PLANNING

MEANING
 The first and the foremost function of management is planning.

 planning is deciding in advance what should be done.

 It is future oriented.

 makes it possible to work systematically.

DEFINITION OF PLANNING

 According to Koontz and O’Donnell “Planning is

deciding in advance
 What to do? (Aim)

 How to do? (Practice)

 When to do? (Time)

 Who is to do? (Workers)

 It bridges the gap from where we are to where we want

to go”.
 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 - Koontz and
O’Donnell
 Planning is a mental predisposition to do things in orderly
way, to think before acting and to act in the light of facts
rather than guess - Urwick.

 Planning is deciding the best alternative among others to

perform different managerial operations in order to achieve
the predetermined goal - Henry Fayol.

 In the words of Louis A. Allen, “Management planning

involves the development of forecasts, objectives, policies,
programmes, procedures, schedules and budgets
NATURE OF PLANNING (BASIC
CHARACTERISTICS OR FEATURES OF
PLANNING)
1) Planning is the primary function of management
2) It is goal-oriented
3) It is all-pervasive
4) It is an rational activity
5) It is future oriented
6) It requires an integrated approach
7) It is a continuous process
8) It involves decision making
IMPORTANCE OF PLANNING (MERITS
OR ADVANTAGES OF PLANNING)
 As the primary function of management, planning is considered
vital in every sphere of activity. The importance of planning may
be stated as following:
1. It focuses on objective
 Once the objective of the business has been fixed, the next step is
to prepare a plan for its effective accomplishment. The enterprise
objective cannot be realized overnight. It has to be achieved
gradually over a certain period.
2. It helps to avoid wastage of resources
 Planning makes it possible to make optimum use of the available
resources, namely, time, money, materials and machines. This is
possible as the employees and the executives know beforehand
what they have to do.
3. It ensures efficiency as well as effectiveness
 Efficiency is ensured by doing right things and effectiveness is
achieved by doing things right. Planning helps to do not only
right things but also things right. Each department knows what
it is supposed to do well in advance as a result of planning.
4. It reduces risk and uncertainty
 Planning is for future use and future is uncertain. While
planning, future uncertainties are anticipated and adequate
provisions are made to meet or overcome the same.
5. It provides for co-ordination
 The work done in any organisation is a team-work. Different
departments participate in the process of goal attainment.
Planning makes the responsibilities of each individual and
department very clear. Thus, planning by explaining the
responsibilities of each individual and department provides
scope for co-operation and co-ordination.
6. It facilitates control
 If planning is the first function of management, Control is the
last function. Planning without control is useless and control
without planning is meaningless. Control helps the enterprise
to know whether the plan has been successfully implemented
and the objective has been achieved.
7. Planning also provides scope for decentralisation
 Dispersal of authority throughout the organisation is what is
known as decentralisation. Once the basic and derivative plans
of the enterprise have been prepared, the next step is to
explain the same to all the subordinates who are going to
perform the various tasks.
LIMITATIONS OF PLANNING (DRAWBACKS
OR DEMERITS OF PLANNING)
1.Uncertain Nature
2. Expensive
3. Rigidity
4. Loss of initiative
5.Ignorance of subordinates’ interests
PROCESS OF PLANNING (STEPS INVOLVED IN
PLANNING/STAGES IN THE PLANNING PROCESS)
ELEMENTS/COMPONENTS OF
PLANNING:
1. Objectives
2. Strategies
3. Policies
4. Procedures For Repetitive activities/
5. Rules Standing Plans

6. Methods
7. Schedules
8. Programmes
For Non-Repetitive
9. Budgets activities/ Single-use Plans
FORMS OF PLANNING

1. STARTEGIC PLANNING: involves what the major goals of

the entire organisation will be and what policies will guide
the organisation in its pursuit of the goals.
2. TACTICAL PLANNING: involves deciding specifically how
the resources of the organisation will be used to help the
organisation achieve its strategic goals.
 FORMS OF PLANNING
 STRATEGIC PLANNING
 It decides the major goals and
policies of allocation of resources
to achieve these goals.
 It is done at higher levels of
management.
 It is long-term
 It is generally based on long term
forecast about technology, political
environment etc.
 It is less detailed because it is not
involved with day to day
operations.
 TACTICAL PLANNING
 It decides the detailed use of resources
for achieving each goal.
 It is done at lower level of
management
 It is short-term
 It is generally based on the past
performance of the organisation and is
less certain.
 It is more detailed because it is
involved with day to day operations of
the organisation.
HOW PLANNING WORKS?

The organization’s

• Purpose • Mission • Values • Directions

Strategic goals Strategic plans

Tactical goals Tactical plans

Operational goals Operational plans

KINDS OF PLANNING (ON THE BASIS OF TIME)

LONG TERM PLANNING

MEDIUM-TERM PLANNING

SHORT-TERM PLANNING
1. Long-term planning: Long-term planning covers a long
period in future. Eg. 5,10 or 15 years. It takes into account all
long-term economic, social and technological factors as well
as their influence on the long-term objectives of the
organisation, eg. Development of new product.
2. Medium – term planning : Also known as intermediate
Planning It focuses on a period between 2 to 5 years, such
planning is more detailed and specific than long term planning
eg., plans for purchase of materials, sales etc.
3. Short-term planning: Such planning covers a short period
usually one year. It contains a detailed outline of certain
specific activities to be completed with a specific time limit,
e.g planning for annual production, sales etc. It may be called
activity planning.
ACCORDING TO THE SCOPE: PLANNING
TYPES

CORPORATE PLANNING

DIVISIONAL PLANNING
4.Corporate Planning: Corporate planning or organisational
planning is concerned with the organisation as a whole. It is
usually long term and is done by the top level of Management.

5. Divisional Planning: Divisional planning determines the

scope and activities of each division, eg., production, sales,
finance, personnel etc..., This plan focus on specific functional
areas of business.
PLANNING SKILLS
 Ability to think ahead
 Ability to define company objectives

 Ability to forecast future environmental trends

 Ability to frame correct strategies

 Ability to monitor the implementation of strategies

PLANNING FROM TOP TO BOTTOM
PLANNING TIME LINES

Strategic 2 Years 5 Years

Plans

6 months
Tactical 2 years
30 days

Operational 6 months

0 1 2 3 4 5 6
Years
TOOLS – PLANNING STRATEGIES

Porter’s
Porter’sFive
Five SWOT
SWOT
Forces
ForcesModel
Model Analysis
Analysis
PORTER’S FIVE FORCES MODEL
 In Porter’s competitive forces model, the strategic position of
the firm and its strategies are determined not only by
competition with its traditional direct competitors but also by
four forces in the industry’s environment: new market
entrants, substitute products, customers, and suppliers.
• Five competitive forces shape fate of firm
1. Traditional competitors
 Competitors in market space continuously devise new products,
new efficiencies, switching costs
2. New market entrants
 Some industries have low barriers to entry
• E.g. food industry vs. microchip industry
 Newer companies may have advantages
• Newer equipment, younger workforce, etc
3. Substitute products and services
 Substitutes customers can purchase if your prices too high
 E.g. Internet music service vs. CDs
4. Customers
 Can customers easily switch to competitor’s products?
 Can customers force firm and competitors to compete on price
alone (transparent marketplace)
5. Suppliers
 The more suppliers a firm has, the greater control it can exercise
over suppliers
SWOT ANALYSIS
 SWOT is a state art tool to evaluate potential strengths,
weaknesses, as well as opportunities, and threats of an
organization. This analysis can show potential business
development as well as possible internal and external business
environmental changes.