Course: BCA Class: I Subject Name: Principles of Management Unit No.: 02 Lecture No.

: Topic:

UNIT-2

PLANNING

Planning is the fundamental management function, which involves deciding beforehand, what is to be done, when is
it to be done, how it is to be done and who is going to do it. It is an intellectual process which lays down an
organisation’s objectives and develops various courses of action, by which the organisation can achieve those
objectives. It chalks out exactly, how to attain a specific goal.

Planning is nothing but thinking before the action takes place. It helps us to take a peep into the future and decide in
advance the way to deal with the situations, which we are going to encounter in future. It involves logical thinking
and rational decision making.

According to Koontz and O’Donnel, “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.”

Planning is the continuous managerial process of anticipating and forecasting the future. environment of the business
organization, the formulation of the long term and short term goals. to be achieved and selecting the strategies for
their realization.

Planning is also a management process, concerned with defining goals for a company's future direction and
determining the missions and resources to achieve those targets. To meet objectives, managers may develop plans,
such as a business plan or a marketing plan.

The planning process provides the information top management needs to make effective decisions about how to
allocate the resources in a way that will enable the organization to reach its objectives. Productivity is maximized and
resources are not wasted on projects with little chance of success.

Importance of Planning

 It helps managers to improve future performance, by establishing objectives and selecting a course of action, for
the benefit of the organisation.

 It minimises risk and uncertainty, by looking ahead into the future.

 It facilitates the coordination of activities. Thus, reduces overlapping among activities and eliminates unproductive
work.

 It states in advance, what should be done in future, so it provides direction for action.

 It uncovers and identifies future opportunities and threats.

 It sets out standards for controlling. It compares actual performance with the standard performance and efforts are
made to correct the same.

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 Course: BCA Class: I Subject Name: Principles of Management Unit No.: 02 Lecture No.: Topic:

Planning is present in all types of organisations, households, sectors, economies, etc. We need to plan because the
future is highly uncertain and no one can predict the future with 100% accuracy, as the conditions can change
anytime. Hence, planning is the basic requirement of any organization for the survival, growth and success.

Characteristics of Planning

1. Managerial function: Planning is a first and foremost managerial function provides the base for other functions of
the management, i.e. organising, staffing, directing and controlling, as they are performed within the periphery of the
plans made.

2. Goal oriented: It focuses on defining the goals of the organisation, identifying alternative courses of action and
deciding the appropriate action plan, which is to be undertaken for reaching the goals.

3. Pervasive: It is pervasive in the sense that it is present in all the segments and is required at all the levels of the
organisation. Although the scope of planning varies at different levels and departments.

4. Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so on. Once that period
is over, new plans are drawn, considering the organisation’s present and future requirements and conditions.
Therefore, it is an ongoing process, as the plans are framed, executed and followed by another plan.

5. Intellectual Process: It is a mental exercise at it involves the application of mind, to think, forecast, imagine
intelligently and innovate etc.

6. Futuristic: In the process of planning we take a sneak peek of the future. It encompasses looking into the future, to
analyse and predict it so that the organisation can face future challenges effectively.

7. Decision making: Decisions are made regarding the choice of alternative courses of action that can be undertaken
to reach the goal. The alternative chosen should be best among all, with the least number of the negative and highest
number of positive outcomes.

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 Course: BCA Class: I Subject Name: Principles of Management Unit No.: 02 Lecture No.: Topic:

Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The activity helps
managers analyse the present condition to identify the ways of attaining the desired position in future. It is both, the
need of the organisation and the responsibility of managers.

Steps involved in Planning

By planning process, an organisation not only gets the insights of the future, but it also helps the organisation to
shape its future. Effective planning involves simplicity of the plan, i.e. the plan should be clearly stated and easy to
understand because if the plan is too complicated it will create chaos among the members of the organisation.
Further, the plan should fulfil all the requirements of the organisation.

Limitations of Planning

(i) Planning leads to rigidity

(ii) Planning may not work in a dynamic environment

(iii) Planning reduces creativity

(iv) Planning involves huge costs

(v) Planning is a time-consuming process

(vi) Planning does not guarantee success

Types of Plans

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 Course: BCA Class: I Subject Name: Principles of Management Unit No.: 02 Lecture No.: Topic:

Single-use and standing plans

An organisation has to prepare a plan before making any decision related to business operation, or undertaking any
project. Plans can be classified into several types depending on the use and the length of the planning period. Certain
plans have a short term horizon and help to achieve operational goals. These plans can be classified into single-use
plans and standing plans.

Single-use Plan:

A single-use plan is developed for a one-time event or project. Such a course of action is not likely to be repeated in
future, i.e., they are for non-recurring situations. The duration of this plan may depend upon the type of the project.
It may span a week or a month. A project may sometimes be of only one day, such as, organising an event or a
seminar or conference. These plans include budgets, programmes and projects. They consist of details, including the
names of employees who are responsible for doing the work and contributing to the single-use plan. For example, a
programme may consist of identifying steps, procedures required for opening a new department to deal with other
minor work. Projects are similar to programmes but differ in scope and complexity. A budget is a statement of
expenses, revenue and income for a specified period.

Standing Plan:

A standing plan is used for activities that occur regularly over a period of time. It is designed to ensure that internal
operations of an organisation run smoothly. Such a plan greatly enhances efficiency in routine decision-making. It is
usually developed once but is modified from time to time to meet business needs as required. Standing plans include
policies, procedures, methods and rules.

Policies are general forms of standing plans that specifies the organisations response to a certain situation like the
admission policy of an educational institution. Procedures describe steps to be followed in particular circumstances

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like the procedure for reporting progress in production. Methods provide the manner in which a task has to be
performed. Rules are very clearly stated as to exactly what has to be done like reporting for work at a particular time.
Single-use and standing plans are part of the operational planning process.

There are other types of plans which usually are not classified as single use or standing plans. A strategy, for example,
is part of strategic planning or management. It is a general plan prepared by top management outlining resource
allocation, priorities and takes into consideration the business environment and competition. Objectives are usually
set by the top management and serve as a guide for overall planning. Each unit then formulates their own objectives
keeping in view the overall organisational goals. Based on what the plans seek to achieve, plans can be classified as
Objectives, Strategy, Policy, Procedure, Method, Rule, Programme, Budget.

Objectives

The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future position that
the management would like to reach. Objectives are very basic to the organisation and they are defined as ends
which the management seeks to achieve by its operations. Therefore, an objective simply stated is what you would
like to achieve, i.e., the end result of activities.

Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms, in the form of
a written statement of desired results to be achieved within a given time period.

Strategy

A strategy provides the broad contours of an organisation’s business. It will also refer to future decisions defining the
organisations direction and scope in the long run. Thus, we can say a strategy is a comprehensive plan for
accomplishing an organisation objectives. This comprehensive plan will include three dimensions, (i) determining long
term objectives, (ii) adopting a particular course of action, and (iii) allocating resources necessary to achieve the
objective.

Whenever a strategy is formulated, the business environment needs to be taken into consideration. The changes in
the economic, political, social, legal and technological environment will affect an organisation’s strategy. Strategies
usually take the course of forming the organisation’s identity in the business environment. Major strategic decisions
will include decisions like whether the organisation will continue to be in the same line of business, or combine new
lines of activity with the existing business or seek to acquire a dominant position in the same market.

Policy

Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies
provide a basis for interpreting strategy which is usually stated in general terms. They are guides to managerial action
and decisions in the implementation of strategy. There are policies for all levels and departments in the organisation
ranging from major company policies to minor policies. Major company policies are for all to know i.e., customers,
clients, competitors etc., whereas minor polices are applicable to insiders and contain minute details of information
vital to the employees of an organisation.

Procedure

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 Course: BCA Class: I Subject Name: Principles of Management Unit No.: 02 Lecture No.: Topic:

Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be
performed. They are specified in a chronological order. Procedures are specified steps to be followed in particular
circumstances. They are generally meant for insiders to follow. The sequence of steps or actions to be taken are
generally to enforce a policy and to attain pre-determined objectives. Policies and procedures are interlinked with
each other. Procedures are steps to be carried out within a broad policy framework.

Method

Methods provide the prescribed ways or manner in which a task has to be performed considering the objective. It
deals with a task comprising one step of a procedure and specifies how this step is to be performed. The method may
vary from task to task. Selection of proper method saves time, money and effort and increases efficiency.

Rule

Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It
reflects a managerial decision that a certain action must or must not be taken. They are usually the simplest type of
plans because there is no compromise or change unless a policy decision is taken.

Programme

Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks,
human and physical resources required and the budget to implement any course of action. Programmes will include
the entire gamut of activities as well as the organisation’s policy and how it will contribute to the overall business
plan.

Budget

A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies future facts
and figures. Since budget represents all items in numbers, it becomes easier to compare actual figures with expected
figures and take corrective action subsequently. Thus, a budget is also a control device from which deviations can be
taken care of. But making a budget involves forecasting, therefore, it clearly comes under planning. It is a
fundamental planning instrument in many organisations.

Planning means looking ahead and chalking out future courses of action to be followed. It is a

preparatory step. It is a systematic activity which determines when, how and who is going to

perform a specific job. Planning is a detailed programme regarding future courses of action. It is

rightly said “Well plan is half done”.

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

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 Course: BCA Class: I Subject Name: Principles of Management Unit No.: 02 Lecture No.: Topic:

before acting and to act in the light of facts rather than guesses”. Planning is deciding best

alternative among others to perform different managerial functions in order to achieve

predetermined goals.

According to Koontz & O’Donell, “Planning is deciding in advance what to do, how to do and

who is to do it. Planning bridges the gap between where we are to, where we want to go. It

makes possible things to occur which would not otherwise occur”.

Purpose of Planning

1) Reduces uncertainty and risk

2) Provides sense of direction

3) Encourages innovation & creativity

4) Helps in coordination

5) Guides decision making

6) Provides a basis for decentralization

7) Provides efficiency in operation

8) Facilitates control

Planning Process

Planning function of management involves following steps:-

1. Establishment of objectives

a. Planning requires a systematic approach.

b. Planning starts with the setting of goals and objectives to be achieved.

c. Objectives provide a rationale for undertaking various activities as well as

indicate direction of efforts.

d. Moreover objectives focus the attention of managers on the end results to be

achieved.

e. As a matter of fact, objectives provide nucleus to the planning process. Therefore,

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objectives should be stated in a clear, precise and unambiguous language.

Otherwise the activities undertaken are bound to be ineffective.

f. As far as possible, objectives should be stated in quantitative terms. For example,

Number of men working, wages given, units produced, etc. However such an objective

cannot be stated in quantitative terms like the performance of the quality control

manager, the effectiveness of the personnel manager.

g. Such goals should be specified in qualitative terms.

h. Hence objectives should be practical, acceptable, workable and achievable.

2. Establishment of Planning Premises

a. Planning premises are the assumptions about the lively shape of events in future.

b. They serve as a basis of planning.

c. Establishment of planning premises is concerned with determining where one

tends to deviate from the actual plans and causes of such deviations.

d. It is to find out what obstacles are there in the way of business during the course

of operations.

e. Establishment of planning premises is concerned to take such steps that avoids

these obstacles to a great extent.

f. Planning premises may be internal or external. Internal includes capital

investment policy, management labour relations, philosophy of management, etc.

Whereas external includes socio- economic, political and economical changes.

g. Internal premises are controllable whereas external are non- controllable.

3. Choice of alternative course of action

a. When forecast are available and premises are established, a number of alternative

course of actions have to be considered.

b. For this purpose, each and every alternative will be evaluated by weighing its pros

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and cons in the light of resources available and requirements of the organization.

c. The merits, demerits as well as the consequences of each alternative must be

examined before the choice is made.

d. After objective and scientific evaluation, the best alternative is chosen.

e. The planners should take the help of various quantitative techniques to judge the

stability of an alternative.

4. Formulation of derivative plans

a. Derivative plans are the sub-plans or secondary plans which help in the

achievement of the main plan.

b. Secondary plans will flow from the basic plan. These are meant to support and

expedite the achievement of basic plans.

c. These detailed plans include policies, procedures, rules, programmes, budgets,

schedules, etc. For example, if profit maximization is the main aim of the

enterprise, derivative plans will include sales maximization, production

maximisation, and cost minimization.

d. Derivative plans indicate time schedule and sequence of accomplishing various

tasks.

5. Securing Co-operation

a. After the plans have been determined, it is necessary rather advisable to take

subordinates or those who have to implement these plans with confidence.

b. The purposes behind taking them into confidence are:-

i. Subordinates may feel motivated since they are involved in decision

making process.

ii. The organisation may be able to get valuable suggestions and

improvement in the formulation as well as the implementation of plans.

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iii. Also the employees will be more interested in the execution of these plans.

6. Follow up/Appraisal of plans

a. After choosing a particular course of action, it is put into action.

b. After the selected plan is implemented, it is important to appraise its

effectiveness.

c. This is done based on feedback or information received from departments or

persons concerned.

d. This enables the management to correct deviations or modify the plan.

e. This step establishes a link between planning and controlling function.

f. The follow-up must go side by side with the implementation of plans so that in the light

of observations made, plans can be made more realistic.

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