Unit 3: Planning

Meaning and concept of planning:

Planning is the primary function of management. Simply, planning is thinking
in advance about the task (work) to be done in the future. In other words,
planning is an intellectual process which is concerned with deciding in
advance what to do? how to do it? When to do it? and by whom to be done?
According to Louis Allen," planning involves the development of forecast,
objectives, policies, programmes, procedures, serials and budgets.”
According to ME Harley, "planning is deciding in advance what is to be done"
In conclusion planning is predetermination of objectives and an intellectual
course of action that should be taken to acid defined goals efficiently and on
time. No work can be successful without planning.
Types of planning:

A. On the basis of managerial hierarchy:

a. Strategic plan: A long term plan prepared by top level management after
the environmental scanning is known as a strategic plan. It is planning for the
total enterprise. It is good and general in nature. It clearly days down the basic
goals, strategies and policies for the enterprise as a whole. This plan is also
known as a strategic plan. This plan is set by the board of directors with the
environment of CEO and other high ranking personnel.

b. Tactical plan: Departmental level plants are called tactical plans. Such
plans are prepared as means to achieve strategic goals. Generally, search
plans are met on plants which have been formed by middle level managers. It
is prepared for smooth running or implementation of corporate plan with time
bound.

c. Operational plan: operational plans are formed to reach operational goals.

Such plans are developed mainly by lower level managers. This plan has very
short term focus. The front line managers and supervisors are responsible for
developing and implementing operational plans.

B. On the basis of time:

a. Long term plan: Long term plan: the plants prepared for achievement of
organisational goals for strategic goals are called long term plan. Generally,
such plans are formed for more than 5 years. Long term plans are formed by
top/high level management.

b. Mid-term plan: The plants prepare to achieve tactical goals are called mid-
term plans. Generally, search plans may be prepared for one to three years.
Mid-term plans are formed by middle level managers.

c. Short term plan: Short term plans are prepared for the achievement of
operational goals. Generally, such plans are formed for not more than 1 year.
Search plans are prepared by lower level managers. All the operational
planning is a short term plan. The plan only provides guidelines to members.
The members can modify short plans on the basis of their facility, need and
requirement. School, colleges, yearly plan is an example of a flexible plan way
for subject change.

C. On the basis of use:

a. Single use plans: The plans specially prepared for specific purpose and for
non-repetitive activities are called single use plans. Such types of plans are
useful only once. Budget projects and programs can be taken as examples of
use plans. Short plan becomes meaningful at least once the defined objective
is gained.

b. Standing use plans: the plants prepare for guiding the activities to be
performed by repetition at call standing plans. Policy, produce and objective
rules are examples of standing plans. Search plans are prepared for long
term.

Planning process:

The planning process are as follows:

1. Identification of needs for planning: identification of needs for planning is

the first stage of the planning process. A planner should be fully conscious
about the need of plan before planning. Planners should be conscious about
internal and external environments. Management needs to analyze the
weakness, strength, opportunity and threats.

2. Setting objectives: Setting objectives is the second stage of the planning

process. Objective may be long term or short-term. The objective should be
made clear and specific according to the primary importance of work. While
forming the objective of the organization, departmental and technical objective
should also be made clear. Measures of all levels should be well informed
about this task and the goal set must be smart (specific, measurable,
attainable, realistic and timely) for the successful future.

3. Developing planning premises: Developing planning premises is the third

stage of the planning process. Premises mean forecast of sales volume,
production cost, prospective environmental changes, wages, rates, tax rate,
etc. So, planning premises provide basic information necessary for effective
planning.

4. Identification of alternative: in the first step of the planning process various

alternatives are identified. Indian can be the only one way to solve any
problem. There may be several alternatives for solving problems. For this,
different sources may provide information for example newspaper, TV, net,
experience of managers, competitors, analysis etc.

5. Evaluation of alternatives: all the alternatives mean not be of equal

importance. So, the alternative should be evaluated with the help of proper
technique at time of alternatives evaluation. The cost, the risk, profit etc.
elements should be compared. Some alternatives may be more profitable but
risky. Some alternatives may be less risky and less profitable. So, such
alternatives can be evaluated with the help of arithmetical, modern and
computer.

6. Selecting the best alternative: after evaluating the alternative according to

their strong and weak point usefulness. Now, we are here at the real point of
decision making. the management has to select the best alternative which
helps to achieve the organizational goal.

7. Formulating supporting plan: in the next step, supporting plans are

formulated on the basis of min plan or master plan. Different types of planks
or as long term, midterm, and short term plans that are associated with each
and every department should be formulated. but while formulating supporting
plans, the plans to contradict with the main plan.

8. Implementing the plan: All those plans remain on the paper should be
implemented to give meaningful sense only then a planning process ends.
After implementing the plan, we can know how it is effectively utilized. If any
necessary changes are felt, it will be improved next time when planning is a
cyclical process.
Benefits/advantage of planning
The advantages of planning are:

1. To achieve the goals: Planning is directed towards achieving enterprise

objectives. Good and effective management is possible only with
management by objective. planning the organization knows its present
position and also where it wants to go.
2. To reduce uncertainty: Planning apps to forecast possible changes and
uncertain future provides alternative ways to lead the organization towards
development and prosperity despite uncertainty. So, business organizations
can remain free from changing in demand, interest, fashion, technology and
so on.

3. To maintain effective control: Planning and controlling both are interrelated

subject matters or inseparable because control involves keeping activity on
predetermined goals by rectifying deviation from the plan whereas planning
helps by setting standards.

4. To increase organizational effectiveness: Planning utilizes the resource

properly to reduce the wastage and maintenance cost of production. Thus,
planning helps the organization to run in profitability. Planning performs the
above activities and also helps to increase the effectiveness of the
organization.

5. To develop innovation: Planning is the basic and primary function of

management. It develops the initiative and creates an aspect of managers.
Planning enables and encourages the manager to use their creativity and
innovation.

6. To maintain the resources: All the physical, human, financial and

informational resources of an organization are fully utilized and mobilized
through proper planning. Hence, all the resources give considerable benefit to
the organization.

7. To maintain coordination: In order to achieve an objective of business and

organization, there should be better coordination among all the activities,
department, sections and employees. new coordination can be bought in
different activities of an organization without planning.

8. To increase competitive strength: We know that today's business is facing

tough competition. show in order to face search competitions we need to
formulate sound planning which will improve the efficiency of products or
services. It helps to stand out in the mass of competitors.

Limitation or disadvantage of planning

The disadvantage of planning are:

1. Time consuming process: Planning is a time consuming process. It is the

business unit to come in action. In the process of planning, every step may
consume a lot of time. It is unsuitable for immediate situations.

2. Costly process: The planning procedure involves too much expenditure,

money and effort. Both are required in the process of planning such as
collecting information, preparing estimates, forecasting and evaluating the
alternatives. So planning is not suitable for a small size business organization.

3. Rapid changes problem: Rapid changes in technology, consumer, interest

and fashion app for the constraints to planning. In a complex and rapidly
changing environment planning is more difficult as it has new problems. In the
rapidly changing conditions, planning activity taken in one period cannot be
relevant for another period.

4. Problem of accurate information: Before preparing planning, sufficient and

reliable data and information are to be collected from different sources inside
and outside the organization. if reliable information and data are not available
for planning there is a chance of business loss and failure.

5. Lack of flexibility: Planning makes an organization stable. Due to internal

and external reasons, plans cannot be changed according to the situation. So
it lacks flexibility. Plans are formulated considering the possibility of changes
in the future but irregular changes directly affect the plan.

Nature/ characteristics/ features of planning

1. Goal-oriented: Goals or objectives are the end result towards which an

activity is directed. The first stage of planning is the conscious and explicit
statement of the ultimate objectives. However, the goal should be clear,
specific and realistic as well.
Primary function: planning is the primary function of management. planning
provides the basis for organizing, staffing, leading and controlling and flows
through all of them as their life blood.
2. Pervasiveness of planning: Managers at all levels of organization perform
the planning function. Planning is needed for all activities at all levels although
the nature and extent of planning varies with the position a person is holding
in the organizational hierarchy and with the board guidelines provided by his
superiors. Planning at low levels is also necessary but it should still remain
within the framework of the master plan set by the top management.

3. Continuous activity: Planning is a continuous and never ending process. All

the organizations, at all points of time, have clearly defined hierarchy of plans.
Manager can't plan once for all. There is always a need for continuous
revision of existing plans and implementation of new ones.

4. Intellectual process: Planning involves logical thinking decision making. All

decisions require ability required ability, experience and foresightedness on
the part of managers. They are required to anticipate the changes in the
environment, make predictions about the future problems and search for
alternative courses of action. Thus, planning is a mental or thinking process.

5. Forward looking: Planning is always done for the future. One of the basic
objectives of every business firm is to ensure its survival and growth. This is
possible only if it is able to cope with the changing environment. Thus,
planning implies anticipating, analysis and predicting the future.

6. Directed towards efficiency: Planning involves efficient utilization of various

resources like materials, machines, capital, labour etc. An effort is made to
achieve organizational objectives with minimum resources

Nature/ characteristic/ feature of planning: [Important Questions]

1. Intellectual process: Planning is an intellectual process, it is related to

thinking before doing something, thus, it is a mental exercise. A planner has to
think about the questions like how to do it? Who is to do it? what to do? and
when to do it? A planner should be educationally and mentally sound.

2. Goal oriented: Learning begins with the determination of organizational

goals. With the determination of goods, the way to achieve the goal is decided
in the planning. All kinds of plans are linked with a goal of organization,
without goals, plan has no meaning. Thus it is clear that planning is helpful in
the attainment of goals of the organization.

3. Primary function: Planning is the primary function of management. It starts

with the setting of specific measurable attainable realistic and timely
objectives. In the absence of planning, no other functions of management
such as organizing, staffing, leading and controlling can be performed
effectively. So planning is also a basic and primary function of management.

4. Pervasiveness: Planning is pervasive. Every work needs planning to

accomplish its objectives. It has equal importance at all levels of
management. The top level managers formulated strategic plans while the
middle level manager formulates tactical plans, and the lower level manager
formulates optional plans. All plans will be integrated for the achievement of
organizational goals. Plants are equally necessary in every sector of the
universe.

5. Continuous process: Planning is a continuous process, it is endless.

Planning is a continuous process for the following reasons:

1. Plan is prepared for a particular period. Hence, there is need for a new
plan after the expiry of the period
2. In case of any discrepancy, plans are to be revised.
3. In case of rapid changes in the business environment plans are to be
revised.

6. Directed towards efficiency: Planning is directed towards efficiency. A

successful plan is what to do in the future? where to do it? Why to do it?
When to do it? by whom to be done and so on. planning helps to achieve
organizational objectives with minimum resources by utilizing the various
resources like materials, machine, capital and Labour efficiency.

7. Forward looking: Planning is the course of action for the future. It decides
the plan of action, what is to be done, when it is to be done, by whom is it to
be done all these questions are related to the future. Under planning, answers
to these questions are found out. Since planning is concerned with future
activities, it is called futuristic. Planning defines objectives, means and policy
for future works. Thus, it is related to the future.