Unit-2 Planning

Planning:
A plan is a course of action to be taken in future. It is a predefined
course of action. Planning is the process of deciding in advance the
objectives to be achieved in a given period of time, formulating
alternative courses of action to achieved them and select the best
course of action.
Planning (also called forethought) is the process of thinking about
and organizing the activities required to achieve a desired goal.
Others definition of planning:
“Ifyou don't have daily objectives, you qualify as a dreamer.” - Zig
Ziglar
Planning is deciding in advance what is to be done. It involves the
selection of objectives, policies, procedures and programs from
alternatives” - M E Harley
“Planning is a trap laid down to capture the future” - Allen
“If you don't know where you are going, how can you expect to get
there?- Basil S. Walsh
Nature or Features or Characteristics of Planning:
1. Planning is goal oriented-Plans are made in order to seek certain
predetermined goals.
2. Planning is a primary function -Planning provides the basic
foundation from which all future management functions arise.
3. Planning is a thinking process - Involves imagination, foresight
and sound judgement.
4. Planning is flexible -Planning should not be rigid.

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5. Planning is all-pervasive -Planning is an on-going activity at all
levels of an organizational hierarchy, right from CEO to first line
managers.
6.Planning is a continuous process -Planning involves continuous
assessment and reassessment of the resources, directions,
opportunities and problems of the organization while converting
them to achieve goals.
7 .Planning is future oriented.
8. Planning involves choice.
9. Planning aims at efficiency
IMPORTANCE OF PLANNING:
Planning is of vital importance because it is pervasive and precedes
all other functions of management. Sound planning is an essential
condition for effective management. Poor planning has often been a
cause of failure in business. Sound planning offers the following
advantages:
1. Focuses Attention on Objectives- Planning makes the goals clear
and specific. This is because the objectives or goals to be achieved
are decided before plans are drawn. Planning focuses managerial
attention on the purposes for which various activities are to be
undertaken.
2. Makes Activities Meaningful- When goals are clearly defined
actions become meaningful. Managers and employees know how
their activities relate to the goals of the organisation. This acts as a
motivating force and employees are encouraged to work harder.
3. Brings Order in Place of Chaos- Planning helps the organisation to
keep an eye on the right path. Planning ensures clarity in thought
and action.
4.Reduces risk of uncertainty- Business enterprise operate in an
uncertain environment and face several types of risk. Planning

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enable these enterprise to predict future events and prepare to face
unexpected events.
5. Improves economy of operation- Planning involves selection of
the best possible action. It indicates how various tasks are to be
completed and to be utilised.
6. Provides basis for control- Planning provides the standards
against which the actual performance can be measured and
evaluated. Planning makes the control meaningful and effective.
7. Promotes innovation and creativity- Sound planning encourage
creative thinking. Managers get the opportunity to develop new
ideas and apply these ideas in creating new products.
8. Facilitates decision making- It involves searching for various
alternatives course of action and laid down.
9. Help in coordination-

Steps in planning:

1. To establish objectives which are verifiable- Identify goals of the

organization. Internal (Financial position of company, human
resources available, manufacturing facility, company image, etc.) and
external environment(Government rules and regulations, Socio-
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economic condition of the society, competition level, suppliers
reliability) of the organization has to be studied
2. To establish planning premise- Planning premises are
assumptions of future market conditions which become the basis for
current planning process. Planning premises usually relate to cost
and availability of raw materials, labour, power, product demands,
population trends, technology growth, government policies etc.
3. To determine alternative course of action- Search and list all
possible alternatives in order to be compared and analytically
evaluated.
4. To evaluate the alternatives and select the best- Select most
suitable and best course of action. Alternatives have to be compared
and evaluated with respect to their expected contribution to
organizational goals. Evaluation and selection is often done with the
help of quantitative techniques and operations research.
5.To formulate derivative plans- Management has to formulate
derivative plans or secondary plans to support the basic plan.
Derivative plans are sub plans or departmental plans. For Example, if
the production plan of TATA MOTORS is to produce a million of
Nano’s in the next five years, the derivative plans would be plans for
various departments like fabrication, forging, casting, purchase,
assembly etc.
6. To secure co-operation and participation of all employees-
Involving employees in planning process enhances their cooperation
and participation. Continuous suggestions, complaints and criticisms
must be solicited from the employees.
7. To measure and control the progress through follow- Up
Continuous evaluation of plans help in identifying recurring mistakes
and avoiding them in future.

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Types of planning:

Classification of Planning Premises:

1. Internal and External premises
2. Tangible and Intangible premises
3. Controllable, Semi-controllable and Uncontrollable premises.
Internal premises:
 Internal premises are those factors which exist within
organization and are generally under the control of
management.
 Internal premises include – men, money, machinery, materials
and methods.
External premises:

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  External premises are those factors which exist outside the
purview of the organization and are generally not under the
control of the management.
 External premises include government policies, general
economy of country, technological trends, climatic conditions
etc.
Tangible premises:
 Tangible premises are those which are quantifiable in nature.
For Example, production quality, quality standards, capital
required, machinery to purchase.
 These info. Is needed for planning and are quantifiable and
measurable in nature.
Intangible premises:
 Intangible premises are those which are abstract and non-
quantifiable in nature.
 For Example, company image, brand loyalty, political situation
etc., are needed for planning but are qualitative in character.

Controllable premises:
 Controllable premises are those factors which are said to be
completely under the control of management. For Example,
Managerial policies, rules and regulations etc.
Semi-controllable premises:
 Controllable premises are those which management has partial
control. For Example, workers attitude and efficiency, firms
pricing policy, firms marketing programs, raw materials etc
Uncontrollable premise:

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  Internal premises are those factors over which management
has absolutely no control. For Example, Natural calamities, new
inventions, wars, strikes imposition of emergency, government
etc.
Barriers to effective planning:
1.Inability to plan- Managers are not born with the ability to plan.
Some managers are not successful planners because they lack the
background, education, and/or ability.
2.Lack of commitment to the planning process- The development of
a plan is hard work; it is much easier for a manager to claim that he
or she doesn't have the time to work through the required planning
process than to actually devote the time to developing a plan.
3.Inferior information- Facts that are out‐of‐date, of poor quality, or
of insufficient quantity can be major barriers to planning. No matter
how well managers plan, if they are basing their planning on inferior
information, their plans will probably fail.

4.Focusing on the present at the expense of the future- Failure to

consider the long‐term effects of a plan because of emphasis on
short‐term problems may lead to trouble in preparing for the future.

5.Too much reliance on the organization's planning department-

Many companies have a planning department or a planning and
development team. These departments conduct studies, do
research, build models, and project probable results, but they do not
implement plans. Planning department results are aids in planning
and should be used only as such. Formulating the plan is still the
manager's responsibility.

Remedial measures of planning:

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