PLANNING

WHAT IS PLANNING?
Planning
Planning is the primary function of management.
It focuses on the future course of action.
A primary managerial activity that specifies the
objectives to be achieved in future and selects the
alternative course of action to reach defined objectives.
Thus, it involves:
Defining the organizations goals
Establishing an overall strategy for achieving those goals
Developing plans for organizational work activities.
WHAT IS PLANNING?

Determination of future course of actions in advance

It is the blue print of action and operation.

Planning is intellectual process which is concerned with

deciding in advance what, when, why, how, and who shall

do the work.
DEFINITIONS:
Generally speaking, planning is deciding in advance
what is to be done
-W H Newman
Planning is deciding in advance what to do, how to do,
when to do and who is to do it. Planning bridges a gap
between from where we are to where we want to go
-Harold, Koontz and ODonnel
Planning is that function of manner in which he decides
in advance what he will do. It is a decision making
process of a special kind, its essence is futurity.
-Hayness and Massie
 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 in advance what is to
be done, where, how and by whom it is to be done.

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 strategy

for achieving goals, and developing a comprehensive set of plans to integrate,
coordinate organizational work.
 Planning can be defined as thinking in advance what is
to be done, when it is to be done, how it is to be done and
by whom it should be done. In simple words we can say,
planning bridges the gap between where we are standing
today and where we want to reach.
Planning involves setting objectives and deciding in
advance the appropriate course of action to achieve these
objectives so we can also define planning as setting up of
objectives and targets and formulating an action plan to
achieve them.
Another important ingredient of planning is time. Plans
are always developed for a fixed time period as no
business can go on planning endlessly.
 Planning

The process of establishing goals and a suitable

course of action for achieving those goals.
It requires decision making
The necessity of planning arises because of the fact
that business organizations have to operate, survive
and progress in a highly dynamic economy where
change is the rule, changes gives rise to the problems
and throw countless challenges
 Difference between planning and decision-making

Decision-making is the part of the planning process

Decision-making involves choosing among the
various alternatives.
It is the process of identifying problems and
opportunities and then resolving them.
 Features/Nature/Characteristic of Planning

Planning contributes to Objectives: Planning

starts with the determination of objectives. We
cannot think of planning in absence of objective.
After setting up of the objectives, planning decides
the methods, procedures and steps to be taken for
achievement of set objectives. Planners also help and
bring changes in the plan if things are not moving in
the direction of objectives.
 Cont.

Planning is primary function of management:

The functions of management are broadly classified as
planning, organisation, direction and control. It is thus
the first function of management at all levels. Since
planning is involved at all managerial functions, it is
rightly called as an essence of management.
Planning focuses on objectives: Planning is a
process to determine the objectives or goals of an
enterprise. It lays down the means to achieve these
objectives. The purpose of every plan is to contribute in
the achievement of objectives of an enterprise.
 Cont.

Planning is a function of all managers: Every

manager must plan. A manager at a higher level has to
devote more time to planning as compared to persons at
the lower level. So the President or Managing director in
a company devotes more time to planning than the
supervisor.
Planning as a continuous process: Planning is a
continuous and permanent process and has no end. A
manager makes new plans and also modifies the old
plans in the light of information received from the
persons who are concerned with the execution of plans.
It is a never ending process.
 Cont.

Planning as an intellectual process: Planning is

a mental work basically concerned with thinking
before doing. It is an intellectual process and
involves creative thinking and imagination.
Wherever planning is done, all activities are orderly
undertaken as per plans rather than on the basis of
guess work. Planning lays down a course of action to
be followed on the basis of facts and considered
estimates, keeping in view the objectives, goals and
purpose of an enterprise.
 Cont.

Planning is dynamic (flexible):Planning is a

dynamic function in the sense that the changes and
modifications are continuously done in the planned
course of action on account of changes in business
environment.
As factors affecting the business are not within the
control of management, necessary changes are made
as and when they take place. If modifications cannot
be included in plans it is said to be bad planning.
 Cont.

Planning involves forecasting: Planning largely

depends upon accurate business forecasting. The
scientific techniques of forecasting help in projecting
the present trends into future. It is a kind of future
picture wherein proximate events are outlined with
some distinctness while remote events appear
progressively less distinct.
Planning and linking factors:A plan should be
formulated in the light of limiting factors which may
be any one of five Ms viz., men, money, machines,
materials and management.
 Cont.

Planning is directed towards efficiency. To increase the

efficiency of the enterprise is the main purpose of planning.
The guiding principles of a good plan is the maximum output
and profit at the minimum cost. Terry has aptly stated that
"planning is the foundation of the most successful action of an
enterprise.
It is a decision-making process. Decision-making is an
integral part of planning. It is defined as the process of
choosing among alternatives. Obviously, decision-making will
occur at many points in the planning process. For example, in
planning for their organisation, the managers first decide
which goals to pursue: shall we manufacture all parts
internally or buy some parts from outside?
 Cont.

Planning is a selective process. It involves the

selection of the best one after making a careful analysis
of various alternative courses of action. It is concerned
with decision-making relating to (a) what is to be done,
(b) how it is to be done, (c) when it is to be done, and (d)
by whom it is to be done.
Planning is pervasive. Planning is a pervasive activity
covering all the levels of enterprise. While top
management is concerned with strategical planning, the
middle management and the lower management are
concerned with administrative planning and operational
planning respectively.
 Importance of Planning

Efficient Use of Resources:All organizations,

large and small, have limited resources. 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.
 Cont.

Reduces business-related risks: There are many

risks involved in any modern business. Planning helps to
forecast these business-related risks. It also helps to take
the necessary precautions to avoid these risks and
prepare for future uncertainties in advance. Thus, it
reduces business risks.
Increases efficiency: Planning makes optimum
utilization of all available resources. It helps to reduce
wastage of valuable resources and avoids their
duplication. It aims to give the highest returns at the
lowest possible cost. It thus increases the overall
efficiency.
 Cont.

Facilitates proper coordination: Often, the plans of

all departments of an organization are well coordinated
with each other. Similarly, the short-term, medium-term
and long-term plans of an organization are also
coordinated with each other. Such proper coordination is
possible only because of efficient planning.
Aids in Organizing: Organizing means to bring
together all available resources, i.e. 6 Ms. Organizing is
not possible without planning. It is so, since, planning
tells us the amount of resources required and when are
they needed. It means that planning aids in organizing in
an efficient way.
 Cont.

Gives right direction: Direction means to give proper

information, accurate instructions and useful guidance to
the subordinates. It is impossible without planning. It is
because planning tells us what to do, how to do it and
when to do it. Therefore, planning helps to give a right
direction.
Keeps good control: With control, the actual
performance of an employee is compared with the plans,
and deviations (if any) are found out and corrected. It is
impossible to achieve such a control without right
planning. Therefore, planning becomes necessary to keep
a good control
 Cont.

Helps to achieve objectives: Every organization has

certain objectives or targets. It keeps working hard to
fulfill these goals. Planning helps an organization to
achieve these aims, but with some ease and promptness.
Planning also helps an organization to avoid doing some
random (done by chance) activities.
Motivates personnel: A good plan provides various
financial and non-financial incentives to both managers
and employees. These incentives motivate them to work
hard and achieve the objectives of the organization. Thus,
planning through various incentives helps to motivate
the personnel of an organization.
 Cont.

Encourages creativity and innovation: Planning

helps managers to express their creativity and
innovation. It brings satisfaction to the managers and
eventually success to the organization.
Helps in decision-making: A manager makes many
different plans. Then the manager selects or chooses the
best of all available strategies. Making a selection or
choosing something means to take a decision. So,
decision-making is facilitated by planning.
Therefore, planning is necessary for effective and
efficient functioning of every organization irrespective of
its size, type and objectives.
 Constraints/ limitations/problems of planning

Costly process: planning involves too much

expenditure. Money and effort both are required in
planning. Planning includes collecting information, data
forecasting and evaluation of alternatives. It requires
salary and allowances to the experts in the process of
providing services.
So, planning has been accepted as costly process by
small and medium size organization
Time consuming: planning is the time consuming
process. It delays the business activity to come in action.
In the process of planning following the procedures of
planning takes a lot of time which may create problem to
the organization where immediate action has to be made.
So in such situation planning is not suitable.
 Cont.

Paperwork:Planning requires a lot of paperwork.

The plans are made and again remade. Copies of
finalised plans are given to the top management and
subordinates. There is also a need to prepare many
reports.
Causes Frustration:Sometimes managers fail to
achieve the planned targets despite putting their best
efforts. This failure can frustrate them and lower
their level of motivation. It can cause the managers
to lose their initiative.
 Cont.

Incomplete information:The manager may not be

able to collect the required information needed for
planning. The information may not be available in time
an its reliability trends to be suspicious. Sometimes, the
information and assumptions on which the plan is based
may change.
Inaccuracy:The information and variables of plan have
to be updated frequently which is not always possible.
The longer the plan period, the lesser the accuracy and
reliability of information. The planning involves
forecasting for long-term future. As the overall
environment change, the past information becomes
meaningless over time.
 Cont.

Unsuitable in emergency situation: as planning is time

consuming, it is not suitable in emergency situation because
quick decisions is desirable in emergency situation buts
planning delays the emergency demand in organization
Lack of reliable data and problem of accurate
premises: For planning assumptions have to be developed
for future action but future is uncertain and unpredictable. To
make reliable data and accurate premises is necessary., in the
lack of reliable data and accurate premises, there is chance of
business loss and failure
Problem of rapid change: Planning is the game of
prediction. Rapid changes may occur in macro and micro level
environment of business. planning is to be made in a flexible
way to compress the plans in the future
 Cont.

Internal rigidity: internal rigidity may be related to

organizational and human psychology policy, procedure
and capital investment which create problem in the
process of implementation. Staff may not like the
changes that may occur frequently in the working
procedure. So rigidity may create problem in planning.
Encourage false sense of security: Planning
encourages false sense of security against future risk and
uncertainty. As future is uncertain, it is unpredictable.
Therefore, planning cannot give accurate and reliable
results.
 Process of Planning

Establishing objectives: objectives are those end points

for whose attainment all the activities re undertaken. In
planning process objectives are set and defined first of all
so that all the employees concerned can be informed about
them to get their complete cooperation. At this stage, major
organizational and unit objectives and individual objectives
are set. They are determined and defined in hierarchical
order. Objectives specify the results expected and indicate
the end points of what is to be done, where the primary
emphasis is to be placed, and what is to. be accomplished
by the various types of plans. The organizational objectives
should be specified in all key result areas. Key result areas
are those, which are important for organization in
achieving its objectives. These are identified on the basis of
organizational objectives.
 Cont.

Planning Premises:After determination of

organizational goals, the next step is establishing
planning premises, that is, the conditions under which
planning activities will be undertaken. Planning premise
is planning assumptions the expected environmental
and internal conditions. Thus, planning premises are
external and internal. External premises include total
factors in task environment like political, social,
technological, competitors plans and actions,
government policies, etc. Internal factors include
organizations policies, resources of various types, and
the ability of the organization to withstand the
environmental pressure. The plans are formulated in the
light of both external and internal factors.
 Cont.

Identification of Alternatives:Based on the

organizational objectives and planning premises, various
alternatives can be identified. The concept of various
alternatives suggests that a particular objective can be
achieved through various actions. For example, if an
organization has set its objective to grow further, it can
be achieved in several ways like expanding in the same
field of business or product line, diversifying in other
areas, joining hands with other organizations, or taking
over another organization, and so on. Within each
category, there may be several alternatives. For example,
diversification itself may point but the possibility of
entering into one of the several fields.
 Cont.

Evaluation of Alternatives: Various alternatives which are

considered feasible in terms of preliminary criteria may be
taken for detailed evaluation. At this stage, an attempt is
made to evaluate how each alternative contributes to the
organisational objectives in the light of its resources and
constraints. This presents a problem because each alternative
may have certain positive points on one aspect but negative on
others. For example, one alternative may be most profitable
but requires heavy investment with long gestation period;
another may be less profitable but also involves less risk.
Moreover, there is no certainty about the outcome of any
alternative because it is related with future and future is not
certain. It is affected by a large number of factors making the
evaluation work quite complex.
 Cont.

Selecting an Alternative:After the evaluation of

various alternatives the fit one is selected. Sometimes
evaluation shows that more than one alternative is
equally good. In such a case, a planner may choose more
than one alternative. There is another reason for
choosing more than one alternative. Alternative course of
action is to be undertaken in future, which is not
constant. A course of action chosen keeping in view the
various planning premises may not be the best one if
there is change in planning premises. Therefore, planner
must be ready with alternative, normally known as
contingency plan, which can be implemented in changed
situations.
 Cont.

Implementing the plans: After deciding the chief

plans, the basic plan, subsidiary plans, they are to be
implemented. After implementing the plans the
sequence of different activities has to be decided. In
other words, it is decided as to who will do a
particular job and at what time.
 Cont.

Follow-up Action: Planning is a continuous

process, so the managers keep on following up the
plans to see that activities are performed as per the
schedule or not. Monitoring the plans is important to
ensure achievement of objectives.
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