7 Important steps in Planning Process

Table of Contents [show]

Important Steps in Planning Process

Planning involves a number of steps ranging from determining the objectives to follow-up action
as detailed below.

The main steps that are taken in planning process are as follows:

1. Establishing Objectives:
Establishing the objectives is the first step in planning. Plans are prepared with a view to achieve
certain goals. Hence, establishing the objectives is an important step in the process of planning.
Plans should reflect the enterprise’s objectives. Objectives should clearly define as to what is to
be achieved by policies, procedures, rules, strategies, budgets and programmes. Plan must make
sure that every activity undertaken contributes to the achievement of objectives.

The objectives fixed must clearly indicate what is to be achieved, where action should take place,
who is to perform it, how it is to be undertaken and when it is to be accomplished. That is, managers
should be able to restate the objectives of the firm in definite and clear terms that will motivate
examination and evaluation of performance against targeted performance in the plan. Objectives
should be measurable.

2. Determining Planning Premises

This is the second step in planning. Premises include actual forecast data, policies and plans of the
enterprise. Planning involves looking into the future which necessitates the enterprise to know,
how future conditions will affect its activities. Thus, forecasting is an important step in planning.
There are two types of forecasting namely,

i.
i. Prediction of general economic conditions.
i. Prediction of market conditions for a specific product or service dealt with by the enterprise.
Keeping the general economic conditions in mind, a study of the industry is made. Then the
manager proceeds to make a study of his company’s share of the market. Forecasting will reveal
those areas where control is lacking. Planning will be reliable when the forecast methods are
accurate. Hence, the success of the planning depends very much upon the forecasts.

3. Determining Alternative Courses

Determining alternative courses is the third step in the planning process. The planner should study
all the alternatives, consider the strong and weak points of them and finally select the most
promising ones.

4. Evaluating Alternative Courses

Alternative courses so selected should be evaluated in the light of premises and goals. Evaluation
involves the study of performance of various actions. Various factors such as profitability,
investment requirements, etc., of such alternatives should be weighed against each other. Each
alternative should be closely studied to determine its suitability.

Many other factors such are uncertain future trend, problems faced financially, future uncertainties
renders the evaluation process, complex and difficult. Usually, alternative plans are evaluated
against factors such as cost, risks, benefits, organizational facilities, etc. Computer based
mathematical plans and techniques can also be utilized to identify best course of action.

5. Selecting the Best Course

After having evaluated the various alternatives, the most suitable alternative is selected. With this,
the plan can be considered to have been adopted. It is exactly the point at which decisions are
made. Sometimes, in the best interests of the enterprise, several alternative courses can be adopted.

6. Formulating Derivative Plans

Planning is not complete as soon as the best course is selected. The main plan should be supported
by a number of derivative plans. Within the framework of a basic plan, derivative plans are
formulated in each functional area. Segregation of master plan into departmental, sectional and
individual plans, helps to understand the real nature of future uncertainties. To make the planning
process more effective, it should also provide for a feedback mechanism. These plans are meant
for the implementation of the main plan.

7. Implementation of Plans
Implementation of plans is the final step in the process of planning. This involves putting the plans
into action so as to achieve the business objectives Implementation of plans requires establishment
of policies, procedures, standards, budgets, etc.

FacebookTwitterPinterestWhatsAppSkypeSMSF
acebook Messenger
1. Perception of Opportunities:

Perception of opportunities is not strictly a part of the planning

process. But this awareness of opportunities in the external
environment as well as within the organisation is the real starting
point for planning. It is important to take a preliminary look at
possible future opportunities and see them clearly and completely.

ADVERTISEMENTS:

All managers should know where they stand in the light of their
strengths and weaknesses, understand the problems they wish to solve
and know what they gain. Setting objectives depends on the
awareness. Planning requires realistic diagnosis of the opportunity
situation.

Step # 2. Establishing Objectives:

This is the second step in the planning process. The major

organisational and unit objectives are set in this stage. This is to be
done for the long term as well as for the short range. Objective specify
the expected results and indicate the end points of what is to be done,
where the primary emphasis is to be placed and what is to be
accomplished by the various types of plans.
Organisational objectives give direction to the major plans, which by
reflecting these objectives define the objective of every major
department. Major objectives, in turn, control the objectives of
subordinate departments and so on down the line. In other words,
objectives from a hierarchy.

The objectives of lesser departments will be more accurate if

subdivision managers understand the overall enterprise objectives and
the derivative goals. Managers should also have the opportunity to
contribute their ideal to setting their own goals and those of the
organisation.

Step # 3. Planning Premises:

ADVERTISEMENTS:

After determination of organisational objectives, the next step is

establishing planning premises that is the conditions under which
planning activities will be undertaken. Planning premises are planning
assumptions the expected environmental and internal conditions.

Thus planning premises are external and internal. External premises

include total factors in task environment like political, social,
technological, competitors, plans and actions, government policies.
Internal factors include organisation’s policies, resources of various
types, and the ability of the organisation to withstand the
environmental pressure. The plans are formulated in the light of both
external and internal factors.

The nature of planning premises differs at different levels of planning.

At the top level, it is mostly externally focused. As one moves down the
organisational hierarchy the composition of planning premises
changes from external to internal. The major plans both old and new
will materially affect the future against which the managers at lower
units must plan.

Step # 4. Identification of Alternatives:

The fourth step in planning is to identify the alternatives. Various

alternatives can be identified based on the organisational objectives
and planning premises. The concept of various alternatives suggests
that a particular objective can be achieved through various actions.

ADVERTISEMENTS:
For example, if an organisation has set its objectives to grow further, it
can be achieved in several ways like expanding in the same Field of
business or product line diversifying in other areas, joining hands with
other organisations, or taking over another organisation and so on.
Within each category, there may be several alternatives.

The most common problem is not finding alternatives but reducing

the number of alternatives so that the most promising may be
analysed. Even with mathematical techniques and the computer, there
is a limit to the number of alternatives that can be thoroughly
examined. The planner must usually make a preliminary examination
to discover the most fruitful possibilities.

Step # 5. Evaluation of Alternatives:

The various alternative course of action should be analysed in the light

of premises and goals. There are various techniques available to
evaluate alternatives. The evaluation is to be done in the light of
various factors. Example, cash inflow and outflow, risks, limited
resources, expected pay back etc., the alternatives should give us the
best chance of meeting our goals at the lowest cost and highest profit.

Step # 6. Choice of Alternative Plans:

This is the real point of decision-making. An analysis and evaluation of

alternative courses will disclose that two or more .ire advisable and
beneficial. The fit one is selected.

ADVERTISEMENTS:

Step # 7. Formulation of Supporting Plan:

After formulating the basic plan, various plan are derived so as to

support the main plan. In an organisation there can be various
derivative plans like planning for buying equipment, buying raw
materials, recruiting and training personal, developing new product
etc. These derivative plans are formulated out of the basic or main
plan and almost invariably required to support the basic plan.

Step # 8. Establishing Sequence of Activities:

After formulating basic and derivative plans, the sequence of activities

is determined so those plans are put into action. After decisions are
made and plans are set, budgets for various periods and divisions can
be prepared to give plans more concrete meaning for implementation.
The overall budgets of an enterprise represent the sum total of income
and expenses, with resultant profit or surplus, and budgets of major
balance sheet items such as cash and capital expenditures. Each
department or programme of a business or other enterprise can have
its own budgets, usually of expenses and capital expenditures, which
tie into the overall budget.

What is the purpose of strategic planning?

The aim of strategic planning is to build agreement among the top people in an organisation
concerning its destiny.

The primary purpose of corporate strategic planning is to get all those who hold the reins of power
facing in the same strategic direction. It gains agreement on what the few long-term top issues are,
and how to deal with them.

Such consensus can also enhance morale and motivation. This agreement, understanding, and
alignment enable the achievement of improved organizational performance.

The purpose of strategic planning is to set overall aims for your organization and a plan to hit them.
The reason for strategic planning is to agree on a way to improve the long-term performance of the
organization.

I believe improved performance results from a systematic process of strategic planning. However,
having a formal strategic plan does not guarantee improved results. It can guarantee something.

Strategic Planning Process

A systematic strategic planning process can produce
performance enhancing corporate strategic plans.
A strategic planning process is a systematic, formally documented way of deciding the handful of
key decisions that an organisation, viewed as a corporate whole, must get right in order to thrive
over the next few years.

Well designed and effectively facilitated corporate planning processes will produce practical
corporate strategic plans. As these are implemented they will improve long term performance of the
organisation.

Such a process of strategic planning can also improve morale and motivation, strengthening the
strategic planning culture and strategic planning motivation

Strategic planning is a review and planning process that is undertaken to

make thoughtful decisions about an organization’s future in order to ensure

its success. Strategy is a framework of plans or methods that help and

organisation to achievement of the main objective. It is a course of actions

that is designed to reach smaller goals thus leading to the main aim of the

company. Originally, the word strategy has been derived from Greek word,

‘strategos’ which means general ship.

Strategic planning process involves rightly defining the company’s mission

and an assessment of its present position and competitive status. Strategic

planning process requires a well-structured plan for how to optimally allocate

time, human capital and financial resources. By following a strategic planning

process, organizations can improve outcomes for their business and avoid

taking on unexpected risks due to lack of foresight and futuristic approach.

Decide on one common strategic

planning process
 Understand what strategic planning process is and how it is done, its

importance to the organization, towards providing a common vision,

with agreed-upon objectives and strategies, and what steps can be

taken to establish and implement a strategic plan;

 Examine all the costs involved in doing strategic planning, in terms of

human resources, time and other resources – needed to develop an

effective plan; in case of organizational instability or financial crisis or

any such situation, it would not be easy or a wise decision to enter into a
 strategic planning process until the current problems and needs have

been properly addressed;

 Agree upon one common procedure and set responsibilities at all levels

in the strategic planning process, dedicating proper time for planning

meetings with the Board and all staff. The time may range from a few

hours to a couple of days, depending on the members and planning.

It’s desirable to set up a committee or task force for strategic planning. The

coordinating group or the committee assigned for strategic planning process

must consist of Board members, senior & middle managers, a representative

of support/technical staff, a member representing stakeholders, and perhaps

former leaders of the organization.

 It’s important to allocate ample time to the strategic planning process.

  It is essential to delegate lesser regular day-to-day responsibilities of the

staff and Board members who are the key participants in developing the

strategic plan.

Evaluate and Assess the Environment

This evaluation covers both an external environment — finding and fixing

opportunities and threats — and an internal environment — analysing

organizational strengths and weaknesses. This process is known as “SWOT

Analysis” that stands for: strengths, weaknesses, opportunities, and threats.

1.

External Environment
Consider political, economic, social, and technological factors and their impact

on your organization. This includes changing demographics, economic and

political trends, and effects of new or changing laws that affect the working of

the organization, social values, communications and other technological

factors.

 Think carefully about your immediate target audience or area to know

its status and demand patterns.

 Determine possible opportunities and challenges related to resources

and financing.

 Identify current and potential allies and competitors, including

organizations with the target audience or the funding sources.

2.

Internal Environment
This includes the following components.

Assess current organizational performance in terms of:

1. Inputs – human and financial resources,

2. Processes – methods and strategies that are operating, and

3. Outputs – final outcome.

  Identify both favourable and unfavourable success factors affecting the

organization. Understand the factors that are necessary for

organization’s continuous success. The Board and staff can give useful

information and knowledge to this process.

 Review organizational values and operating principles as these define

the organization. There are organizations that follow the written values

and principles guiding their decision making process and related

activities.

The committee responsible to assist the environmental scan can contact

company’s external members like suppliers, stakeholders, etc to get an

external view and the staff can provide an internal assessment. The result of

the environmental scan should be an analysis of organizational strengths and

weaknesses and external opportunities and threats. Recorded or documented,

the assessment requires close review and discussion by the committee. The

meeting for strategic planning process begin with a presentation of these

results of the environmental assessment. In most of the cases, these results are

presented to the Board before the planning meetings begin.

3.
 Determine the important issues and questions
that need to be addressed as part of the
strategic planning effort
If there is some discrepancy about issues of the organization, it is possible to

move immediately to the main objective and then goals. If there is no

agreement on general directions and organizational goals at all, it becomes

necessary to find issue priorities and learn critical choices. This might be done

in several ways. For example:

 The planning committee should determine the strategic issues from the

environmental assessment, with individuals identifying issues and

indicating why each of them is strategic, including the pros and cons of

addressing and not addressing it.

Whatever method is used, the discussion should reach some level of

agreement about issues or choices that need to be taken care of and the

decisions made under the strategic planning process.

4.

Define or review the values, social vision, and

mission
Make sure there is an agreement on why organization’s existence, what goals

it seeks to achieve, and whom it serves. Begin your strategic planning process

by agreeing on:

 Deep-rooted values or core principles that guide the organization and

are shared by Board and staff, not easily changed.

 Vision for the community which is viewed as your reflection of what the

community would be like, if your values were shared and practiced by

all.

 Mission or the purpose for your organization’s existence.

Recommended courses

o Online Training on Internet Marketing Basics

o Online Certification Training in Anger Management

o Training on Marketing Psychology

5.

Make a shared vision for the organization

It is important to focus and agree on the organization’s vision to be in three to

five years or at the end of the period covered by the strategic plan.

The vision describes the organization and:

 -its mix of programs,

 Resources (human and financial)

 Reputation inside and outside,

 Key accomplishments and development, and

 Relationships with stakeholders, and government;

 Its target area, target population,

 Budget and funding from public and private sources,

 Board and staff, size and composition,

 Program areas, offices and locations.

The development of a shared vision is best done with both Board and staff

involvement and coerciveness.

6.

Develop a series of goals that define the

organization addressing its mission
Short steps from the vision to goals – the statement that describe the vision

are essentially missions. It is extremely important to divide the vision into a

series of major objectives of the organization, as status statements that

describe the organization.

7.

Concede the major strategies to attain goals

and address main issues identified through
SWOT
The major emphasis should be on broad strategies, which should be related to

specific goals. The process requires to know the “where you are?”, “where you

want to be?” and “how to reach there?” for the organization. The Board

provides a blueprint, while the staff or the planning committee does the

detailed analysis. Whatever specific approach is used, particular criteria for

assessing and selecting among strategies should be given consent. Thereafter,

the planning committee must always consider the reasons to properly

delegate responsibilities for their implementation.

8.

Design an action plan that marks the goals and

identifies objectives and work plans on a
yearly basis
After developing the longer-term parts of a strategic plan, it is now time to

ensure a specific work plan, to start the implementation. Strategic planning

describes that strategies must exhibit present conditions within the

organization’s internal environment. Therefore it becomes difficult to develop

particularized annual plans except for the first or perhaps the second year

covered by the strategic objective. However, yearly action plans are required.

Yearly program goals should be time-based and measurable, as it shows the

progress made by the organization according to the plans made. This also
gives an idea if the strategic planning process is been done and implemented

in the right manner or not. The annual plan can be included under the

strategic plan.

Developing objectives and annual work plans requires the Board’s and staff’s

regular input, wherein the staff takes up program-related goals and objectives,

and the Board developing goals and objectives related to governance, once

the Board has defined organizational goals.

The Board must approve the action plan, so that the staff can develop the

written plan. The staff’s expertise lies in the implementation of plans and

strategies based on policies set by the Board.

9.

Seal the final planned strategy that

summarizes the decisions and consequences of
the strategic planning process
No set format is required; however it’s important to be sure to include the

outcomes of each major step.

10.
 Build in processes for monitoring and
modifying strategies in accordance with the
changes in the external environment
Development towards goals and use of strategies should be monitored

regularly, with strategies re-evaluated and annual objectives improved on a

yearly basis, based on the progress made, obstacles removed, and the

continuously changing environment. Before unexpected changes before-hand,

such as favourable appointed officials, development in the economy, changes

in local financiers priorities, or changing demand patterns of the target

population.

1. Define objectives at the beginning of every year.

2. Track the progress that has been made.

3. Use the plan as a compass, but not an inflexible blueprint for action.

The Board plays a critical role in reviewing progress and changing the

strategies when needed; the staff generates the documentation and necessary

information for this review, as well as performing timely assessment and

making reports to the Board.

The steps above are just one of the approaches towards developing and

implementing a strategic plan. Strategic planning is a joint Board-staff effort.

The main planning sessions work best when assisted by an someone from

outside the organization who is knowledgeable about the organization like a

former senior member or someone from a community-based organizations,

someone who is trained in group activities and experienced in strategic

planning, directed towards assuring complete discussion of issues but also

task-oriented and who can take the process forward. Together these factors

serve as a guide to strategic planning.

Recommended Articles
Here are some articles that will help you to get more detail about the Strategic

Planning Process so just go through the link.

1. 6 Important Ways to do Succession Planning Strategy (Guide)

2. 9 Best Steps To Create A Strategic Business Planning Process

3. Strategy Planning Tools | Meaning & Important Steps

STRATEGIC MANAGEMENT TRAINING (17

COURSES, 2+ PROJECTS)
21 Online Courses

13 Case Studies/Projects Within Courses

127+ Hours

Verifiable Certificate of Completion

Lifetime Access

Learn More
11SHARES