PLANNING

Dr. Usha Lenka

Associate Professor, Department of Management Studies, IIT Roorkee
 CONTENTS
• Learning objectives
• Fundamentals of planning
 Definitions of planning
 Features of planning
 Importance of planning
 Types of plans
 Planning process
 Contemporary issues in planning

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 INTRODUCTION
Planning

 Organizations have limited resources at their disposal.

 Effective utilization of organizational resources assumes a paramount importance.

 This can be achieved through developing effective planning mechanism.

 Planning is the first and most basic managerial function.

 Planning bridges the gap between the present and future.

 Planning provides a forward-looking approach to organizations.

 DEFINITIONS OF PLANNING
Planning

 “Planning is deciding in advance what to do, how to do it, where to do it and who will do it. It
bridges the gap from where we want to go. It helps things to occur which would not have
otherwise happened” – Koontz and o’ Donnell.

 “The plan of action helps in attaining results envisaged, the line of action to be followed, the
stages to go through, and the methods to use” – Henri Fayol.

 Basically, it is an intellectual process which lays down an organization's objectives and develops
various courses of action by which the organization can achieve those objectives.

 It is concerned with both means (what) and ends (how) to attain a specific goal.
 FEATURES
FeaturesOF PLANNING
of Planning

 It is a primary function of management.

 It focuses on achieving objectives.

 It is pervasive (required at all levels of management as well as in all departments of

the organization).

 It is continuous process.

 It is futuristic (involves looking ahead and preparing for the future).

 It involves decision making.

 It is a mental exercise.

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 IMPORTANCE
Importance OF PLANNING
of Planning

 Provides future direction.

 Reduces the risks of uncertainty.

 Avoid overlapping and wasteful activities.

 Promotes innovative ideas, as planning is an intellectual process.

 Facilitates decision making.

 Establishes standards for controlling.

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 ASPECTS OF
Types ofPLANNING
Plans
MISSION • The basic purpose of an organization.
GOALS (OBJECTIVES) • Desired outcomes or targets.
STRATEGIES • Determination of long-term objective of organization.
POLICIES • General statements that guide decision making process.
PROCEDURES • Method to handle future activities.
RULES • Guidelines for actions.
PROGRAMS • Goals, policies, procedures, rules, and tasks to carry out an action.
BUDGETS • Statement of expected results expressed in numerical terms.
PLANS • Documents that outline how goals are to be met.

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 TYPES
TypesOF PLANS
of Plans

Source: Robbins, S.P. and Coulter, M., and Vohra, N. (2010), Management, Pearson, New Delhi, India.

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 TYPES
TypesOF PLANS
of Plans
Based on Breadth
 These include: Strategic and Tactical
 Strategic Plans:
i) They are developed to achieve strategic goals.
ii) More precisely, a strategic plan is a general plan outlining decisions about resource allocation,
priorities, and action steps necessary to reach strategic goals.
iii) These plans are set by the board of directors and top management, generally have an extended
time horizon, and address questions of scope, resource deployment, competitive advantage,
and synergy.

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 TYPES OFofPLANS
Types (contd…)
Plans (Cont..)
 Tactical Plans:

i) A tactical plan, aimed at achieving tactical goals, is developed to implement specific parts of a
strategic plan.

ii) Tactical plans typically involve upper and middle management and, compared with strategic
plans, have a somewhat shorter time horizon and a more specific and concrete focus.

iii) Thus, tactical plans are concerned more with actually getting things done than with deciding
what to do.

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 TYPES
TypesOF PLANS
of Plans
Based on Time Frame
 These include: Long-term and Short-term plans.
 Long-term Plans:
i) Previously, the time frame was up to seven years. However, due to environmental uncertainties
now the time period is three years or beyond.
 Short-term Plans:
i) Covering one year or less.
Although, these time classifications are most common, yet organizations can use any time frame it
seems appropriate.

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 TYPES
TypesOF PLANS
of Plans
Based on Specificity

 These include: Directional and Specific plans.

 Directional Plans:

i) Flexible plans that set out general guidelines.

ii) Provide focused but does not bind managers into specific goals or actions.

 Specific Plans:

i) Clearly defined and leave no scope for interpretation.

ii) They have clearly defined objectives. There is no ambiguity and misunderstanding.

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 TYPES
TypesOF PLANS
of Plans
Based on Frequency of Use

 These include: Single use and Standing plans.

 Single Use Plans:

i) One time plan specifically designed to meet the needs of unique situation.

 Standing Plans:

i) Ongoing plans that provide guidelines for activities performed repetitively.

ii) Include policies, rules, procedures.

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 Planning Process
PLANNING PROCESS
Setting Objectives

Developing Planning
Premises

Identifying Alternative
Course of Action

Selecting One Best

Alternative

Implementing the
Plan

Follow Up Action

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 Planning Process
PLANNING PROCESS
(1) Setting Objectives
 This is the primary step which specifies the objective of organization i.e. which and what types of objectives an organization
wants to achieve.

 Objectives are the end results which the management wants to achieve by its operations.

 These must be specific and measurable in terms of units.

 Objectives are set firstly, for the organization as a whole for all departments and then departments set their own objectives
within the framework of organizational objectives.
Example:
Nokia company sets the objective to sell 2,00,000 units of phones by next year, which is double the current sales. Now, it is the
responsibility of all the departments varying from operations to finance, hence organizations must ensure proper delegation of
authority with responsibility in order to achieve the target.

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 Planning Process (Cont.…)
PLANNING PROCESS (contd…)
(2) Developing Planning Premises

 Planning is essentially focused on the future and there are certain events which are expected to affect the
policy formation.

 Such events are external in nature and affect the planning adversely if ignored.

 Their understanding and fair assessment are necessary for effective planning.

 Such events are the assumptions on the basis of which plans are drawn and are known as planning premises.

Example:
Nokia company has set the objective of 2,00,000 units sale on the basis of forecast done on the premises of favorable Government
policy towards digitization of transactions.

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 PLANNING PROCESS
Planning Process (Cont.…)(contd…)

(3) Identifying Alternative Courses of Action: Once objectives are set, assumptions are made. Then the next
step is to act upon them. There may be many ways to act and achieve objectives. All the alternative courses of
action should be identified.

Example: Nokia may have many alternatives like reducing price, increasing advertising and promotion, after
sale service etc.

(4) Evaluating Alternative Course of Action: In this step, the positive and negative aspects of each
alternative need to be evaluated in the light of objectives to be achieved. Every alternative is evaluated in terms of
lower cost, lower risks, and higher returns, within the planning premises and within the availability of capital.

Example: Nokia will evaluate all the alternatives and check its pros and cons.

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 PLANNING PROCESS (contd…)
Planning Process (Cont.…)

(5) Selecting One Best Alternative

The best plan which is the most profitable plan and with minimum negative effects is adopted and implemented.
In such cases, the manager’s experience and judgement play an important role in selecting the best alternative.
Example: Nokia selects more T.V advertisements and online marketing with after sales service.

(6) Implementing the Plan

This is the step where other managerial functions come into the picture. This step is concerned with “doing
what is required.” In this step, managers communicate the plan to the employees clearly to convert the plans
into action. It involves allocating the resources, organizing for labour and purchase of machinery. Example:
Nokia hires salesman on a large scale, creates T.V advertisement, and starts online marketing activities and set up
service workshops.

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 PLANNING
PlanningPROCESS (contd…)
Process (Cont.…)

(7) Follow Up Action

 Monitoring the plan constantly and taking feedback at regular intervals is called follow-up.

 Monitoring of plans is very important to ensure that the plans are being implemented according to the
schedule.

 Regular checks and comparisons of the results with set standards are done to ensure that objectives are
achieved.

Example: A proper feedback mechanism must be developed by the Nokia company throughout its branches so
that the actual customer response, revenue collection, employee response, etc. could be known.

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 CONTEMPORARY ISSUES
Planning Process IN PLANNING
(Cont.…)

Planning effectively in
dynamic environment

CONTEMPORARY
ISSUES IN
PLANNING

Use of environmental
scanning

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 CONTEMPORARY
PLANNING
PlanningPROCESS
ISSUES
Process IN
(contd…)
PLANNING
(Cont.…)

Planning in Dynamic Environment

 Business environment is continuously changing.

 In an uncertain environment, managers should develop plans that are specific and flexible.

 Planning is an ongoing process. They should be ready to change directions if environmental

conditions warrant. This flexibility is particularly important as plans are implemented.

 Managers need to stay alert to environmental changes and respond as needed.

 Make the organizational hierarchy flatter. This means allowing managers at lower levels to set goals
and develop plans because there’s little time for goals and plans to flow a top down approach.

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 CONTEMPORARY
PLANNING
PlanningPROCESS
ISSUES
Process IN
(contd…)
PLANNING
(Cont.…)

Planning by Environmental Scanning

 Environmental scanning involves screening information to detect emerging trends.
 Fastest-growing forms of environmental scanning is competitor intelligence, which is
gathering information about competitors that allows managers to anticipate competitors’
actions rather than merely react to them.
 It seeks basic information about competitors: Who are they? What are they doing? How
will their actions affect us?
 Attending trade shows and debriefing your own sales staff also can be good sources of
information on competitors.

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 SUGGESTED READINGS
 Robbins, S.P. and Coulter, M. (2012), Management, Prentice Hall, New
Jersey, USA.
 Daft, R. L. (2008), Management (8th edition), Thomson South-Western,
Mason, USA.
 Koontz, H. and Weihrich, H. (2012), Essentials of Management, Tata
McGraw Hill, New Delhi, India.
 Griffin, R. (2016), Fundamentals of Management, Cengage Learning,
Boston, USA.
 Drucker, P.F. (1974), Management: Task, Responsibilities, Practices,
Harper and Row, New York, USA.
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