PLANNING

DR A JAGAN MOHAN REDDY

SIBM,SIU,HYDERABAD
Introduction
• Planning is essential in every walk of life.
• Each and every person has to frame a plan to decide his activities.
• Plan period may be short or long,
• Planning is the first and foremost function of management.
• Effective planning facilitates early achievement of objectives.
Meaning of Planning
• Planning is an intellectual process of thinking.
• A course of action to achieve the predetermined obj’s of organization future.
• Separate plans are prepared for various departments, and top executives co ordinate the
various departmental plans.
Definition : Various Definitions by eminent writers in the field of management.
“Planning is the selecting and relating of facts and the making and using of assumptions regarding the
future in the visualization and formulations of proposed activities believed necessary to achieve desired
results”
Characteristics of Planning :
• Planning is looking into the future.
• Involves pre-determined line of action.
• It discovers the best alternative out of available many alternatives.-Opportunity Cost
• It requires considerable time form implementation.
• It is a continuous process.
• Its object is to achieve pre-determined objectives in a better way.
• It integrates various activities of organization.
• It is done for a specific period.
• It not only selects the objectives but also
• Develops policies, programs and procedures to achieve the objectives. It is required at all levels of
management.
• It is an interdependent process which co ordinates the various business activities.
• It directs the members of the organization.
• Growth and prosperity of any organization depends upon planning.
Objectives of Planning
• Anticipates unpredictable contingencies.
• Economy in operation
• Achieving the Pre-Determined goals Reduce Competition
• Brings co-operation and coordination; Reduces uncertainty
Nature of Planning
• Economy and certainity are considered while selecting the best alternative among the available
ones.
The Nature Of Planning is as below that is self explanatory.
• Primary Function ; Planning contributes to objectives
• Planning is an intellectual activity
• Planning results in higher efficiency
• Planning is a continuous process
• Planning is flexible ; Unity and Consistency
• Planning is Common to all; Basis for all managerial functions
• Getting Coordination ;Considering limiting factors
Planning Vs. Forecasting
• Planning is not forecasting.
• Forecasting is guessing of the future course of events correctly.
• Planning is a wider term that includes forecasting and it is part of planning and is based on the
past experience.
Importance of Planning
• Through planning objectives are achieved well in advance.
• Defective planning leads to failure of the organization-Execution(Japan).
• Effective planning can anticipate the uncertain events and help prepare the workforce to meet
the situation to survive.
• Planning helps the businessman get early success.
 Tackling complexities of objectives of business- Effective
 Convert utilization of uncertainty into resources certainty
 Effective Help in control & cordination
 Economy in avoiding operation/business failures.
Advantages of Planning
• Better utilization of resources
• Helps in achieving objectives
• Economy in operation ;
• Minimizes future uncertainties
• Improves competitive strength ;Effective control; Motivation
• Cooperation ;Promote growth and improvement
• Develops rationality among management executives
• Prevents hasty judgment ;Reduces redtapism
• Encourages innovative thought
• Improves ability to cope with change
• Creates forward looking attitude in management
• Development of efficient methods
• Delegation of authority facilitated
• Anticipation of crisis
Six P’s of Planning Purpose
• Goals should be verifiable so that we can check it
• PHILOSOPHY—ideology
• PROMISES—uniting factor
• PLANS—manager has to ascertain the goals, actions to achieve goals, requirement of resources,
sources of resources
• POLICY—general guidelines on which management can take decision
• PRIORITY—Needs.
Steps in Planning Process Step
Step 1 Determination Of Objectives
Step 2 Establishment Of Planning Premises
• Step 3 Selection of the Best Plan from the Alternatives Available
• Step 4 Timing and Sequence of Operation
• Step 5 Estimation of Future Events
• Step 6 Follow Up Action
STEP 1 Determination Of Objectives
• First step in planning process.
• The objectives so determined decide the future course of action.
STEP 2 Establishment Of Planning Premises
• Planning premises are the assumptions for future which provide a framework for the planning
process.
• They form the very basis for action. Business environments are uncertain.
• Planning Premises give a prediction about future uncertainties of business environments.
• On the basis of these forecasts are made and future trends are indicated.
STEP 3 Selection of the Best Plan from the Alternatives
• Available All alternatives are found out, studied and evaluated.
• After careful consideration of all the points one alternative is selected and decision is taken
according to the choice made.
STEP 4 Timing and Sequence of Operation
• Timing is an essential consideration in any planning- Time & cost Overruns.
• Sequence of operation is also arranged carefully.
• Priorities are fixed.
STEP 5 Estimation of Future Events
• Some estimation is made for future events.
• There are trend studies which indicate possible future events.
• Keeping some provision for margin of error, these trend studies can be relied upon.
• Experience, Judgment & Discretion also help in estimating future events.
STEP 6 Follow Up Action
• The plans so prepared are to be carried out.
• Follow up action is also needed for seeing through the plan during the course of
implementation.-PERT;CPM-Project Management.
• A regular follow-up action is both desirable and needed for effective implementation
and accomplishment of tasks assigned- P, D ,C & A.
Standing Plans
• Formulated by Managers at different levels.
• Meant for repeated use as and when the occasion demands.
• May be used over a long period of time.
Single-Use Plans
*Are used for only specific periods.
Types of Plans : Financial or Non-financial Plans
1. Plans that require financial resources are considered financial plans
2. Plans relating to physical resources of an organization are non-financial plans
Informal :Mere thinking by managers or contemplation.
When informal plans are finalized and prepared for implementation, it is considered to be a Formal Plan
Specific and Routine Plans
• Any plan made with a particular objective is a specific plan.
• Day-to-day normal activities require some type of regular plan known as routine plan

Strategic and Functional Plans

• Strategic Planning is overall planning of the enterprise’s objectives determined by top management
• A plan made in functional area like production, purchase, marketing is referred to as functional plan

Long-range or Short range Plan

• Short term plans refers to a period covering six to twelve months
• Long range plans usually involve a time interval of between three and five years

Administrative or Operational Plans

• Administrative plans provide the base for operative plans.
• Administrative planning is done by top and middle level management and operational planning is done by lower level
management
Strategic Planning (SP)Vs Operational Planning(OP)
• SP is concentrated towards attaining the long-term objectives of business.
• OP is done to achieve short-term objectives of the company.

Strategic Planning (By the Top Level Management)

• Where the Organization wants to reach in future?
• What should be done to pursue the organizational Vision, Mission & Objectives?
• It is an analytical process which examines the Micro And Macro Environment of
business.
• The process is used to define the company’s vision, ambitions, and Set Priorities
To Make A Route that will lead the company towards its ultimate goal.
• Not for a particular dept., but it covers the entire organization.
• Internal & External Environment which directly influences the organization.
• Focuses on the enduring Development Of The Organization.
The tools used in this process are:
• SWOT Analysis (Strength, Weakness, Opportunities, Threats)
• Portfolio Analysis
• PEST Analysis (Political, Economic, Social, Technological Environment)
• Porter’s 5 forces Analysis (New Entrants, Rival Sellers, Substitute Products, Buyer Bargaining Power, Supplier
Bargaining Power)
• BCG Matrix (Boston Consulting Group).
• They help in Designing a Strategy considering various elements, that will lead the organization towards its
vision.
Operational Planning
• OP determines the day to day activities of the business.
• The planning is done to support Strategic Planning to accomplish the organizational goals..
• Middle-level management performs the function of the operational planning process.
• It includes planning of regular business activities and operations for a short period.
The following are the features of Operational Planning:
• Objectives need to be clearly defined.
• Achievement of the desired result.
• The activities are to be performed as decided.
• Maintenance of Quality Standards.
• Measuring Performance- what can’t be measured, can't be managed.
 DIFFERENCES BETWEEN
STRATEGIC PLANNING AND OPERATIONAL PLANNING
• Pursues the Organization’s Vision. • Tactical objectives of the organization.
• Long Lasting as compared Operational Plan. • Not. OP supports Strategic Planning.
• Looks at Internal &External environment of business. • Only Internal.
• Done by Top Level Management. • Middle-level management.
• Covers the Whole Organization. • Done for a particular Unit or Dept. of Org..
• Strategic Plans are made to achieve the Vision, • OPs are made to effectively perform the basic
Mission, Goals, & Objectives. activities of the business.
• Scope Wide • Narrow;
• Planning of Vision, Mission And Objectives. • Planning the routine activities of the company.