UNIT II

PLANNING
Planning is the fundamental management function, which involves deciding beforehand, what is
to be done, when is it to be done, how it is to be done and who is going to do it. It is an
intellectual process which lays down an organization’s objectives and develops various courses
of action, by which the organization can achieve those objectives. It chalks out exactly, how to
attain a specific goal.
Planning is nothing but thinking before the action takes place. It helps us to take a peep into
the future and decide in advance the way to deal with the situations, which we are going to
encounter in future. It involves logical thinking and rational decision making.
According to Koontz and O’Donnel, “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 to where we want to go.”
Planning is the continuous managerial process of anticipating and forecasting the future.
environment of the business organization, the formulation of the long term and short term goals.
to be achieved and selecting the strategies for their realization.
Planning is also a management process, concerned with defining goals for a company's future
direction and determining the missions and resources to achieve those targets. To meet
objectives, managers may develop plans, such as a business plan or a marketing plan.
The planning process provides the information top management needs to make effective
decisions about how to allocate the resources in a way that will enable the organization to reach
its objectives. Productivity is maximized and resources are not wasted on projects with little
chance of success.

Importance of Planning

 It helps managers to improve future performance, by establishing objectives and selecting a

course of action, for the benefit of the organisation.
 It minimises risk and uncertainty, by looking ahead into the future.
 It facilitates the coordination of activities. Thus, reduces overlapping among activities and
eliminates unproductive work.
 It states in advance, what should be done in future, so it provides direction for action.
 It uncovers and identifies future opportunities and threats.
 It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.
Planning is present in all types of organisations, households, sectors, economies, etc. We need to
plan because the future is highly uncertain and no one can predict the future with 100%
accuracy, as the conditions can change anytime. Hence, planning is the basic requirement of any
organization for the survival, growth and success.

Nature of Planning

1. Managerial function: Planning is a first and foremost managerial function provides the base
for other functions of the management, i.e. organising, staffing, directing and controlling, as they
are performed within the periphery of the plans made.
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2. Goal oriented: It focuses on defining the goals of the organisation, identifying alternative
courses of action and deciding the appropriate action plan, which is to be undertaken for reaching
the goals.
3. Pervasive: It is pervasive in the sense that it is present in all the segments and is required at
all the levels of the organisation. Although the scope of planning varies at different levels and
departments.
4. Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so
on. Once that period is over, new plans are drawn, considering the organisation’s present and
future requirements and conditions. Therefore, it is an ongoing process, as the plans are framed,
executed and followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the application of mind, to think,
forecast, imagine intelligently and innovate etc.
6. Futuristic: In the process of planning we take a sneak peek of the future. It encompasses
looking into the future, to analyse and predict it so that the organisation can face future
challenges effectively.
7. Decision making: Decisions are made regarding the choice of alternative courses of action
that can be undertaken to reach the goal. The alternative chosen should be best among all, with
the least number of the negative and highest number of positive outcomes.
Planning is concerned with setting objectives, targets, and formulating plan to accomplish them.
The activity helps managers analyse the present condition to identify the ways of attaining the
desired position in future. It is both, the need of the organisation and the responsibility of
managers.

Steps of Planning Process

The planning process involves several key steps that managers must follow:

Setting Objectives:

This marks the beginning of planning, where clear goals are defined for the organization. Objectives
are specific, measurable end results that the management aims to achieve. Each department sets its
objectives within the overall framework of the organization’s goals. For instance, a mobile phone
company might set a target to double its sales to 200,000 units next year.

Developing Planning Premises:

Planning is future-oriented and requires understanding external events that could impact decisions.
These events, known as planning premises, are assumptions based on which plans are made. For
example, a mobile phone company might base its sales objective on favorable government policies
promoting digital transactions.

Identifying Alternative Courses of Action:

After setting objectives and making assumptions, various ways to achieve the goals are explored.
Multiple alternatives, such as price reduction, increased advertising, or improved after-sales services,
are identified.

Evaluating Alternative Courses of Action:

Each alternative is carefully evaluated, considering both positive and negative aspects. Factors like
cost, risks, and returns are assessed within the planning premises and available resources. The
evaluation helps in weighing the pros and cons of each option.

Selecting One Best Alternative:

The most profitable plan with minimal negative effects is chosen and implemented. Managerial
experience and judgment play a vital role in this decision-making process. For instance, a mobile
phone company might opt for increased TV advertisements, online marketing, and excellent after-sales
service.

Implementing the Plan:

This step involves putting the chosen plan into action. Managers communicate the plan clearly to
employees, allocate resources, organize labor, and procure necessary machinery. For example, a
mobile phone company might hire more salespeople, create TV advertisements, initiate online
marketing activities, and establish service workshops.

Follow-Up Action:

Continuous monitoring and feedback are crucial to ensure plans are on track. Regular checks and
comparisons against set standards are performed. Feedback mechanisms, such as customer responses
and revenue collection, are utilized to evaluate the actual outcomes against the planned objectives. For
instance, the mobile phone company establishes a feedback system across its branches to assess
customer responses, revenue, and employee feedback.
By planning process, an organisation not only gets the insights of the future, but it also
helps the organisation to shape its future. Effective planning involves simplicity of the
plan, i.e. the plan should be clearly stated and easy to understand because if the plan is
too much complicated it will create chaos among the members of the organisation.
Further, the plan should fulfill all the requirements of the organisation.

Limitations of Planning
(i) Planning leads to rigidity
(ii) Planning may not work in a dynamic environment
(iii) Planning reduces creativity
(iv) Planning involves huge costs
(v) Planning is a time-consuming process
(vi) Planning does not guarantee success