PLANNING

Meaning
• Forecasting : Future predicting.
• Dr. Terry : “ Planning is the selecting & relating
of facts & using of assumptions regarding the
future in the visualization of formulation of
proposed activities believed necessary to
achieve desired results. “
• Haynes & Massie “ Planning is that function
of manager in which he decides in advance
what he will do. It is a decision-making
process of a special kind, its essence is
futurity. “
STEPS IN PLANNING OR PROCESS
OF PLANNING
• Establishing Objectives :
– Broad Objective must be laid down first
– It may be subdivided into various objectives
– If there are more than one objectives, they
should be arranged in order of priority
• Building the premises:
– Premises are assumptions about future
– These premises can be sub divided into 3
types
• Collecting, Classifying and Analyzing data :
– Relevant data is to be collected
– Heap of data must be classified
– The classified data must then be interpreted
• Determining Alternative courses :
– Various alternatives which can help
organization achieve the objectives must be
searched
– All alternatives must be taken into account
• Evaluating Alternatives :
– Each alternative must be assessed in terms of
its profitability
– Various methods of operational research are
widely used
• Selection of Course of action:
– Assessment makes comparison possible
– The best among them should be selected
• Preparing derivative plans :
– Main plan can be sub divided into various
subsidiary plans eg. Department wise plans
• Providing follow - up:
– A through examination is required
– A plan can be first implemented on an
experimental basis
– Eye on the progress , checking of results on
frequent intervals is must
• Example base : career as a manager –
colleges & courses . . .
 Planning premises
• Planning premises : expected environment of
Plans

• Dr. Terry “ Premises are assumptions providing

background against which estimated events
affecting the planning will take place. “

• Management gives importance to the critical

premises only
 Types of planning premises
• Internal vs External Premises :
- Inside organizational boundaries vs
Outside organizational boundries.
- Affecting individual firm vs universal
effect.
- are controllable vs are uncontrollable.
• Controllable vs Non-controllable:
- could have control vs no control.
- Eg. Personnel vs Earthquake.
• Tangible vs Intangible :
- Quantifiable vs not easy to quantify.
- Eg. Assets vs morale of employee.
 Internal premises
(1) Sales Forecast :
– Income vs expenses
– small scale industries don’t go for sales
forecasting, which is not good practice
– methods of sales forecasting viz. Statistical &
other methods.
(2) Capital investment :
– long term investment
– calculation on alternatives
– various sources of investment ,terms of payment
to be considered.
(3) Basic policies :
– cannot be changed if once set – profit sharing.
(4) Supply of materials :
– sources of various material or internal
production
– more than one supplier, to remove
dependency.
(5) Development of unit :
– Expansion / upgradation.
(6) Ability of employees :
– Employees contribution
– Education – Experience - Expertise
– attitude towards work.
 External premises
• Relating to General Business Environment :
includes political, economical, social &
technological conditions .
(1)Political Stability :
– if political stability is maintained planning is
considerably facilitated else not
– planning become tough where the govt.
changes twice or thrice a year.
(2) Govt. Controls :
– The degree of govt. control depends on the
nature of the business
– more stringent/strict on eatables
– health & safety.
(3)Govt. fiscal policy :
– policies of taxes
– monetary policies – bank rate policy.
(4)Population Trends :
– size of population
– age groups.
(5)Employment, productivity & National
Income:
– portion of disposable income.
(6)Price level :
– price elasticity of demand
– price & demand are inversely related
– future price level & its influence on market.
(7)Technological change :
– Research staff.
(8) International Political Situation :
– integrated markets
– war like situations – eg. Muslim caps & war with
pakistan / war with iraq & iran crude oil price rise.
(9)Social revolution :
– trade unions agitation, adult education
programmes, students agitation etc.
(10) Trade Cycles :
– Regular ups & downs in business activity are
known as trade cycles.
• Relating to Product Market : conditions
influencing firms demand & industries
demand.
(1)Industry demand :
– factors that affect industry demand are
production, national income, population etc.
– lower income group : basic necessity
– middle income group : comfort
– High income group : luxury.
(2)Individual firm demand:
– price elasticity of demand depends on its own
policy
– competitors policy
– consumers preference etc.
• Relating to Factor Market : concerned with
land, labour , capital & raw-material.
(1)Business Location :
– availability of Raw materials
– skilled labour
– transportation
– local environment
– existence of auxiliary industries
– availability of capital.
(2)Labour availability :
– skill
– stability
– labour unrest
– wage difference.
(3)Sources of Material & parts:
– suppliers distance.
(4)Availability of capital :
– availability of capital
– suppliers assuming controlling power in
management of the unit , which is not
acceptable by the owner.
 Types of plans
• Single Use/ Multi Use Plans.
(1) Objectives :
– aims or purpose for which organization are set
up.
– goals a business unit want to achieve.
– Mission:-Idealism; broad objective ; service to
humanity.
– Goal :- aim expressed in specific terms; time
specific; measurable.
(2) Policies :
– General statements which guides the
subordinates in decision making in various
departments of organization.
– how to do’.
– eg. Higher positions must be filled with
promotion only, raw materials must be
purchased from local suppliers only etc.
– policies must be communicated to the staff :
willingness
– uniformity – quick decision – delegation of authorities.
(3) Strategies :
• type of plan which is prepared to meet the challenges
posed by the activities of competitors & other
environmental forces
• “keep in mind the plans of competitors”
• e.g. price cut by competitor / advertisement depicting
superiority of our product
• Bank Robbery
• strategies are thus contingent plans, as it is prepared
to meet the demand of a particular situation.
(4) Procedures:
– They are the guides to action.
– They lay down in detail the exact manner in which
a certain activity must be done.
– E.g. Purchase of R.M. – selection of employees.
– Procedure lay down a standard way of doing a job.
– Ensures smooth functioning.
– Integrate efforts of different individuals.
– Training of employees because they learn from
procedures.
– Should be standardized - reviewed periodically.
(5) Rules :
– A rule is the simplest plan of action.
– It dictates that a particular work is to be done in a
particular manner.
– It specifies ‘ what to be done ‘ or not to be done in
a given situation.
– It is a rigid & definite plan & leaves no scope for
deviation.
– Procedure lays steps : e.g. steps to deliver the
goods.
– Goals are not concerned with steps : e.g. smoking
is prohibited in the factory.
(6) Budgets :
– A budget is a plan giving the expected result expressed in
numerical terms.
– It may be entirely expressed in financial terms or it may be
expressed in number of units, man hours or other any
measurements that can be expressed in numbers.
– It may be prepared for sales , production, material, labour,
any cash or capital expenditure.
– Budgets are controlled devices.
– But making of budget is clear planning.
– Actual operations can be measured & variations are found
out.
– Budgets should be flexible & not rigid.
(7) Programmes :
– A programme is a sequence of activity taken to
implement the policies & to achieve the objectives.
– Lays down clear steps & time period.
– Two types : Major programmes & Minor
programmes.
– Major Programme : expansion Programme .
– Minor Programs : sub programmes to complete
the major ones e.g. new machines , increase in
advertisement exp. Etc.
– Minor Programmes may be independent too e.g.
train workers to implement new method of prod.
 ..Thank
you..