PLANNING

MEANING OF PLANNING

Planning can be defined as “thinking in advance what is to be done, when it is to be

done, how it is to be done and by whom it should be done.” In simple words we can
say, planning bridges the gap between where we are standing today and where we
want to reach.

“Setting objectives for a given time period, formulating various courses of action to
achieve them and then selecting the best possible alternative from the different
courses of actions.”

IN NUTSELL

 Thinking in advance
 Involve choice
 Whenever more than one alternatives are given and one is selected
Primary function
 Base of all functions
 Standard for controlling
 Bringing innovative ideas

NATURE OF PLANNING

1. Planning contributes to objectives.- Planning starts with the determination of

objectives. We cannot think of planning in absence of objective.

2. Planning is primary function of management.- No other function can be

executed by the manager without performing planning function because objectives
are set up in planning and other functions depend on the objectives only.

3. Pervasive-. Planning is required at all levels of the management and in all types
of organizations. It is not a function restricted to top level managers only but
planning is done by managers at every level.

4. Planning is futuristic/forward looking.- Planning always means looking ahead

or planning is a futuristic function. Planning is never done for the past. These are
for future and are made on the basis of past experiences.

5. Planning is continuous- Planning is a never-ending or continuous process

because after making plans also one has to be in touch with the changes in
changing environment. So, after making plans also planners keep making changes
in the plans according to the requirement of the company

[Link] involves decision-making-. The planning function is needed only

when different alternatives are available and we have to select most suitable
alternative. We cannot imagine planning in absence of choice because in planning
function managers evaluate various alternatives and select the most appropriate
7. Planning is a mental exercise-. It is a mental exercise. planning is a mental
process which requires higher thinking,. In planning assumptions and predictions
regarding future are made by scanning the environment properly.

IMPORTANCE/SIGNIFICANCE OF PLANNING

[Link] provides direction. Planning is concerned with predetermined course

of action. It provides the directions to the efforts of employees. Planning makes
clear what employees have to do, how to do, etc.

[Link] reduces the risk of uncertainties. Organisations have to face many

uncertainties and unexpected situations every day. Planning helps the manager to
face the uncertainty because planners try to foresee the future by making some
assumptions regarding future keeping in mind their past experiences and scanning
of business environments. The plans are made to overcome such uncertainties. The
plans also include unexpected risks such as fire or some other calamities in the
organisation. The resources are kept aside in the plan to meet such uncertainties.

[Link] reduces overlapping and wasteful activities. The organisational

plans are made keeping in mind the requirements of all the departments. The
departmental plans are derived from main organisational plan. As a result there
will be co-ordination in different departments. On the other hand, if the managers,
non-managers and all the employees are following course of action according to
plan then there will be integration in the activities. Plans ensure clarity of thoughts
and action and work can be carried out smoothly.

[Link] promotes innovative ideas. Planning requires high thinking and it is

an intellectual process. So, there is a great scope of finding better ideas, better
methods and procedures to perform a particular job. Planning process forces
managers to think differently and assume the future conditions. So, it makes the
managers innovative and creative.

[Link] facilitates decision-making. Planning helps the managers to take

various decisions. As in planning goals are set in advance and predictions are made
for future. These predictions and goals help the manager to take fast decisions.

[Link] establishes standard for controlling. Controlling means comparison

between planned and actual output and if there is variation between both then find
out the reasons for such deviations and taking measures to match the actual
output with the planned. But in case there is no planned output then controlling
manager will have no base to compare

LIMITATIONS OF PLANNING

Internal Limitations of Planning

[Link] leads to rigidity. Once plans are made to decide the future course of
action the manager may not be in a position to change them. Following pre-decided
plan when circumstances are changed may not bring positive results for
organisation. This kind of rigidity in plan may create difficulty.
[Link] may not work in dynamic environment. Business environment is
very dynamic as there are continuously changes taking place in economic, political
and legal environment. It becomes very difficult to forecast these future changes.
Plans may fail if the changes are very frequent.

[Link] reduces creativity. With the planning, the managers start working rigidly and
they become the blind followers of the plan only. The managers do not take any
initiative to make changes in the plan according to the changes prevailing in the
business environment.

[Link] involves huge cost. Planning process involves lot of cost because it is
an intellectual process and companies need to hire the professional experts to carry
on this process.. So, it is a cost-consuming process. If the benefits of planning are
not more than its cost then it should not be carried on.

[Link] is a time-consuming process. Planning process s a time-consuming process

because it takes long ime to evaluate the alternatives and select the best one. 6And
whenever there is a need for prompt and immediate decision then we have to avoid
planning.

[Link] does not give guarantee success. Sometimes managers have false
sense of security that plans have worked successfully in past so these will be
working in future also. It is not true as there are so many unknown factors which
may lead to failure of plan in future. Planning only provides a base for analyzing
future. It is not a solution for future course of action.

External Limitations of Planning

Sometimes planning fails due to following limitations on which managers have no

control:

(i)Natural calamity. Natural calamities such as flood, earthquake, famine, etc. may
result in failure of plan.

(ii)Change in competitors' policies. Sometimes plan may fail due to better

policies, product and strategy of competitor which was not expected by manager.

(iii)Change in taste/fashion and trend in the market. Sometimes plans may fail
when the taste/fashion or trend in market goes against the expectation of planners.

(iv)Change in technologies. The introduction of new technologies may also lead to

failure of plans for products using old technology.

(v)Change in government/economic policy. Managers have no control over

government decisions. If government economic or industrial policies are not framed
as expected by manager then also plans may fail.
PLANNING PROCESS

[Link]-up of the objectives. In planning function manager begins with setting

up of objectives because all the policies, procedures and methods are framed for
achieving objectives only. The managers set up very clearly the objectives of the
company keeping in mind the goals of the company and the physical and financial
resources of the company.

[Link] premises. Premises refer to making assumptions regarding future.

Premises are the base on which plans are made. It is a kind of forecast made
keeping in view existing plans and any past information about various policies.

[Link] the various alternatives for achieving the objectives. After setting up
of objectives the managers make a list of alternatives through which the
organisation can achieve its objectives as there can be many ways to achieve the
objective and managers must know all the ways to reach the objectives.

[Link] of different alternatives. After making the list of various

alternatives along with the assumptions supporting them, the manager starts
evaluating each and every alternative and notes down the positive and negative
aspects of every alternative. After this the manager starts eliminating the
alternatives with more of negative aspect and the one with the maximum positive
aspect and with most feasible assumption is selected as best alternative.

[Link] an alternative. The best alternative is selected .Sometimes instead of

selecting one alternative; a combination of different alternatives can also be
selected. The most ideal plan is most feasible, profitable and with least negative
consequences.

[Link] the plan. The managers prepare or draft the main and supportive
plans on paper but there is no use of these plans unless and until these are put in
action. For implementing the plans or putting the plans into action, the managers
start communicating the plans to all the employees very clearly because the
employees actually have to carry on the activities according to specification of
plans.

[Link]-up. Planning is a continuous process so the manager's job does not get
over simply by putting the plan into action. The managers monitor the plan
carefully while it is implemented. The monitoring of plan is very important because
it helps to verify whether the conditions and predictions assumed in plan are
holding true in present situation or not. If these are not coming true then
immediately changes are made in the plan. During follow up many adjustments are
made in the plan.
PLAN

Plan is a document that outlines how goals are going to be met. It is a specific
action proposed to help the organization achieve its objectives. There may be more
than one way and means of reaching a particular goal but with the help of logical
plans, objectives of an organization could be easily achieved.

1 Single Use Plans- Single use plans are one time use plan. These are designed to
achieve a particular goal that once achieved will not reoccur in future.

2 Standing Plans- Standing plans are also known as Repeat Use Plans. These
plans focus on situations which occur repeatedly. Standing plans are used over
and over again.

(i) Single Use Plans — one time use, everytime a new plan is prepared.

(ii) Standing Plans — once made is used for many years.

TYPES OF PLANS

Planning is a pervasive function which means it is not the task of top level
managers only but managers working at different levels perform planning function.
The plans framed by top level manager may differ from the plans formed by middle
and lower level managers. The different types of plans or common plans formed by
the managers at different levels are:

1. Objectives 5. Methods

2. Strategy 6. Rules

3. Policies 7. Programmes

4. Procedures 8. Budgets

[Link] (Neither Single use nor Standing plan)

Objectives should be SMART as S — Specific

M — Measurable A — Achievable R — Relevant

T — Time bound

For example, increase in sale by 10% by six months or decrease in rejections by 2%

by one month.

[Link] (Neither single use nor standing plan)

A strategy is a comprehensive plan to achieve the organisational objectives

For example, choice of advertising media, sales promotion techniques, which

channels of distribution to be used, who are the customers, what is the demand,
etc.
[Link] (Standing plan)

Policy can be defined as organisation's general response to a particular problem or

situation. In simple words, it is the organisation's own way of handling the
problems. Policies are made at every level because the managers at every level need
to decide or predetermine the way of handling a situation and policy acts as a guide
to take decisions in unexpected situation

For example, purchase policy may include—From how many suppliers company
should purchase, what is the criteria for choosing among the suppliers.

[Link] (Standing plan)

Procedures are required steps established in advance to handle future conditions.

The sequence of steps to be followed by employees. The procedure can be defined
as the exact manner in which an activity has to be accomplished.

For example, the procedure for admission in a particular school can be:

Procedures are made common for all the departments to co-ordinate their activities.
So procedures cut across all the departmental lines.

For example, the procedure to handle the order by manufacturing department may
involve sales department also.

[Link] (Standing plan)

Methods can be defined as formalised or systematic way of doing a jobs. The

managers decide in advance the common way of doing a job. So that,

If the common way of doing the job is not decided in advance, then there will be
confusion, and comparison will not be possible. For example, for valuation of
depreciation whether to use straight line or diminishing balance method of
depreciation.

[Link] (Standing plan)

Rules spell out special actions or non-actions of the employees. There is no

discretion allowed in rules,

For example, there can be rule of no smoking in the organisation. Rules generally
guide the general behaviour of the employees and employees cannot make any
changes in them.

[Link] (Single use plan)

Programmes are the combination of objectives, policies, procedures and rules. All
these plans together form a program. The programmes are made to get a systematic
working in the organisation.

For example, construction of shopping mall, opening of new department.

[Link] (Single use plan)

Budget is the statement of expected result expressed in numerical terms. In

budgets, the results are always measurable and most of the time, these are
financial in nature.

For example, Sale budget Sales in unit = T 1,00,000 Price per unit = T20

Total sale budget = T 20,00,000