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PLANNING

PLANNING

Management 8/e - Chapter 4

PLANNING
A Plan is course of action to be taken future.
Planning is the process of deciding in

advance what is to be done, how it is to be done, where, when and whom. Planning is a mental exercise that requires imagination, foresight and sound judgement. It is thinking before doing.

Definition
Koontz O'Donnell : Planning is an intellectual process, the conscious determination of courses of action. Louis A Allen: Planning involves the development of forecasts, objectives, policies, programmes, procedures, schedules and budgets".

Philip Kotler : Planning is deciding in the present what to do in future.

Nature of Planning
Planning is goal-oriented: Planning seeks to achieve certain objectives and all plans are linked with the goals of the organization. Planning will become a useless exercises if it does not contribute in some positive way to the accomplishment of desired objectives. Planning identifies the actions that would lead to the desired results quickly and economically

Nature of Planning (Cont.)


Planning is future Oriented : Planning is essentially cooking ahead and preparing for the future. It is based on the proverb look before you leap. Scientific anticipation of future events called forecasting which serves as the basics of planning.

Nature of Planning (Cont.)


Planning is an intellectual process: Planning is a mental exercise involving creative thinking and imagination. A manager can prepare sound plans only when he has sound judgement , foresight and vision. Planning is not mere guess work but involves logical and systematic thinking.

Nature of Planning (Cont.)


Planning is primary function : Planning saves as the basics for another functions of management. It precedes organizing , staffing, directing and controlling. All the functions are performed within the framework of plans. Therefore, Planning is most basic important function.

Nature of Planning (Cont.)


Planning is pervasive : Planning required in all types of organizations and at levels of management. Every department prepares plans. However, the slope of planning may differ from one level to another. Top level managers are generally concerned with long time periods. Lower level managers are more concerned with planning activities for the day ,week or the month.

Nature of Planning (Cont.)


Planning is continuous : Planning is an ongoing process. Plans are prepared for specific time period e.g.one year. At the end of period , new plans have to prepared. Similarly as conditions change , existing plans to be revised. They call it the principle of navigational change.

Nature of Planning (Cont.)


Planning aims at efficiency : Planes are prepared to achieve the objectives in the best way. Sound planning leads to accomplishment of desired objectives at the minimum possible cost.(i.e. Optimization of resources.) A plan is worthless if it is not worth the cost incurred on it. Planning also focuses on accurate forecasts.

Purpose of Planning
Making objectives clear : Planning makes goals clean and specific. This is because goals are to be achieved are decided before choosing the course of action. Planning focuses attention on the organizational objectives. Plans serve as a guide for deciding what actions should be taken. With clear goals ,activities becoming meaningful.

Purpose of Planning (Cont.)


Helps the organization a right path: Planning helps the organization to keep on the right path. Employees understand how their action relate to organizational goals. Planning avoids aimless and ad-hoc action. Planning provides systematic and orderly towards the goals. Without goals, decisions become ad-hoc choices become meaningless.

Purpose of Planning (Cont.)


It reduces risk and uncertainty : Business enterprises operate in an uncertain environment. Planning enables these enterprises to predict future events and prepare to face unexpected events with help of planning , managers can identify potential dangers and take-steps to over come them. Planning is helpful in assessing and meeting future challenges.

Purpose of Planning (Cont.)


It improve efficiency of operations : Planning involves selection of best possible course of action. It helps to eliminate all types of waste and to achieve optimum utilization of available resources. Planned action is always better than unplanned action. Planning makes the total task of managing more efficient and effective.

Purpose of Planning (Cont.)


Provides the basis for control : Planning provides the standard against which the actual performance can be measured and evaluated. A comparison of performance with the desired results help to identify the deviations and to take corrective steps to make the events confirm to plans.

Purpose of Planning (Cont.)


Facilitates decision making : Decision making is thus integral part of planning. Process of choosing among alternatives. Decision making will occur at many points in the planning process. Planning involves forecasting of future conditions. With the help of planning hasty decisions and random actions can be avoided.

Purpose of Planning (Cont.)


Effective coordination : Planning determines the activities of different individuals ,groups and departments in such away that maximum coordination between physical and human resources. Without planning it is not possible to co ordinate the different activities of an organisation.

Limitations of Planning
Planning premises may not be fully reliable. Dynamic conditions act as a limitation of planning. Availability of time is a limiting factor of planning. Cost involved in planning is also a limiting factor.

Mental attitude of management can be serious limiting

factors to planning. Procedural and policies rigidities also proved to be a hindrance to planning. Capital invested in the fixed assets may be limitation to planning. External Scientific , Technological, economic , political , Ethical ,legal and social.

Types of Planning
Long-range planning :
Long-range planning sets long-term goals for the enterprise and then proceeds to formulate specific plans for attaining these goals. It involves an attempt to anticipate ,analyze and make decisions about basic problems.

Short range planning :


This concerned with determination of short term activities to accomplish long term objectives. Relates to a relatively short period and has to be consistent with the long range plans.

Types of Planning (Contd...)


Strategic planning :
Strategic planning is part of functional areas of business. It involves key decisions regarding the overall goals and strategic of the enterprise. It is the process of deciding on basic goals , the resources required to achieve. It is based upon long term forecasts and is done at higher levels of management . It contains developmental cum resources planning.

Types of Planning (Contd...)


Operational planning : It also know as tactical or administrative . It involves the conversion of strategic plans into detailed operational programs. It is blue print for current action and its supports the strategic plan. It is concerned with specific tasks and reflects a routine decision. It is being prepared at lower level management. It concerned with optimum use of resources with in frame work

Types of Planning (Contd...)


Functional planning : It is prepared for various functional areas like production ,marketing ,financial and manpower planning. It serves as a guide for people in particular department of functional area of the enterprise.

Steps in Planning

Steps in Planning (Contd...)


Define and describe objective : Plans are prepared to achieve objectives/goals. First step in planning to define clearly the objectives of the organization as a whole and each of its individual departments. Need for planning arises either for solving a problem or for exploiting an opportunity that may arise in the future. Therefore ,the problem to be solved or the opportunity to be utilized should be clearly defined

Steps in Planning (Contd...)


Determination of planning premises : Planning premises are the assumptions about the future. They provide environment or boundaries in which plans will be implemented. Planning premises are established with help of forecasting. Present trends and future possibilities should be assessed .

Steps in Planning (Contd...)


Discover alternate courses of action : To identify all possible alternatives , it is necessary to collect and analyze all relevant information. Information may be collected from primary and secondary sources. The data so collected will serve as the basis for development of an alternative course of action. The information used in discovering alternative must be up to date and reliable.

Steps in Planning (Contd...)


Evaluation of alternatives and final choice :

The various alternatives are evaluated and compared in terms of their expected costs and benefits. The alternative courses of action should be judged in terms of common factors such as the risk involved , expected return , planning promises goals to achieved etc. After objective and scientific evaluation of different alternatives ,the best alternative is selected.

Steps in Planning (Contd...)


Formulating of derivative plan : After the basic plan is decided , the next logical steps is to develop detailed plan for its implementation. These detailed plans refer to the policies, procedures , rules , schedules and budgets , etc. For instance, when a company decides to new product , plans concerning the product design , procurement of funds , purchase of materials, training of personnel ,advertising for the product , etc. , have to be prepared. Proper timing and sequencing of should be done.

Steps in Planning (Contd...)


Communicating the plan :

Plan should be explained to the subordinates to earn their support in the execution of plans. Successful implementation of plans requires whole hearted coordination and understanding of personnel. It depends upon the attitudes and belief of the employees in enterprises. Successful executing of plans ,requires the participation of subordinates.

Steps in Planning (Contd...)


Reviewing the planning process :

Continuous evaluation of plans and the process of planning helps to detect short-comings or pit-falls of the plans. All the plans should be reviewed from time to time in the light of current circumstances and necessary action should be taken to keep them up to date. A system of constant review and appraisal of plans must be devised to improve the planning process.

Principles of Planning
Principles of contribution to objectives Principles of pervasiveness of planning Principles of limiting factor Principles of flexibility Principles of navigational change

Measures of making Planning more effective

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