Planning Process
As planning is activity there are certain reasonable measures for every manager to follow:
(1) Setting Objectives
This is the primary step in the process of planning which specifies the objective of
organisation i.e. what an organisation wants to achieve.
The planning process begins with the setting of objectives.
Objectives are end results which the management wants to achieve by its operations.
Objectives are specific and are measurable in terms of units.
Objectives are set for the organisation as a whole for all departments and then
departments set their own objectives within the framework of organisational objectives.
Example:
A mobile phone company sets the objective to sell 2,00,000 units next year, which is double the
current sales.
(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:
The mobile phone company has set the objective of 2,00,000 units sale on the basis of forecast
done on the premises of favourable Government policy towards digitization of transactions.
(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:
The Mobile company has 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:
The mobile phone company will evaluate all the alternatives and check its pros and cons.
(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:
Mobile phone company selects more T.V advertisements and online marketing with great 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.
This step involves allocating the resources, organising for labour and purchase of
machinery.
Example:
Mobile phone company hires salesman on a large scale, creates T.V advertisement, and starts
online marketing activities and set up service workshops.
(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 was developed by the mobile phone company throughout its
branches so that the actual customer response, revenue collection, employee response, etc.
could be known.
Plan
To achieve the specific results, a particular course of action is prepared to meet the
commitments. The plan is a document that is outlined to meet the objective. The
number of plans is prepared for different organizational goals. Various derivative
plans are made which are all bound together under the single plan.
For example- To start a new factory, you need to prepare the different plan for the
different task.
Plans are classified into two categories
Standing Plan/ Repeat use plans
These plans are made for long-term use. These plans are made for the actions that
are recurring in nature. It is a kind of guideline of actions that need to be followed
from time to time. These plans include objective, policies, procedures, methods,
strategies, and rules. The plans are used over and over again and can be altered
with organizational need.
For example- business plan
Features of the standing plan
Recurring in nature
Long-term goals
Informed decisions
Developed once can be modified later
Based on main organization objective
Single-use Plan
These plans are for single use and cannot be used again. These plans are made to
achieve a particular goal. They are specially designed to deal with the special
situations and to meet the short-term challenges. These plans include budget and
program.
For example- an outline of the advertisement campaign
Features
Short-term goal
Non-recurring in nature
Based on standing plans for the organization
Types of Plan
1 Objective
The base of planning is objective which represents end towards which all the
organizational activities are directed.
“Objective are the goals, aims, or purpose that organizations wish to achieve over
varying periods of time” Mc Farland
Example- to increase sales revenue by 10%
Features
Measurable in nature.
It can be for the long term or short term.
It can be single or multiple.
It must be achievable or feasible.
Result oriented
Clear and specific
All the activities are guided towards the objective.
2 Strategy
Originally strategy was used in a military action plan. Now strategies are used in
business plans. It is an imperative and comprehensive plan designed to achieve the
organizational objective.
“ The determination of basic long-term goals and objectives of an enterprise and the
adoption of the course of action and the allocation of resources necessary to carry
out these goals” Chandler
Example- techniques for sale promotion
Features
To determine long-term objective.
It is designed to achieve the specific objective.
It is consistent and directs future goals.
3 Policies
Policies are designed for all levels of management. It is made under limited
guidelines for unified performance
“A policy is verbal, written, or implied, overall guide setting up boundaries that
supply general limits and direction in which managerial action takes place” Terry
Example – no credit sale of a product X
Features
Design to implement the strategy
Instructions and guidelines to be followed.
Based on objective
4 Procedures
It is a sequence of steps that need to be followed by management for achieving
future goals. They specify the series of activities that need to be performed to
accomplish a particular goal.
“Procedure prescribes the manner or methods through which work is to be
performed.” Allen
Example- the procedure to be followed for school admission.
Features
Series of the task to carry different activities of a department.
Goal oriented
Chronological order.
5 Rules
Rules are special actions need to be followed strictly by the management.
“A rule requires that a specific and definite action with respect to a situation”
Koontz O Donnell
Example- no smoking in premises
Features
Specific in nature
Involve punishment for non -compliance.
Code of conduct
Rigid and compulsive
6 Programmes
It is the combination of Goals, Policies, Procedures, and rules to achieve the special
objective.
“Programme is a mixture of procedures, policies, rules, assigned works and elements
necessary for operating the group of activities smoothly” Koontz O Donnell
Example- development of a product
Features
Enhances systematic working.
Designed for the definite objective.
Design for effective use of resources
7 Budget
It is the monetary expression for the business plan that needs to be followed in
future. with the help of budget, the cost is controlled.
“A budget is a financial statement and quantitative statement prepared prior to a
defined period of time, of the policy to be pursued during that period for the purpose
of attaining a given objective.” Institute of Cost and work accountants, London
Feature
Monitor the cost and expenditure.
Based on past figures and future possibilities.