Planning

Planning is an intellectual process, the conscious determination of courses of

action, the basing of decisions on purpose, acts and considered estimates
Nature of Planning

1. Planning is goal-oriented: Every plan must contribute in some positive way towards the
accomplishment of group objectives. Planning has no meaning without being related to goals.
2. Primacy of Planning: Planning is the first of the managerial functions. It precedes all other
management functions.
3. Pervasiveness of Planning: Planning is found at all levels of management. Top management
looks after strategic planning. Middle management is in charge of administrative planning.
Lower management has to concentrate on operational planning.
4. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the
objectives as economically as possible. Planning also focuses on accurate forecasts.
5. Co-ordination: Planning co-ordinates the what, who, how, where and why of planning. Without
coordination of all activities, we cannot have united efforts.
6. Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and
formulate plans in the light of these critical factors.
7. Flexibility: The process of planning should be adaptable to changing environmental conditions.
8. Planning is an intellectual process: The quality of planning will vary according to the quality of
the mind of the manager.
Purpose of Planning
1. To manage by objectives: All the activities of an organization are designed to achieve
certain specified objectives. However, planning makes the objectives more concrete by
focusing attention on them.
2. To offset uncertainty and change: Future is always full of uncertainties and changes.
Planning foresees the future and makes the necessary provisions for it.
3. To secure economy in operation: Planning involves, the selection of most profitable course
of action that would lead to the best result at the minimum costs.
4. To help in co-ordination: Co-ordination is, indeed, the essence of management, the
planning is the base of it. Without planning it is not possible to co-ordinate the different
activities of an organization.
5. To make control effective: The controlling function of management relates to the
comparison of the planned performance with the actual performance. In the absence of
plans, a management will have no standards for controlling other's performance.
6. To increase organizational effectiveness: Mere efficiency in the organization is not
important; it should also lead to productivity and effectiveness. Planning enables the
manager to measure the organizational effectiveness in the context of the stated objectives
and take further actions in this direction.
 Classification of Planning
On the basis of content
• Strategic Planning – It is the process of deciding on Long-term objectives of the
organization. – It encompasses all the functional areas of business
• Tactical Planning – It involves conversion of detailed and specific plans into
detailed and specific action plans. – It is the blue print for current action and it
supports the strategic plans.

On the basis of time period

• Long term planning – Time frame beyond five years. – It specifies what the
organization wants to become in long run. – It involves great deal of uncertainty.
• Intermediate term planning – Time frame between two and five years. – It is
designed to implement long term plans.
• Short term planning – Time frame of one year or less. – It provide basis for day
to day operations.
Planning Process
a) Perception of Opportunities:
• Awareness of an opportunity is the real starting point for planning.
• It includes a
• preliminary look at possible future opportunities
• the ability to see them clearly and completely,
• knowledge of where we stand in the light of our strengths and weaknesses,
• an understanding of why we wish to solve uncertainties, and
• a vision of what we expect to gain.
• Setting realistic objectives depends on this awareness. Planning requires
realistic diagnosis of the opportunity situation.
b) Establishing Objectives:
• The first step in planning itself is to establish objectives for the entire
enterprise and then for each subordinate unit.
• Objectives specifying the results expected indicate the end points of
• what is to be done,
• where the primary emphasis is to be placed, and
• what is to be accomplished by the network of strategies, policies, procedures, rules,
budgets and programs.
• Enterprise objectives should give direction to the nature of all major plans
which, by reflecting these objectives, define the objectives of major
departments.
• Major department objectives, in turn, control the objectives of subordinate
departments, and so on down the line.
c) Considering the Planning Premises:
• Means to establish, obtain agreement to utilize and disseminate critical
planning premises.
• These are forecast data of a factual nature,
• applicable basic policies, and
• existing company plans
• Premises are planning assumptions – in other words, the expected environment
of plans in operation. This step leads to one of the major principles of planning.
• Examples include sales forecasts (internal, tangible), competitor actions
(external, uncontrollable), and available resources (internal,
tangible/controllable)
 Types of Planning Premises:
Controllable Premises:
• These are factors that an organization can influence or control, such as its policies, procedures, and resources.
Example: A company deciding to invest in new equipment (controllable) to increase production capacity (tangible,
controllable).
Uncontrollable Premises:
• These are factors outside the organization's direct control, such as economic conditions, government regulations, or natural
disasters.
Example: A construction company planning a project that is affected by unexpected rainfall (uncontrollable).
Tangible Premises:
• These are quantifiable and measurable factors, often expressed in numerical terms.
Example: Sales forecasts in units or monetary value, production capacity, or labor hours.
Intangible Premises:
• These are qualitative factors that are difficult to measure, such as brand reputation, employee morale, or company culture.
Example: A company's reputation for quality and customer service (intangible, possibly uncontrollable).
Internal Premises:
• These are factors related to the organization itself, such as its resources, capabilities, and policies.
Example: A company's financial situation (internal, tangible, potentially controllable).
External Premises:
• These are factors related to the external environment, such as market conditions, competitor actions, and economic trends.
d) Identification of alternatives:
• The focus of this step is to search for and examine alternative courses of action,
especially those not immediately apparent.
• There is seldom a plan for which reasonable alternatives do not exist, and quite
often an alternative that is not obvious proves to be the best.
e) Evaluation of alternatives
• It involves examining their strong and weak points, the following step is to evaluate
them by weighing the various factors in the light of premises and goals.
• One course may appear to be the most profitable but require a large cash outlay and a slow
payback;
• Another may be less profitable but involve less risk;
• Still another may better suit the company in long–range objectives.
• If the only objective were to examine profits in a certain business immediately, if
the future were not uncertain, if cash position and capital availability were not
worrisome, and if most factors could be reduced to definite data, this evaluation
should be relatively easy.
f) Choice of alternative plans
• An evaluation of alternatives must include an evaluation of the premises on which the alternatives
are based.
• A manager usually finds that some premises are unreasonable and can therefore be excluded from
further consideration. This elimination process helps the manager determine which alternative
would best accomplish organizational objectives.
g) Formulating of Supporting Plans
• After decisions are made and plans are set, the final step to give them meaning is to numberize
them by converting them to budgets.
• The overall budgets of an enterprise represent the sum total of income and expenses with resultant
profit or surplus and budgets of major balance– sheet items such as cash and capital expenditures.
• Each department or program of a business or other enterprise can have its own budgets, usually of
expenses and capital expenditures, which tie into the overall budget.
• If this process is done well, budgets become a means of adding together the various plans and also
important standards against which planning progress can be measured.
h) Establishing sequence of activities
• Once plans that furnish the organization with both long-range and short-range direction have been
developed, they must be implemented.
Types of Plans
Operational plans lead to the achievement of tactical plans, which in turn lead to the attainment of
strategic plans. In addition to these three types of plans, managers should also develop a
contingency plan in case their original plans fail.
a) Strategic plans:
• A strategic plan is an outline of steps designed with the goals of the entire organization as a
whole in mind, rather than with the goals of specific divisions or departments. It is further
classified as
i) Mission:
• The mission is a statement that reflects the basic purpose and focus of the organization which normally
remain unchanged. The mission of the company is the answer of the question : why does the organization
exists?
• Properly crafted mission statements serve as filters to separate what is important from what is not, clearly
state which markets will be served and how, and communicate a sense of intended direction to the entire
organization.
• Mission of Ford: “we are a global, diverse family with a proud inheritance, providing exceptional products and
services”.
ii) Objectives or goals:
• Both goal and objective can be defined as statements that reflect the end towards which the organization is
aiming to achieve. However, there are significant differences between the two. A goal is an abstract and
general umbrella statement, under which specific objectives can be clustered. Objectives are statements that
describe—in precise, measurable, and obtainable terms which reflect the desired organization’s outcomes.
 iii) Strategies:
• Strategy is the determination of the basic long term objectives of an organization and the adoption of
action and collection of action and allocation of resources necessary to achieve these goals.
• Strategic planning begins with an organization's mission. Strategic plans look ahead over the next two,
three, five, or even more years to move the organization from where it currently is to where it wants to
be. Requiring multilevel involvement, these plans demand harmony among all levels of management
within the organization. Top-level management develops the directional objectives for the entire
organization, while lower levels of management develop compatible objectives and plans to achieve
them. Top management's strategic plan for the entire organization becomes the framework and sets
dimensions for the lower level planning.
b) Tactical plans:
• A tactical plan is concerned with what the lower level units within each division must do,
how they must do it, and who is in charge at each level. Tactics are the means needed to
activate a strategy and make it work.
• Tactical plans are concerned with shorter time frames and narrower scopes than are
strategic plans. These plans usually span one year or less because they are considered short-
term goals.
• Long-term goals, on the other hand, can take several years or more to accomplish. Normally,
it is the middle manager's responsibility to take the broad strategic plan and identify specific
c) Operational plans
• The specific results expected from departments, work groups, and individuals are the
operational goals. These goals are precise and measurable. “Process 150 sales applications
each week” or “Publish 20 books this quarter” are examples of operational goals.
• An operational plan is one that a manager uses to accomplish his or her job responsibilities.
Supervisors, team leaders, and facilitators develop operational plans to support tactical
plans (see the next section). Operational plans can be a single-use plan or a standing plan.
i) Single-use plans apply to activities that do not recur or repeat. A one-time occurrence, such as a
special sales program, is a single-use plan because it deals with the who, what, where, how, and how
much of an activity.
¬ Programme: Programme consists of an ordered list of events to be followed to
execute a project.

¬ Budget: A budget predicts sources and amounts of income and how much they are
used for a specific project.
ii) Standing plans are usually made once and retain their value over a period of years
while undergoing periodic revisions and updates. The following are examples of ongoing
plans:
Policy: A policy provides a broad guideline for managers to follow when dealing with important
areas of decision making. Policies are general statements that explain how a manager should
attempt to handle routine management responsibilities. Typical human resources policies, for
example, address such matters as employee hiring, terminations, performance appraisals, pay
increases, and discipline.

Procedure: A procedure is a set of step-by-step directions that explains how activities or tasks are to
be carried out. Most organizations have procedures for purchasing supplies and equipment, for
example. This procedure usually begins with a supervisor completing a purchasing requisition. The
requisition is then sent to the next level of management for approval. The approved requisition is
forwarded to the purchasing department. Depending on the amount of the request, the purchasing
department may place an order, or they may need to secure quotations and/or bids for several
vendors before placing the order. By defining the steps to be taken and the order in which they are
to be done, procedures provide a standardized way of responding to a repetitive problem.

Rule: A rule is an explicit statement that tells an employee what he or she can and cannot do. Rules
are “do” and “don't” statements put into place to promote the safety of employees and the uniform
treatment and behavior of employees. For example, rules about tardiness and absenteeism permit
d) Contingency plans
• Intelligent and successful management depends upon a constant pursuit of
adaptation, flexibility, and mastery of changing conditions. Strong management
requires a “keeping all options open” approach at all times — that's where
contingency planning comes in.
• Contingency planning involves identifying alternative courses of action that can
be implemented if and when the original plan proves inadequate because of
changing circumstances.
• Keep in mind that events beyond a manager's control may cause even the most
carefully prepared alternative future scenarios to go awry. Unexpected
problems and events frequently occur. When they do, managers may need to
change their plans. Anticipating change during the planning process is best in
case things don't go as expected. Management can then develop alternatives to
the existing plan and ready them for use when and if circumstances make these
alternatives appropriate.
OBJECTIVES
• Objectives may be defined as the goals which an organisation tries to achieve. Objectives are described as
the end- points of planning. According to Koontz and O'Donnell, "an objective is a term commonly used to
indicate the end point of a management programme." Objectives constitute the purpose of the enterprise
and without them no intelligent planning can take place.
• Objectives are, therefore, the ends towards which the activities of the enterprise are aimed. They are
present not only the end-point of planning but also the end towards which organizing, directing and
controlling are aimed. Objectives provide direction to various activities. They also serve as the benchmark
of measuring the efficiency and effectiveness of the enterprise. Objectives make every human activity
purposeful. Planning has no meaning if it is not related to certain objectives.
Features of Objectives
• The objectives must be predetermined.
• A clearly defined objective provides the clear direction for managerial effort.
• Objectives must be realistic.
• Objectives must be measurable.
• Objectives must have social sanction.
• All objectives are interconnected and mutually supportive.
• Objectives may be short-range, medium-range and long-range.