Planning Notes | Ruchi Uppal

Chapter 4
Planning Notes
Planning is the process of setting objectives for a given time period, formulating various courses of action to
achieve them, and then selecting the best possible alternative from among the various courses of action
available.

Importance of Planning
(i) Planning provides directions:
❖ Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding
what action should be taken and in which direction.
❖ If goals are well defined, employees are aware of what the organisation has to do and what they must
do to achieve those goals.
❖ Departments and individuals in the organization are able to work in coordination. .
❖ If there was no planning, employees would be working in different directions, and the organisation
would not be able to achieve its desired goals.
(ii) Planning reduces the risks of uncertainty:
• Planning is an activity which enables a manager to look ahead and anticipate changes.
• By deciding in advance the tasks to be performed, planning shows the way to deal with changes and
uncertain events.
• Changes or events cannot be eliminated but they can be anticipated and managerial responses to them
can be developed.
(iii) Planning reduces overlapping and wasteful activities:
• Planning serves as the basis of coordinating the activities and efforts of different divisions, departments
and individuals.
• It helps in avoiding confusion and misunderstanding.
• Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions.
• Useless and redundant activities are minimised or eliminated.
• It is easier to detect inefficiencies and take corrective measures to deal with them.

(iv) Planning promotes innovative ideas:

• Since planning is the first function of management, new ideas can take the shape of concrete plans.
• It is the most challenging activity for the management as it guides all future actions leading to growth
and prosperity of the business.

(v) Planning facilitates decision making:

• Planning helps the manager to look into the future and make a choice from amongst various alternative
courses of action.
• The manager has to evaluate each alternative and select the most viable proposition.
• Planning involves setting targets and predicting future conditions, thus helping in taking rational
decisions.
(vi) Planning establishes standards for controlling:
• Planning involves setting of goals. The entire managerial process is concerned with accomplishing
predetermined goals through planning, organising, staffing, directing and controlling.
• Planning provides the goals or standards against which actual performance is measured.
• By comparing actual performance with some standard, managers can know whether they have actually
been able to attain the goals.
• If there is any deviation it can be corrected. Therefore, we can say that planning is a prerequisite for
controlling.
• If there were no goals and standards, then finding deviations which are a part of controlling would not
be possible.
• The nature of corrective action required depends upon the extent of deviations from the standard.
• Therefore, planning provides the basis of control.
 Planning Notes | Ruchi Uppal

Features of Planning
(i) Planning focuses on achieving objectives:
• Organisations are set up with a general purpose in view.
• Specific goals are set out in the plans along with the activities to be undertaken to achieve the goals.
Thus, planning is purposeful.
• Planning has no meaning unless it contributes to the achievement of predetermined organizational
goals.
(ii) Planning is a primary function of management:
• Planning lays down the base for other functions of management. All other managerial functions are
performed within the framework of the plans drawn.
• Thus, planning precedes other functions. This is also referred to as the primacy of planning.
• The various functions of management are interrelated and equally important.
• However, planning provides the basis of all other functions.
(iii) Planning is pervasive:
✓ Planning is required at all levels of management as well as in all departments of the organisation.
✓ It is not an exclusive function of top management nor of any particular department. But the scope of
planning differs at different levels and among different departments.
✓ For example, the top management undertakes planning for the organisation as a whole. Middle
management does the departmental planning. At the lowest level, day-to-day operational planning is
done by supervisors.
(iv) Planning is continuous:
➢ Plans are prepared for a specific period of time, may be for a month, a quarter, or a year.
➢ At the end of that period there is need for a new plan to be drawn on the basis of new requirements and
future conditions.
➢ Hence, planning is a continuous process. Continuity of planning is related with the planning cycle.
➢ It means that a plan is framed, it is implemented, and is followed by another plan, and so on.
(v) Planning is futuristic:
➢ Planning essentially involves looking ahead and preparing for the future.
➢ The purpose of planning is to meet future events effectively to the best advantage of an organisation.
➢ It implies peeping into the future, analysing it and predicting it.
➢ Planning is, therefore, regarded as a forward looking function based on forecasting.
➢ Through forecasting, future events and conditions are anticipated and plans are drawn accordingly.
➢ Thus, for example, sales forecasting is the basis on which a business firm prepares its annual plan for
production and sales.
(vi) Planning involves decision making:
➢ Planning essentially involves choice from among various alternatives and activities.
➢ If there is only one possible goal or a possible course of action, there is no need for planning because
there is no choice.
➢ The need for planning arises only when alternatives are available. In actual practice, planning
presupposes the existence of alternatives.
➢ Planning, thus, involves thorough examination and evaluation of each alternative and choosing the
most appropriate one.
(vii) Planning is a mental exercise:
➢ Planning requires application of the mind involving foresight, intelligent imagination and sound
judgement.
➢ It is basically an intellectual activity of thinking rather than doing, because planning determines the
action to be taken.
➢ However, planning requires logical and systematic thinking rather than guess work or wishful thinking.
➢ In other words, thinking for planning must be orderly and based on the analysis of facts and forecasts.