UNIT 2

PLANNING

2.1 DEFINITION

Koontz and O' Donnel stated that "Planning is deciding in advance what to do, how to do it,
when to do it and who is to do it. It bridges the gap from where we are and to where we want to
go.

Heying and Massie defined "It can be said that planning is first function of the manager in which
he has to decide in advance action that is to be done." It is an intellectual process in which
managers must have to use their imaginative mind. Planning is an attempt to foresee the future in
order to get high performance.

2.2 Nature of Planning

a) Contribution to purpose: - Planning helps in the achievement of enterprise goals and

objectives. Plans focus on purposes. Planning identifies irrelevant actions and helps in
determining actions which will lead toward the accomplishment of objectives and thus reduces
wastages as well. Planning focus on desired ends. Without plans, actions become merely random
activity, leading to chaos.

(b) Primacy of planning:- Planning is the first function of management. Without planning, other
function of management cannot be completed. Apart from being the first function, planning is
required continuously for performance of every function of management for example,
organisation structure requires planning , so does staffing. Similarly, planning is needed in case
of leading and controlling as well.

(c) Pervasive: Planning is not the job of high-level managers only but planning is a function of
all managers. However, nature of planning varies with the hierarchical levels. Higher level
managers formulate strategic plans while lower level managers are engaged in day to day
planning within the framework of top level plans.

(d) Planning considers limiting factors: - Planning should be realistic. Planning should be done
keeping in mind the available resources. Unrealistic plans can never achieve the desired result. If
a manager ignores the limiting resources, planning is bound to fail. For example, if the raw
material is scarce in supply, then the raw material will be a limiting factor. Keeping in mind the
availability of raw material, production planning and sales target should be decided.

(e) Efficiency of plans: Plans must be efficient. Efficient plans contribute to purpose and
objectives by offsetting the costs and other unsought consequences. A plan can contribute to the
attainment of objectives, but if it does so at too high or unnecessarily high costs, it is not
efficient. It should aim at eliminating all wastages.
2.3 Advantages of Planning

 All efforts are directed towards desired objectives or results. Unproductive work and
waste of resources can be minimized.
 Through careful planning, crisis can be anticipated and mistakes or delays avoided and
the enterprise can manage the change effectively.
 Planning enables the systematic and thorough investigation of alternative methods or
alternative solutions to a problem. Thus we can select the best alternative to solve any
business problem.
 Planning maximizes the utilization of available resources and ensures optimum
productivity and profits.
 Planning provides the ground work for laying down control standards.