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Concept of Planning

Planning is a rational action mixed with a little of forethought. It is seen everywhere. In a business, planning is the primary of all managerial functions as it involves deciding of future course of action. Thus, planning logically precedes the execution of all managerial functions. Planning is the process of deciding inadvance what is to be done, where, how and by whom it is to be done. Planning as a process involves anticipation of future course of events and deciding the bestcourse of action. Thus, it is basically a process of thinking before doing. All these elements speak about the futurity of an action. Koontz and ODonnell have defined planning in terms of future course of action. They state that Planning is the selection from among alternatives for future courses of action for the enterprise as a whole and each department within it. Planning involves defining the organizations goals, establishing overall strategyfor achieving goals, and developing a comprehensive set of plans to integrate, coordinate organizational work.

Nature of Planning
(a) Planning is a mental activity. Planning is not a simple process. It is an intellectual exercise and involves thinking and forethought on the part of the manager. (b)Planning is goal-oriented. Every plan specifies the goals to be attained in the future and the steps necessary to reach them. A manager cannot do any planning, unless the goals are known

Conti.
(c) Planning is forward looking.
Planning is in keeping with the adage, look before you leap. Thus planning means looking ahead. It is futuristic in nature since it is performed to accomplish some objectives in future.

Conti
(d) Planning pervades all managerial activity. Planning is the basic function of managers at all levels, although the nature and scope of planning will vary at each level

e) Planning is the primary function. Planning logically precedes the execution of all other managerial functions, since managerial activities in organizing; staffing, directing and controlling are designed to support the attainment of organizational goals. Thus, management is a circular process beginning with planning and returning to planning for revision and adjustment.
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(f) Planning is based on facts. Planning is a conscious determination and projection of a course of action for the future. It is based on objectives, facts and considered forecasts. Thus planning is not a guess work

Conti..
(f) Planning is based on facts. Planning

is a conscious determination and projection of a course of action for the future. It is based on objectives, facts and considered forecasts. Thus planning is not a guess work.

Conti..
(g) Planning is flexible.
Planning is a dynamic process capable of adjustments in accordance with the needs and requirements of the situations. Thus planning has to be flexible and cannot be rigid.

(h) Planning is essentially decision making. Planning is a choice activity as the planning process involves finding the alternatives and the selection of the best. Thus decision making is the cardinal part of planning.

IMPORTANCE OF PLANNING

According to G.R. Terry, Planning is the foundation of most successful actions of all enterprises. An enterprise can achieve its objectives only through systematic planning on account of the increasing complexities of modern business. The importance and usefulness of planning can be understood with reference to the following benefits.

(a) Minimizes uncertainty: The future is


generally uncertain and things are likely to change with the passage of time. Planning helps in minimizing the uncertainties of the future as it anticipates future events.

(b) Emphasis on objectives: The first step in planning is to fix the objectives.When the objectives are clearly fixed, the execution of plans will be facilitated towards these objectives

(c) Promotes coordination. Planning helps to promote the coordinated effort on account of pre-determined goals. (d) Facilitates control. Planning and control are inseparable in the sense that unplanned actions cannot be controlled. Control is nothing but making sure that activities conform to the plans

(e) Improves competitive strength. Planning enables an enterprise to discover new opportunities, which give it a competitive edge. (f) Economical operation. Since planning involves a lot of mental exercise, it helps in proper utilization of resources and elimination of unnecessary activities. This, in turn, leads to economy in operation

(g) Encourages innovation. Planning is basically the deciding function of management. Many new ideas come to the mind of a manager when he is planning. This creates an innovative and foresighted attitude among the managers. (h) Tackling complexities of modern business. With modern business becoming more and more complex, planning helps in getting a clear idea about what is to be done, when it is to be done, where it is to be done and how it is to be done.

Barriers to effective Planning


Influence of external factors Non-availability of data Time and Cost Inflexibility

Requirements of a Good Plan


Clear objective Proper understanding Flexible Stable Comprehensive Economical

Stategic planning

Stategic planning

Operational planning

Exhibit 77 Planning in the Hierarchy of Organizations

Stategic planning

Stategic planning

Operational planning

Types of Plans

Types of Plans Strategic Plans


Apply to the entire organization. Establish the organizations overall goals. Seek to position the organization in terms of its environment.

Cover extended periods of time.

Operational Plans
Specify the details of how the overall goals are to be achieved.
Cover short time period.

Long-Term Plans Plans with time frames extending beyond three years Short-Term Plans Plans with time frames on one year or less Specific Plans Plans that are clearly defined and leave no room for interpretation Directional Plans Flexible plans that set out general guidelines, provide focus, yet allow discretion in

Classification of Plans

implementation.

SINGLE USE PLANS


A PROGRAM is a single use plan to carry out a special project within an organization. The Project itself is not intended to remain in existence over the entire life of the organization. Rather, it exists to achieve some purpose, that if accomplished, will contribute to the organizations long term success. A BUDGET is a single user financial plan that covers a specificed length of time. It details how funds will be spent on labour, raw materials, capital goods, information systems, marketing and so on, as well as how the funds will be obtained

Standing plans
Standing plans are used to provide guidance for tasks performed repeatedly within the organization. The primary standing plans are organizational policies, rules, and procedures

STANDING PLANS

PLANS

SINGLE-USE PLAN

OBJECTIVES POLICIES & STRATEGIES PROCEDURES METHODS flexible

1)PROGRAMMES 2) PROJECTS 3) BUDGETS 4)Non repetative 5)Rigid

The Planning Process


Setting Goals: Analyzing and evaluating the environment: Determining Alternatives:

Evaluating the alternative: Selecting the Best solution:

Implementing the Plan: Controlling and evaluating the Results:

1- Setting Goals:
Establish the targets for the short and long range future. For example: - 25 percent growth over last year sales in present financial year. - To increase market share by 5 percent in next five years

2- Analyzing and evaluating the environment:


Analyze the present position and resources available to achieve objectives. - Where are we now? - What are the limitations in the environment? - What resources do we have? - Are there any external factors that can influence the objectives and there accomplishment?

3- Determining Alternatives:
Construct a list of possible courses of action that will lead you to your goal

4- Evaluating the alternative:


Listing and considering the various advantages and disadvantages of each of your possible course of action.

5- Selecting the Best solution:


Selecting the course of action that has the most advantages and the fewest serious disadvantages

6- Implementing the Plan:


Determine, who will be involved, what resources will be assigned how the plan will be evaluated, and reporting procedures.

7- Controlling and evaluating the Results:


Making certain that the plan is going according to expectations and making necessary adjustments

Forecasting is the process of predicting future environmental happenings that influence the operation of the organization. It is important as it help managers better understand the future makeup of the organizational environment, which, inturn, helps them to formulate more effective plans.

Forecasting

characteristics of forecasting
It is concerned with future events.
It is made on the basis of data collected from within and outside the organization. It may be long-term or short-term. Forecasts can be of several types: Economic forecasts, sales forecasts, and Technological forecasts etc. It can be done by analyzing the past and present events related to particular function of the organization.

Importance of Forecasting
1- Key to Planning: 2- Means of Coordination: 3- Basis for Control 4- helps in Executives Development 5- helps in Facing Environmental Challenges.

Steps in Process of Forecasting


1- Developing the Ground Work: 2- Estimating Future Trends 3- Comparing Actual with Estimated 4-Refining the forecast

Defined the purpose of forecasting. Past performance and events must be analyzed and compared with present events. A thorough investigation and analysis of various factors that can affect the organizations performance should be done. Base must be prepared on which the forecasting will be done.

Developing the Ground Work:

Estimating Future Trends


Based on intelligent guess the probable future trends are estimated.

Comparing Actual with Estimated


The actual results are periodically compared with estimates to reveal any deviation.

Refining the forecast:


Since forecasting is an on going process and with experience the refinement in the process is made.

Decision Making
A decision is the result of making a judgment or reaching a conclusion. Decision making is defined as a rational choice among alternatives. Decision-making is a part of all managers jobs. A manager is constantly making decisions while performing the functions of planning, organizing, staffing, directing, and controlling. Decision making is not a separate, isolated function of management but a common core to the other functions.

Types of Decisions
1- Programmed and Non-Programmed

Decisions:

Programmed decisions are concerned with relatively routine and repetitive problems. Information on these problems is already available and can be processed in a preplanned manner. Non-programmed decision deals with unique or unusual problems. Such novel or nonrepetitive problems cannot be tackled in a predetermined manner

2- Routine and Strategic Decisions


Routine decisions are operating decisions and are repetitive in nature. They involve short-term commitments. The strategic decisions involve longterm commitment and large investments

Organizational and Personal Decisions


Organizational decisions are made by managers in the interest of organization. Managers make decision in their official capacity based on rationality judgment and experience. Personal decisions are made for personal purposes evolve emotions and feeling.

Individual and Group Decisions:


Individual decisions are taken by single individual. These are basically routine day-to-day decisions. Group decisions are generally strategic in nature and important for long-term commitment.

The decision Making Process


Define the Problem Diagnosing the problem Develop Potential Alternatives Measure & compare Alternatives Select the Best Alternative

Implement the Solution:

Establish Control and Evaluation System

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