PLANNING

Definition

 Koontz, O'Donnell and Weihrich:

"Planning is an intellectually demanding process; it

requires the conscious determination of courses of
action and the basing of decisions on purpose,
knowledge and considered estimates".
Elements of Planning

1. What will be done ?

2. What resources will be required ?

3. How it will be done ?

4. Who will do it?

5. When it will be done?

 NATURE AND SCOPE OF PLANNING

 Planning does attempt to make future decisions

 Planning is a Continuous Process
 Planning concerns all Managers
 Plans are arranged in a Hierarchy
 Planning Commits an Organization into the Future
 Planning is Antithesis of States Quo
IMPORTANCE OF PLANNING

 Planning is essential in modern business

 Planning affects performance
 Planning puts focus on objectives
 Planning anticipates problems and uncertainties
 Planning is necessary to facilitate control
 Planning helps in the process of decision making
 ADVANTAGES OF PLANNING

 Focuses Attention on Objectives

 Ensures Economical Operation
 Reduces Uncertainty
 Facilitates Control
 Encourages Innovation and Creativity
 Improves Motivation
 Improves Competitive Strength
 Achieves Better Coordination
LIMITATIONS OF PLANNING

 Lack of reliable data

 Lack of initiative
 Costly process
 Rigidity in organizational working
 Non-acceptability of change
 External limitations
 Psychological barriers
ESSENTILAS OF EFFECTIVE PLANNING

 Setting Clear-cut Objectives

 Management Information System
 Carefully Premising
 Business Forecasting
 Dynamic Managers
 Flexibility
 Availability of Resources
 Cost-Benefit Analysis
 TYPES OF PLANNING

 Strategic and Functional Planning

 Long-term and short-term Planning
 Adhoc and Standing Planning
 Administrative and Operational Planning
 Physical Planning
 Formal and Informal Planning
 STEPS/PROCESS IN PLANNING

Establishing
Verifiable Goals
Measuring and or Set of Goals to
Controlling be Achieved
the Progress
Establishing
Planning
Premises

Developing
Derivative
plans

Deciding the
planning
period

Evaluating and
Selecting a
Course of Action
Findings
Alternative
Courses of Action
 Set of Goals to be Achieved
 The first step in planning is to determine the enterprise objectives.

 These are most often set by upper level or top managers, usually after a

number of possible objectives have been carefully considered.

 There are many types of objectives managers may select: a desired sales

volume or growth rate, the development of a new product or service etc.

 The type of goal selected will depend on number of factors: the basic

mission of the organization, the values its managers hold, and the actual

and potential ability of the organization.

 Establishing Planning Premises

The second step in planning is to establish planning

premises, i.e. certain assumptions about the future on the
basis of which the plan will be intimately formulated.
Planning premises are vital to the success of planning as
they supply economic conditions, production costs and
prices, probable competitive behaviour, capital and
material availability, governmental control and so on.
 Deciding the planning period

 Once upper-level managers have selected the basic long-term goals

and the planning premises, the next task is to decide the period of
the plan.
 Business varies considerably in their planning periods.
 In some instances plans are made for a year only while in others
they span decades.
 In each case, however, there is always some logic in selecting a
particular time range for planning. Companies generally base their
period on a future that can reasonably be anticipated.
 Findings Alternative Courses of Action

 The fourth step is planning is to search for and examining alternative

courses of action.
 For instance, technical know-how may be secured by engaging a
foreign technician or by training staff abroad.
 Similarly, products may be sold directly to the consumer by the
company's salesmen or through exclusive agencies.
 There is seldom a plan for which reasonable alternatives do not exit,
and quite often an alternative that is not obvious proves to be the best.
Evaluating and Selecting a Course of Action

Having sought alternative courses, the fifth step is to

evaluate them in the light of the premises and goals and
to select the best course or courses of action. This is
done with the help of quantitative techniques and
operations research.
 Developing Derivative plans
 Once the plan has been formulated, its broad goals must be translated
into day-to-day operations of the organization.
 Middle and lower-level managers must draw up the appropriate plans,
programmes and budgets for their sub-units.
 These are described as derivative plans.
 In developing these derivative plans, lower-level managers take steps
similar to those taken by upper-level managers – selecting realistic
goals, assessing their sub-units particular strength and weaknesses and
analyzing those parts of the environment that can affect them.
 Measuring and Controlling the Progress

 Obviously, it is foolish to let a plan run its course without

monitoring its progress.
 Hence the process of controlling is a critical part of any plan.
Managers need to check the progress of their plans so that they can

(a) take whatever remedial action is necessary to make the plan

work, or

(b) change the original plan if it is unrealistic.

 DEISION-MAKING
 According to D.E. McFarland, "A decision is an act
of choice wherein an executive forms a conclusion
about what must be done in a given situation. A
decision represents a course of behaviour chosen
from a number of possible alternatives”.

 Haynes and Massie, "A decision is a course of

action which is consciously chosen for achieving a
desired result"
CHARACTERISTICS OF DECISION MAKING

 It is a process of choosing a course of action from among

the alternative courses of action.

 It is a human process involving to a great extent the

application of intellectual abilities.

 It is the end process preceded by deliberation and

reasoning.

 It is always related to the environment. A manager may

take one decision in a particular set of circumstances and
another in a different set of circumstances.
 It involves a time dimension and a time lag.

 It always has a purpose. Keeping this in view, there may

just be a decision not to decide.

 It involves all actions like defining the problem and

probing and analyzing the various alternatives which take
place before a final choice is made
 DECISION MAKING
PROCESS
1 ●
Setting objectives

2 ●
Defining the Problem

3 ●
Analyzing the problem

4 ●
Developing Alternatives

5 Selecting the Best Alternative

●

●
a. Risk b. Economy of Effort c. Situation or Timing d. Limitation of Resources

6 ●
Implementing the Decision

7 ●
Follow-up the Decisions
 TYPES OF DECISIONS

 Programmed and non-programmed decisions

 Basic and routine decisions

 Policy and operative decisions

 Individual and group decisions