Definition

• Deciding in advance
• What to do
• How to do
• When to do
• Who is to do it
Features of Planning:

DCP OF MP

1. D- Decision making
2. C-Continuous process
3. P-Pervasive
4. O-Objective achievement
5. F-Futuristic
6. M-Mental exercise
7. P-Primary function
 Features of planning
 Planning sets specific
objectives and provides ways
1. Objective Achievement
for achieving this objective.
 Planning is purposeful .
 It has no meaning unless it
contributes to the
achievement of
predetermined organisational
goals.
 It provides sense of direction
to various activities.
 • Base for other functions
2. Primary Function of • All other functions are
Management
performed within the framework
of the plan drawn by the
planning process.
 • Requires at all level of management
and in all departments.
3. Pervasive • Therefore there are different plans
• Overall organizational plan,
divisional plan, departmental plan
and specific plan
 • A plan in formulated for a specific
period
• After the end of this period a new
plan is formulated keeping in view
4. Continuous Process
the likely future environment
• This is done repeatedly
• Thus there is continuity in
formulation and implementation of
plan
 • It is futuristic as it is primarily
concerned with looking ahead
and preparing an organization
5. Futuristic for the future.
• Basis purpose is to meet future
environmental requirements
effectively to achieve
organizational objectives.
• Forecasting the future behaviour
of business environment
 • Planning helps to select the
6. Decision making most appropriate alternative out
of several alternative.
• Unless decision has been made,
a plan cannot be implemented.
• Decision making is the core of
planning.
 • Planning is a thinking process
rather than doing process.
7. Mental exercise • It is intellectual process as it
requires application of mind
involving foresight, intelligent
imagination and sound
judgement.
Importance of planning
 Importance of Planning

(DR.SODI)
 1. D-Planning provides Direction
 2. R-Planning reduces the Risk of uncertainty
 3. S-Establishing Standard of controlling
 4. O- Reduces Overlapping
 5. D-Decision making
 6. I- Promotes Innovative Ideas
 PROVIDES DIRECTION FOR
ACTION

 By prescribing in advance what is to be done and how it is to be done

 Planning sets objectives
 All are clear about what they have to achieve and proceed in the same
direction
 e.g. Textile co. wants to diversify into ready made garments. For that,
actions have to be taken to find out market potential, for research and
development, to get market feedback, etc.
 REDUCING RISK OF
UNCERTAINITY

• Planning is done keeping in mind the business environment which is ever

changing.
• Such changes create uncertainty and consequently, risks for an organization.
• Though planning doesn’t reduce uncertainty but reduces the risk of uncertainty
• Mangers can anticipate likely changes in business environment in advance and
plan appropriate actions.
• e.g. While formulating plan planning department noticed that the government is
likely to ban imports from the country from which the raw materials are imported.
This alerted them and a plan was repaired to acquire the raw material from
somewhere else. This helped in smooth flow of production.
 Reducing overlapping and
wasteful resources

• By providing basis for coordinating activities and efforts of different

departments and individuals.
• It provides clarity in thought and work is carried out smoothly without
interruptions
 PROVIDING INNOVATIVE IDEAS

• As planning is a mental exercise, it promotes innovative ideas which are

unique in some way to solve business problems to solve business problems
or to achieve organizational objectives in new ways.
• Planning being primary function of management, new ideas are introduced
at the planning stage itself.
• E.g introducing new product, new ways to serving the customers.
 FACILITATING DECISION MAKING

 By providing guidelines how decision should be taken.

 Such guidelines are in the form of policies, procedures,
rules, etc. which are kept in mind while making
decisions.
 ESHTABLISHING STANDARDS FOR
CONTROLLING

 Actual performance results are evaluated against these standards in

controlling.
 If there is any deviation between the two, necessary corrective
actions are taken at the controlling stage to ensure that no deviation
takes place between the standards established by planning and actual
results in future.
Limitations of planning
 • When plan is prepared it works as a
benchmark for everyone in the
organization
• Any deviation from this may be
Rigidity in unworkable.
organizational • For e.g. People have to work under
function prescribed policies, procedures,
rules, methods, etc. Many times
following this prescriptions becomes
more important in work
performance than work results.
There are two types of costs
involved in the planning process.
First, cost is involved in the planning
process. Costly
Second, planning process requires a process
lot of information collection and
processing, keeping records, etc.,
which involves a lot of cost.
 • It discourages creativity which is
important for innovations.
• While planning is a creative
process it is undertaken in such a
Discouraging way that this creativity is
creativity confined to top level only.
• Usually, a plan is prepared at top
management level and managers
at middle and lower management
levels merely implement the
plan, which requires very little
creativity.
• It requires collection of
different types of information
from the environment as well as
from internal sources, analysis Time-
of information and drawing consuming
conclusions from the analysis. process
• This is the reason why elaborate
planning is limited to only large
organizations.
 • Although, planning provides
direction for actions which bring
success, it does not guarantee
success.
• There are two reasons, first the
No guarantee for plan may be faulty.
success • This happen when the present plan
is based on the past plan which
was successful but the situation
for the new plan has changed.
• Second, even if a plan is good, it
brings desired results only when it
is implemented.
• Business Environment is dynamic as
it keeps on changing.
• The organisation has to adapt itself
to changes in the business May not work
environment by making changes in in the dynamic
plans. environment
• Planning cannot foresee everything
and thus, there may be obstacles to
effective planning
 PLANNING PROCESS

SETTING ESTABLISHING IDENTIFYING ALTERNATIVE

COURSE OF ACTION
OBJECTIVES PLANNING PREMISES

SELECTING EVALUATING
PLAN AN ALTERNATIV
FOLLOW UP IMPLEMENTATIO ALTERNATIV E COURSES
ACTION N E
 SETTING OBJECTIVES

• Objectives are the end results which are to be

achieved during the plan period.
• Objectives are set for the organization as a
whole as well as for its major divisions and
departments.
• Objectives may be set in quantitative terms like
20 per cent growth in sales per annum or in
qualitative terms like developing employees,
undertaking research and development activities
and so on.
 Establishing Planning Premises

 Planning premises, are assumptions about future

environment scenario and organizational resources.
 These assumptions are the base material upon which
plans are formulated.
 For making assumptions, forecasts about future conditions
are made in the basis of current conditions.
 At this step, the business environment is analysed
thoroughly.
 Identify Alternative Cources of actions

 There are many alternative ways through which

an organization may achieve its stated objectives.
 For e.g. growth objective may be achieved either
by expanding the present business or by
diversifying in a new business. At this step
attempt is made to identify as many alternatives
as possible so that an organization has flexibility
in choosing the most appropriate alternative
course of action.
 Evaluating Alternative Courses

 In this step, positive and negative aspects of various

alternative courses of action are evaluated to
identify the most appropriate alternative through
which the desired objectives may be achieved.
 For evaluating various alternatives organizations fix
certain criteria in the light of stated objectives.
 These criteria are fixed in terms of cost, returns,
risk and an organization’s vision, that is what it
wants to be in the distant future.
 Selecting an Alternative

 The alternative which is considered to be

the most appropriate for achieving which is
considered to be the most appropriate for
achieving objectives is selected.
 The objective at the step is to select the
best plan which is flexible and will help
achieve organizational objectives.
 Plan Implementation

 When a plan is selected, it is implemented, that

is, it is put into action.
 For implementing a plan, various action plans are
prepared to make arrangements for required
resources.
 For e.g. for implementing a plan for opening a
new factory, action plans for acquiring financial
resources, human resources, physical facilities,
etc. are prepared.
 Follow up Actions

 When the plan is put into action, follow up action

is required to see whether it is being
implemented and activities are being performed
according to schedule.
 Monitoring of implementation of plans is quite
important for ensuring that the stated objectives
are achieved.
 Types of plans

Single Use Standing

plan plan

Policy
Programme Procedure
Budget Method
Rule
 Single use plan
■ Single use plans are those plans which are formulated for undertaking
non recurring activities
■ Main feature are:
1. Single use plans are relevant to non recurring activities
2. Duration of single use plans is for a specified period which depends
on the nature of activities.
3. E.g Budget for one year, a programme of advertisement campaign for
launching a new product for 3 months, etc.
 Standing plans
■ Standing plans are relevant to recurring activities
■ Features are:
1. Standing plans are relevant to recurring activities. For e,g,
employee promotion policy deals with employee
promotion which is a recurring activity as in a large
organization, employee promotion activity undertaking
frequently
2. These are used over a long period of time. Once a policy
on any matter is formulated, it is followed by the
concerned persons on a continuous basis.
3. Standing plans are usually formulated at comparatively
higher management level.
 Objective
■ Objective is the end which an organization seeks to achieve by its operation

1. There may be multiple objectives in an organization-

survival, profit and growth.
2. Objectives have hierarchy.
3. Objectives may be set for a long period as well as short
period
4. Objectives can be defined in a broad and generalised
form.
 Strategy
■ Strategy is a comprehensive plan for accomplishing an organization‟s objective

1. Strategy is formulated after considering all environmental

dimensions and organizational strengths and weaknesses.
2. It sets long term direction of the organization by specifying
where it will reach in future.
3. Strategy operates at three level. Entire organization, different
businesses and different functions.
 TATA GROUP
■ Tata had 300 companies
■ When Ratan Tata took over the control of TATA Group in 1991, many companies
started showing lower profit due to competition
■ TATA Group chalked out a strategy to organise its businesses around its core
competence.
■ Thus only businesses like automobiles, cement, chemicals and fertilizers hotels, IT
steel, tea and other closely related businesses were kept.
■ Tata oil mills, Lakme, TATA vashisti, Merind and Tata Timken were sold.
■ In present scenario, Tata group has defined its objectives as „to double group
turnover‟ every four years and to double profit every three years.
 Policy
■ Policy is a statement which guides thinking or channelizes energies towards a particular
direction.
1. Policy defines the broad parameters within which a manager
may function.
2. Policy is generally expressed in a qualitative and conditional
way
3. Policy is formulated in the context of organizational objectives
and strategies.
E.g. if an organizational has a policy to promote
employees on seniority basis, the managers job is just
to determine the seniority of employees for promotion.
 Policy of EIH Ltd.

■ EIH Ltd. is the owner of the famous Oberoi chain of hotels in India and
abroad. For achieving growth in is business it has prescribed the following
policies:
1. To locate hotels at central places of the cities.
2. To construct or acquire hotels having 300-500 rooms.
3. To spend 7-8% of revenues on hotel maintenance and upkeep.
4. To ensure quality of food and beverages.
5. To provide personalised services to customers.
6. To offer most expensive rooms in the city.
7. To use internal funds first and go for external financing if need be.
8. To decentralised authority to the bottom level
 Procedure
■ Procedure is a chronological sequence in which an activity should be performed to
achieve its objective.

1. It establishes sequential steps for performing activities.

2. Different activities may require different types of procedures.
3. Procedures are quite pervasive in an organisation.
4. Procedures may cut across the fictional lines in an
organization.
E.g. an organization may prescribe procedure about
how a sales order should be executed so that all
entities like the customer, billing section, and
finance department get timely information.
 Method
■ Method is the prescribed way or manner in which a task has to be performed considering
its objectives.

1. Method is a formally prescribed standard which should be used

in performing a specific activity.
2. Method is activity specific implying that different activities may
require different methods.

E.g. There are different methods of valuation of closing

stock. An organisation may choose a particular method
which works as an standard for valuation of closing
stock throughout the organization
 Rule
■ Rule is the specific statement that prescribes what is to be done or not to be done.

1. Rule sets conditions which must be observed in performing

various activities.
2. Rule is to be followed strictly without any exception. Non
adherence to a rule generally results in punishment.
3. Rule is meant to govern behaviour of organizational members
and maintain discipline.
4. Rule is of impersonal nature and treats all the persons as
equal.

E.g. Rules may be “Smoking is strictly prohibited in

the factory premises”
 Programme
■ Programme is a detailed statement about a project which outlines the objectives, policies,
procedure, methods, rules and resources required to implement any course of action.

1. Programme activity is identifiable in terms of specific

objectives, for e.g programme for creating employment
opportunities undertaken by government.
2. Programme activity is unique, infrequent and even unfamiliar to
the organisation. It is not a repetitive activity.
3. Programme activity is critical to the organization for achieving
its objectives.
 Budget
■ Budget is a statement of expected results expressed in numerical terms.

1. Budget expresses quantitatively resource availability and

operating results to be achieved in a specific period.
2. There may be different types of budgets with each budget
covering a particular area.
3. Budget is period specific. When this period is over new budget
is prepared.
Bharatiya Vidya Bhavans V.M Public School,
Vadodara

Tasneem Hotelwala.
PGT Commerce