day operations.

8. Establishing the sequence of activities- Once, the derivative plans are

prepared, the next step is to work out the sequence and timings
of activities involved in each sub plan. The sub plans need to be
integrated so as to achieve goals as per the plan.
 THE PLANNING PROCESS
9. Implementation- The various plans of the organisation are
communicated to those whose participation is required to implement
them. Implementation involves:

• Organising resources

• Directing subordinates

9. Review- Plans are periodically monitored to find out whether the

performance is taking place as per the planned targets. If necessary,
plans are revised.
 Elements / Components of Planning
Plans are classified under two categories
1. Standing Plans – are meant for repeated use
and when the occasion demands. Ex:
mission, objectives, strategies, policies,
procedures and rules.
2. Single Use Plans – are meant for a specific
activity. Ex: budgets, schedules, programmes
and projects.
 Types of Plans
• Mission- Every organisation needs to have a mission. The
mission is a statement that reflects the vision, the basic
purpose and philosophy of the organisation. Eg. Educational
Institute: To impart quality education so as to develop the
overall personality of the students.
• Objectives- Organisational objectives are derived from the
mission of the organisation. All actions taken are directed
towards meeting the objectives or goals. The objectives act as
a base of the planning process. Every department in the
organisation has its own goals. The goals of every department
must contribute to the attainment of the organisational goals.
The goal of every department must contribute to the
attainment of the organisational goals
 Types of Plans
• Strategies- The word strategy comes from the greek word
‘strategos’ which means ‘ the art of the general’. In the words of
Harold Koontz, “Strategy is the determination of the basic long-
term objective of an enterprise and the adoption of action and
allocation of resources necessary to achieve these goals”. It is a
broad long term plan to achieve the desired position in the future
from the present position. It provides answers to questions like:
What is the present position of the organisation?
What should be the future position of the organisation?
What must be done to attain the desired future position?
• Policies- Policies are the statements that guide decision making and
defines the boundaries within which decisions can be made.
Examples of policy statement:
Credit period not to exceed 15 days (credit policy)
 Types of Plans
• Procedures- In the words of Harold Koontz, “Procedures are
plans that establish a required method of handling future
activities”. Procedure is an established way of performing
the work. Eg. Advertising Procedure:
Planning the advertising campaign.
Preparing the advertising campaign.
Placing the advertising campaign in the media.
• Rules- In the words of Harold Koontz, “Rules spell out specific
required actions or non-actions allowing no discretion”. They are
specific statements of what should be done and what should not be
done in certain situations. Eg. “ No drinking in the company
premises” is a rule.
 Types of Plans
• Programmes- A programme is a comprehensive plan designed
to implement the policies and accomplish the objectives. E.g.
Advertising programmes, Training Programmes, Expansion
Programme.
• Budgets- A budget is a plan that expresses the anticipated
results in numerical terms. E.g. Cash budget, Sales Budget,
Advertising Budget, and so on.
• Schedules- A schedule is a time table for activities. It indicates
the start time, the completion time for each and every
activity.
• Projects- It is a single use plan. Project approach is needed
when the work to be done is of specific nature.
 Vision and Mission Statements
• Vision statement – describes the organization
as it would appear in a future successful state.
It creates an image of future state that the
organisation wishes to achieve.

• Mission statement – explains the company’s

or departments purpose for existence. It
supports the vision and communicates the
priorities and methods to achieve it.
Planning in the Hospitality Industry
1. Important component of all core areas.
2. Needs to be highly flexible to accommodate
guest needs.
3. Dynamic in nature.
4. Has a very high component of human
element
5. Control cycle is short
6. Require continuous motivational inputs
Management by Objectives (MBO)
• The concept of MBO was popularized by Peter Drucker
in 1950’s.
• It is defined as “The superior and the subordinate
managers of an organization jointly define its common
goals, define each individual’s major areas of
responsibility in terms of the results expected of them
and use these measures as guides in operating the unit
and assessing the contribution of each of its members.”
• According to the theory having a say in the goal setting
and action plans encourages participation and
commitment among employees.
 Collectively
formulate
objectives

Collectively MBO Collectively

monitor formulate
performance
PROCESS plan

Subordinate
implements
plan
 MBO Process
1. Collectively formulating goals- The superior and subordinate collectively
decide and formulate goals, which the subordinate needs to achieve.
2. Collectively formulating action plans- After setting goals, the subordinate
manager along with his superior formulates an action plan to Achieve the
goals
3. Evaluating the alternatives- If alternative plans are framed, the superior and
subordinate manager have to evaluate the alternative plans. They conduct
cost- benefit analysis of each and every alternative.
4. Selection of the best plans- After cost- benefit analysis of the alternative
plans, the next step is selection of the best feasible plan. The superior and
subordinate manager would select the best plan that gives maximum
benefits at minimum costs.
5. Implementation of the plan- The subordinate implements the plan by
making optimum use of the resources.
6. Collectively monitoring performance- In the final stage, the subordinate
reviews his performance by comparing against the planned targets. If
deviations occur, the superior and the subordinate once again frame
objectives.
 Decision Making
• Decision making is a process of identifying a
set of feasible alternatives, and from these
selecting the best course of action.

• The process of identifying and selecting a

course of action to solve a specific problem is
called decision making.
 Process of Decision Making

1. Defining the problem- The first step in decision making is to define the
problem. A company may face several problems which require proper
solution.
2. Generating alternative problems- The second step is to generate a set of
alternative solutions to solve the problem. In developing the alternative
solutions, the decision maker must first specify the objectives that are to
be achieved.
3. Evaluating alternatives-Once a list of alternative solutions have been
developed, the next step is to evaluate them. The manager should
undertake cost-benefit analysis of each and every alternative.
 Process of Decision Making
1. Selecting the best alternatives- After discarding
several alternatives, finally the best one is selected.
The alternative which gives maximum benefit at
minimum cost is selected.
2. Implementing the chosen alternative- The
alternative so selected must be communicated to
those who are likely to implement it and to those who
are likely to be affected by its implementation.
3. Follow up- The decision maker needs to check the
implementation at regular intervals, so as to find out
whether the implementation is moving in the right
direction to solve the problem or to achieve the goal.
 Define the
problem

Follow Generate
Up Alternatives

DECISION
MAKING
PROCESS
Evaluate
Implement
Alternatives

Choosing
Alternatives