Planning is the most fundamental function of mans Business Manageme

functions. Without setting the goals to be reached agement.ItDre

and th It men
followed, organising staffing, directing
provides the framework within which
and
precedes
controlling cannotSe of aes O
action to b
be effe
effective. Play ot
be undertaken. Every coordinating, motivating
and organisation plans
can individual
followed future. Action follows planning and there is thol
in
and Plarwing
nothinf to do action tob
objectives and theways of
achieving them
decided.
are
Pla
prerequisite to effective management. Planningunle unless
in the
fact,
is

5.1. MEANING AND DEFINITIONS OF PLANNING

Planning is the management function of anticipating the future
determination of a future course of action to achieve the and the
desired results, consciou
cod

a
blueprint of the course of action to be followed in future. A
planis
forecasting because in order to plan the future course of action,Planning inu
it is essential
anticipate the future. While planning, a manager
the goals to be achieved or the prepares mapP of the future, sets
a

to accomplish those results.

desirable results and decides the activities
required
Planning consists of both
making. It involves determination of objectives and problem-solving
the means of
and decision-
"Planning is deciding in advance what is to be done. It involves achieving them
of objectives, policies, procedures, and the selection
from among
"Planning is the process of thinking programmes
through and making
alternatives."
actions and relationships necessary to explicit the strategy,
These definitions indicate that accomplish overall objective or purpose.
an

and results, the selection of the bestplanning involves the determination of objectives
results, the time sequence of activitiespossible course of action to achieve the desired
and the resources
activities. required to perform the
5.2. NATURE AND CHARACTERISTICS
OF PLANNING
The nature of planning can be
visualised from the
1. Planning is following features of Planning:
goal-oriented. ofPlanning not an end in itself. Rather it
towards the accomplishment
is
is means
contributes in sonme positive way objectives.
a

to the Planning has no

meaning unless it
emanate from objectives. The goals achievement of desired goals. All plans
may be
implicit
goals are essential for efficient planning Ihus, or
explicit but well-defined
2. Planning is a planning is
goal-oriented.
primary function. Planning is the
Drocess. All other functions of basis of the
management are
1under planning. Planning provides the basIS fordesigned to attain the management
efticient goals set
directing and controlling. It precedes the execution of all organising, staffing
other
planning there is nothing to organise, no one to actuate and functions, Without
no need
to control.
3. Planning is all-pervasive. Planning is the function of each
and e

irrespective of the level and area of his/her operation. It is the ioh nmanager
in all types of'organisations. Planning is an essential ingredient in m anagers
at
all executive levels. However, the
tive lev 5.5
end
rease as we descen scope, extert
woare long-termtowards the lower and the nature of
hyp level p
plans for the levels of
management. plarning ternd to
ulate departmentalaand functional company as a whole,
plans for
Managers at the
middle-level
managers prep operating and short-term medium term. At managers
4. Pla ning is plans. the lowest level,
an
intellectual process.
ination, foresight and sound
gination, Planning isa
mental process
equires a mental judgment. It is not
disposition of thinking before guesswork involvingg
or
wishful thinking
facts, rather than guesses. doing and acting in the
light of
Planning is a continuous process.
As the assumptions and Planning is an on-going and dynamic
he revised or new ones events which plans are based
on
exercise
have to be change, old plans have
functions, he continues to plan, revisingprepared.
his old
As a
manager carries out his
plans as the need arises. plans and choosing alternative
6. Planning is
forward-looking. All planning is done with an eye on the future.
Planninginvolves looking ahead and
isthe essence ot planning. Forecastingpreparing
for the future. Therefore,
forecasting
making provision for it. A involves assessing the uncertain future and
plan really synthesis of various forecasts. No
is a
can be prepared without knowledge of future events. Planning is an
plan
through the uncertain future. attempt to see

7.Planning in volves choice. Planning is basically a

or choosing among alternative courses of action. problem of decision-making
of alternatives. There is no need for planning Planning presupposes the existence
if there is only one
way of doing
something. Plans are decisions made after evaluation of alternative courses of action.
8. Planning is an integrated process. Planning does not just happen, it has to be
initiated.Planning is a structured process and different plans constitute a hierarchy.
Different plans are interdependent and interrelated. Every lower level plan serves
as a means towards the end of higher plans. This is known as the 'ends-means
chain'. Planning is a time-bound concept and every plan has a definite time horizon.
9. Planning is directed towards efficiency Planning has no relevance if it does
notfacilitate the achievement of objectives economically and efficiently

5.3. OBJECTIVES, IMPORTANCE AND ADVANTAGES OF

PLANNING
Planning is of paramount importance both for an organisation and an economy

und plans are essential to effective management, because they

serve as guides to

the
and priorities is

lanagement functions. L¡ck of well-defined objectives to

is planning to fail'. Planning is usetul
On cause of failure. "Failure to plan
an
organisation in the following ways
exists to

attention on objectives and results. Every organisation

Ocuses concentrates attention
on the doau
achieve certain objectives. Planning not to
the organisation
the organisation. It forces the members of
Boalsof and lose sight of the
broad objectives
activities
et lost in the craze of routine
Or which the organisation was established.
 and Change
char
uncertainty TiSk. Uncertainty
and
plann ange are inevita
ii) Reduces em. But
elinminate them.
carnot planning enables an talble and
planning
copewith
uncertainty
future
and change. With the help of plan
events and make due provision f
organisation
&an ent. t
can predict em. InePri
chance, they can be made t
chance,
leaving future
events to
the ick in a d

manner. Planning
while ing advantage of
seeks to m i n i m i s e risk while takin
taking desited
opportunities. Planning helps identity
to potential threatsand o advantage
of

It also keeps management

alert to the changing environmentnite tunities
saves an organisation from
Cii) Provides sense of direction. Planning
and avoids aimless activities. It directs human efforts into ende rifting
"If you don't know wha
contribute to the accomplishment of goals.
are going, any road will get you there. Planning makes
worl
more
meaningful and activities more orderly. It bridges the gap between whe
we are and where we want to go. Without planning action is likelv
to
become random activity, producing nothing but chaos.

(io) Encourages innovation and creativity. Innovation and creativity are

prerequisites to continuous growth and steady prosperity of business.
Planning is forward-looking and it enables an enterprise to cope with
technological and other developments. Planning requires continuous
monitoring of environment for new ideas and developments. As a result
theenterprise becomes dynamic. Being anticipatory in nature, planningg
improvesthe adaptability of an organisation to the changing environment.
(o) Helps in coordination. Planning is the best stage for the integration of
diverse forces at work. Sound planning interrelates all the activities and
resources of an organisation. It also helps to relate internal conditions and
processes to external events and forces. The activities and efforts of various
departments and divisions can be harmonised with the help of an overall
plan. Planning seeks to achieve a coordinated structure of
(vi) Guides decision-making. Planned targets serve as the
operations.
evaluation of different alternatives so that the best course ofcriteria for the
action may be
chosen. By predicting future, planning helps in
decisions. Sound plans prevent hasty judgment and taking future-oriented
"Withoutplanning, business deçisions would become random haphazard action.
asthough a pilot set out without ad hoc choices,
London, Hong Kong or Johannesburg." knowing whether he wished to fly to
decisions consistent with the future plansWhen plans covering future exist,
are made.
automatically get a future orientation. In the absence Therefore,
of
decisions
sound basis for making future-oriented
decisions. plans there is no

(vil) Provides a basis for decentralisation.

Planning helps in the delegation of
authority to lower levels of management. Well-established plans serve
guides to subordinates and reduce the risk as

authority. Planning also helps to improve the involved in

delegation of
motivation and
employees by providing targets of performance. morale of
Na

(eii') P ronvides efficiency in operations. 5.7

of available resc
resources. It Planing facilitates optimum
makes
possible for things to occur utilisation
otherwise happen. It improves
not

anisation by helping it to discover arnd the competitive strength which would

ution to problems, planning results exploit opportunities. As of an
solu
f work. A good in the use of rational a

plan not
only most efficient
methods
satisfaction to those implementing it.optimises productivity but
than unplanned action. T Planned effort is always moreprovides
hus, planning improves efficient
effectiveness.
Eacilita tes control. Planning
organisational
standards for the evaluationprovides
of
the basis for
control. Plans serve as
pertormance.
management to control the events rather than be Sound
planning enables
nermits control by exception. Control cannot controlled by them. It
because the function of control is to ernsure thatbe the
exercised without plans
the plans. Any attempt to control without activities conform to
no gauges for performance. plans meaningless as there are
is

54. LIMITATIONS OF PLANNING

Planning is not a substitute for executive
judgment but
suffers from the following limitations: merely an aid to it. It

1. Inaccuracy. Planning is based on forecasts which are never

cent per cent
accurate. The accuracy and reliability of forecasting diminishes as the
forecasting period increases. If reliable forecast and data are not available,
planning becomes unrealistic.
2. Time-consuming. Planning is
time-consuming and expensive
a
Time, effort and money are required in the collection and analysisprocess.
of data
and in the formulation and revision of plans. Planning is useful only when
theexpected gains from it exceed its costs. By the time plans are prepared,
conditions might change rendering the entire efforts irrelevan
3. Rigidity. Planning may result in internal inflexibilities and procedural
rigidities which curb initiative and individual freedom. Sometimes, planning
may cause delay in decision-making. A manager may be bogged down by
rules and procedures when there is need for quick decision.
4. Resistance. Planning often requires some change in the existing set-up.
Unless the required change is forthcoming planning may be ineffective
obstacle in planning. Planning also
Resistance to change is an important
requiresa forward-looking attitude. But very often, people have a greater

regard for the present as future is uncertain.

may create
of security in the
false sense
ralse security. Planning a
will be solved once the
Oganisation. A manager may feel that all problems
has to continuousiy
Plans are put into operation. In reality, management
execution.
evise the plans and regularly check on their
6. Powerful people and other vested interests may exert
*esSure-tactics. own interests.
Moreover, the
their
Pessure to ensure that the plans serve
 planners may
be unduly influenced by the 'pet
an objective analysis of the
projects' of the
of
the
Managemen
and may not make ilable 'big bot
7
verydifficult to measure accurately
External coustraints. The etfectiveness of planning
alternatives, t
effectiveness of planning,
the effectiveness

ning may be
external forces which are beyond the control of those
se affected t
preparing plans. Government control, natural responsible
calamitPonsible
unforeseen events may create hurdles in the implementation of pladoth other
very difficult to predict and provide for such external constrainta ans. It is

5.5. PRINCIPLES OF PLANNING4

Over the years, a number of fundamental principles have been developed to oud
the efforts of managers in preparing effective plans. These principles relate guide
o the to t
nature, purpose, process and structure of planning. A brief description of planning
principles is given below:
1. Principle of Contribution to Objectives. Every major and derivative plan should
contribute positively towards the accomplishment of enterprise objectives. The
objectives must be clear, attainable and verifiable.
2. Principle of Efficiency of Plans. The efficiency of a plan is measured by the
amount it contributes to
objectives minus the costs and other undesirable
consequences involved the formulation and operation of the plans. This principle
in
stresses economical use
upon of individual effort to achieve
3.
group goals.
Principle of Primnacy of Planning. This
hardly perform other managerial functionsprinciple
without
emphasises that a manager can
him. Planning is the primary requisite of other a road map of plans to guiae
thesefunctions are designed to support the management functions because
4. Principle of accomplishment of enterprise objectives.
Planning
from poorly structured
Premises. Perhaps the main
plans. A coordinated structuredeficiency of planning arises
only when managers throughout the of plans can be developed
consistent planning8 premises. organisation understand and agree to utilise
5. Principle of
Policy Framework. A consistent
enterprise plans can be developed it the basic and effective framework
decisions are expressed clearly and are policies that guide thinking ot
plans. The decisions which lead to understood by in
managers who prepare
objectives without a framework ofplans cannot be
accurately focused
the
policies. on
enterprise
6. Principle of
Timing.
timed, intermeshed
When the
plans are structured to provide an
can contribute
network of derivative
and
Supporting programmes, appropriately
effectively and etficiently towards the plans
objectives. Both premises and policies are useless the attainment of
without proper timine.
enterprise
pris
N a t u r e l

iele of Alternatives. In choosing from among alternatives, the best

Principle of
.alternative
Prin will
will
be that which contributes most efficiently and effectively to the
mplishment
omplish
of a desired
goal.
Principle
inle of Limiting Factor.
of Lin from among alternatives, the
While choosing
&
plannershould
ld focus on those factors which are critical to the attainmernt of the
desired goal. coal.This will help in selecting the most favourable alternative.
time necessary to
Principle of Commitment. Logical planning should cover a

decision. This is necessary to

fulfilment of commitment involved in
forecast the fult the
a

sure of meeting commitments.

reasonably
make whidh
This principle deals ability change with the to
0 Principle of Flexibility. reduced by
The risk of loss due to unexpected events can be
built into plans.
However, the cost of flexibility should be weighed
hrilding flexibility into the plans.
commitments made.
dangers of future
aeainst the
check on
Change. The manager should periodically
11. Principle of Navigationalredraw to maintain a course toward
the desired
events and expectations and plans
is difficult or costly.
have in-built flexibility navigational change
goal. Unless plans revision of plans, if
should not be an excuse for periodic
Butbuilt-in flexibility
circumstances s o w a r r a n t .

While formulating plans, a manager

Principle of Competitive Strategies.
12. plans should be
the plans of rivals or competitors. 1The
shouldtake into account a competitor will do in
the s a m e situation.
ot what
chosen in the light
A GOOD PLAN
5.6. FEATURES OF
EFFECTIVELY?)
(HOW TO PLAN
features:
contain the following
A good plan should
accurate forecasts.
1. Develop for its implementation.
from those responsible
2. Gain acceptance ofthe plan
must be sound one.
3. The plan
4. Be objective.
system.
5. Set up a monitoring intervals.
the plan at regular
6. Review and revise
situation.
7. Fit the plan to the

5.7. TYPES OF PLANNING

may be of three types:
Onthe basis of time period, planning
5.7.1. Long-term Planning
in future, eg, 5, 10 or
15years. lttakes
long period well as

planning covers a
as
tactors
ininto social and technological plannung
all long-term economic, organisation. Long-term
theirunt
influenceon thelong-term objectives of the development
of product. new

uence long term, e.g,

ofresources for
cCommitment
 5.10
towards achievement of which
the achievement
Businew Mansgre.
the targets all
It provides
organisation
directed.
are
ected. Long-termn
Lor planning involves
less specific. With the
helnat deal activitises
d, therefore, it
tends to be
itself to face
the effects of
the
long-ter long-t plarg
ong-ter
tuic
enterprise
prepares
plans must be tied together and changes in b
ianges
zether and aligned
environment. All long-term wi he tobed
goals of the enterprise.
5.7.2. Medium-term Planning
it focuses on a period betwen
tween two and
Also known as intermediate planning, than long-term plas
is more detailed and specitic f
vears. Such planning ing, lt na
include plans for purchase of materials,
bour overhes
sales budget, labour overhead
ke meP
moderniexpenses
concerned with specific projects like
etc. It also covers Project planning

5.7.3. Short-term Planning

saltion
Such planningcovers a short period usually one year. It deals with specific activis
tobe undertaken to accomplish the objectives lala down under long-range plannin vite
It relates to current functions and their sub-functions, eg, work methods, emplove
training, etc. It contains a detailed outline of certain specific activities to be completa
with a specified time limit. It may be called activity planning.
Acording to the scope, planning may be classified as follows:
i) Corporate Planning. Corporate planning or organ1sation planning is concerned
with the organisation as a whole. It is usually for long term and is done by the top
level of management. It lays down the overall objectives, strategies and policies for
the total enterprise. It is original and decisional and provides a basis for planning
at the divisional and departmental level. It energises and
framework for employees at all levels. It is also known asprovides motivational
a

focus here is on the total strategic planning. The

enterprise.
i) Divisional Planning. It determines the
establishes policies and budgets to attain scope of a division's activities and
tactical planning or operational divisional goals. It is also known as
with the selection of broad plansplanning.
to achieve
Whereas corporate
planning is concerned
redefines these goals in terms of activities organisational
of each goals, divisional planning
finance, personnel, etc. The
plans division, e.g., production, sales,
limited in scope. The focus is on formulated at this level
specific functional areas ofare more specific but
i ) Departmental or business.
each department or a Unit Planning It
involves development of specific
here is
division so as to accomplish the plans for
on
day-to-day actions of work units and on divisional plans. The focus
budgets. meeting planned schededules andd
5.7.4. Strategic Planning
Strategic planning refers to the process of
and integrated plan relating the strategic formulating a
unified,
ofthe environment. It involves appraising the dvantages of the firm to comprehensive
external ernvir the challenges
the enterprise, identifying the strategies to be the challen
adopted
objectives. Strategic planning is the process of deciding on tin nt in
relation to

resources required to achieve these goals, the acquisition and achieve the
etc.
dispw oals, the
urces,
Nalun w

Strategicplanr alanning is long term in nature. It is

Strateerprise. Strategic plans are, theretore,
comprehensively concerned with
enterprise.
formulated mainly at the
top
t h e t o t a l

management. It has It has mainly an external focus as it is

levelof
ves in the face of
sational objectives designed to achieve
t h eo r g a n i s a environmental opportunities and threats.
theoplanning offers the following advantages:

Stra trategic planning identifies the opPportunities and threats which the firm
is likely
future.
to face in

It determines the future direction of a company.

(i) It defines the manner in which the resources of the enterprise are to be
deployed.
(i) It lays down a systematic and logical procedure for carrying out the
operations of the firm.
(n) It provides a basis for the formulation of operational plans.
(oi) It facilitates coordination between the different divisions and departments
of the enterprise.

5.7.5. Operational Planning

is a short-term exercise designed to
Operational planning or tactical planning It is based on strategic
implement the strategies formulated under strategic planning. into new
the strategic plan of a company may be to diversify
plans. For example, short-term plans
out this plan, the firm may prepare
lines of products. To carry and sold.
product to be manufactured
regarding the new

Operational Planning
Table 5.1 : Strategic Planning
vs.

Operational Planning
S.No. Strategic Planning
Decides the Lse of resources in day-
and policies 1.
1. Lays down major goals to-day operations.
of the organisation. Done at lower levels of management.
levels of 2
2. Done at higher
management. Short term in nature.
term in nature.
Long 4. Detailed and specific.
4. Broad and general. Based on past experience.
forecasts and 5.
5 Based on long-term
appraisal of environment.

consists of the following steps:

The process of strategic planning planning process begins with the

Objectives. Strategic fo:

1. Mission and the mission for the
crganisation. The
basic purpose
defined.
determination of be clearly
established should
has been to
which the organisation organisation's long-term relationship
focuses on an should be
Strategic planning the business
mission
environment. Therefore,
its external of the organisation.
in terms of social impact is
formulated e n v i r o n m e n t of
the organisation
The external factors
Environmental Analysis. threats. A list of important
2. opportunities and
analysed to identity
 Mission
Manogeme
Environmental Analysis
Self-appraisal Streengtng hs
Opportunities & Threats
&Weaknesses
Strategic Decision-making

Strategy Implementation& Control

Fig. 5.1 Strategic Planning Process

likely to affect the organisation s activities 1S prepared. Environ

analysis permits the organisation to influence the shape of evenk nen
to come
3. Self-appraisal. The strengths and weaknesses of the organisation
analysed. Such a 'resource analysis' will enable the enterprise to canist
on its strengths and to minimise its weaknesses. The organisation canevl
external opportunities by concentrating on its internal competenceploit
matching its strengths with environmental opportunities, an enterprise can
competence. By
develop a suitable niche for itself to face competition and to achieve growth
For instance, Reliance Industries Limited established a textile mill whens
a
large number of textile mills had become sick. Ihe company adopted the
niche of high quality and high priced suitings and sarees. It marshalled
its
resources to produce and sell to select group of customers. Within a short
period the company achieved unparalleled success.
4. Strategic Decision-making. Strategic alternatives are generated and
evaluated. Then a strategic choice is made to reduce the performance
For example, in order to grow, an enterprise may enter new marketsgap.or
develop new products or sell more in the present markets. The
must select the alternative that is best
suited to its
organisation
offers a distinctive edge over its rivals.
Choice of
capabilities and that
several factors, e,g, management strategy depends upon
perceptions, external environment,
management attitude towards risk, past strategies and management power.
5. Strategy
Implementation
and Control. Once
must be translated into tactical and
the strategy is
formulated, it
operational plans.
budgetsare developed for each function. short-term Programmes and
Drepared to utilise the resources. Froper operational plans are
sequence and timing
decided so that every step 1s taken at the of efforts
right time. Controls
is

he developed to evaluate
pertormance the strategy is putshould
as also
Wherever, actual results are below into use.
expectations the
reviewed or reappraised. It must be modified and strategy should be
the external environment. adapted to chanees in
 STEPSIN THE PROCESS OF 5.13
5.8.

standard plannir PLANNING

There is no
planning process. Each
anning depending its size,enterprise has to
for plan
hus operandi on
main steps plannin
in
process are follows nature and
as
develop its own
environment. However,
the
1.Analysingthe the
Environment. The first step in
of the
externaland internal environment of the planning thorough
is a
will help to identify the
e n v i r o n m e n t analysis
enterprise. Analysis of external
ffective,
effective, plann opportunities and constraints for the
planning must enable the enterprise
changes market conditions, organisation to adapt itself
e n v i r o n m e n t a

to the
lopments, cultural no norms, etc.). Therefore,government policies, technological
interpret complex environmental forces. It is
nd interpret the managers must
carefully analyse
relevant information as the necessary
quality of information determines the
to collect and
analyse
sis
Analysis of the intermal environment (resources and quality of planning,
the strengths and weaknesses of the enterprise.
requirement will help to identify
,Establishing Objectives. Plans are formulated to achieve certain
Therefore, establishiment ot organisational objectives is an important step inobjectives.
The organisational objectives should be established in the planning
light of perceived
opportunities and resources of the organisation. They should be clearly specified
andmeasurable as far as possible. They should be spelled in key areas of operations
and for difterent diViSions and departments.
3. Determining Planning Premises. Planning is done for future which is uncertain.
Therefore, certain assumptions are made in preparing plans. These assumptions or
conditions underlying planning should be clearly defined through scientific
forecasting of future events. Planning premises are the limitations that lay down
the boundary for planning.
Planning premises can be of several types. Controllable or internal premises are
of the
under the control of management, eg, resources, techniques and policies the
enterprise. On the other hand, uncontrollable or external premises are beyond
rate of population growth, general economic
control of the enterprise. These relate to situation, etc.
conditions, government policies, political
of Action. There can be several ways of
4. Developing Alternative Courses
alternatives should be identified.
The various available
achieving the same objectives. sales efforts,
in order to increase sales an enterprise may intensify
For example, In order to develop all possible
markets or develop new products.
explore new
skill and experience.
must have imagination,
alternatives, a manager
and weighed
The various alternatives are compared
5, Evaluating Alternatives. Each alternative has
its merits and
dements

and premises.
n thelight of objectives be or practicable.
Each alternative
cannot equally appropriate Several statistical
and
outall alternatives examined to determine its suitability.
action.
Snould be closely used to evaluate alternative
courses of

mathematical techniques are alternatives, the most

the various

the Best Course. After evaluating plan isadopted.

0. Selecting the point at which the
POpriate alternative
is selected. This is alternative 1s good. In
that more than
one
in
may suggest combine them
oetimes, the evaluation alternatives and
choose several
dse,
a manager may
action.
 5.14

Derivative Plans, Once the basie

pasic
BusinAness Mamagen
planPoli
7.Formulating
decided, various
supporting or subsidiary plans a
schedules, etc.
(policy
ulatod and
programmes, budgets, Such
procedures,
the basic plan. The sequence
of various
tivities is
implementin operations. Different plans are properly integrate
plans These me
are
continuity
each other.
detethatrminedthrequiey tosapys
e

Determine Develop Formulate

Objectives Planning Strategies Choose
Premises
Poicies

Review and Implement Integrate

Revise Plans Plans Different Develop
Plans Derivative
Plans
Fig. 5.2 The Planning Process.

5.9. PLANNING PREMISES

Plans are prepared for future. But future is uncertain.
certain assumptions about the future. These
Therefore, management mal
should not be based smakes
hunch, intuition or guesswork. Rather these assumptions
should be developed through upon
forecasting of future events. The assumptions about future sciencc
and used in derived from
planning are known as planning forecastine
O'Donnell, "Plannin8 premises are the premises. According to Koontz and
anticipated environment in which plans are
expected to operate. They include assumptions or forecasts of the
conditions that will affect the course of future and known
existing company plans that control the basic plans, such as
prevailing policies and
nature of
Planning premises are the building blocks on supporting plans."
planning is based. These premises relate to which the
super-structure of
factors. Consistent and coordinated the
strategic or crucial
and
planning premises. One of the major plans can be prepared on the basis oflimiting
process by guiding, purposes of premises is to facilitate good
init. Premises guide directing, simplitying reducing the
and the planning
planning. planning. degree of
Developing sOund premises is vital uncertainty
for successful
Planning premises may be classified as
1. External and under:
Internal
the firm. These are of Premises. External
premises are those which lie
economic, technological,many kinds: (@) general business outside
consisting of the demand and political and social environment
factor market for land, supply forces forconditions,
the
(b) the productincluding
within the labour, capital,
etc. Internal product or service, and market
enterprise. These include sales premises (c) the
equipment, competence of management forecast, capital refer to the factors
personnel, investment in
Intangible Premises. langible skill of labour force, plant
2. Tangible and and
etc.
quantified, e,g, money, units of production, etc.premises are
those
On the
other which can be
Op. cit., pp. 179-80. hand, intangi gible
Nature a n d rocess of Planning

the
arale, etc.qualitative
to
prer

factors like
These cannot 5.15
public
important role inexpressed inrelations, company's reputation,
e m p l o y e

nises play an be
Controllable.
Uncontrollable planning, quantitative terms. However,
within thecontrol and real
realm of Premises. Those
These include
the management are knownpremises which are entirely
policies, programmes
which an enterprise has absolutely no and rules of the controllable premises
as
whic

alamities, new inventions, control are uncontrollable

natural calar enterprise. Premises over
premises. Some premise population trends, etc. are premises. War,
ises are such over
union-managementent relations, which the examples of such
supply
arecalled semi-controllable premises. management has
position in the industry, etc.partial control,
Such
premises
5.10. OBSTACLESTO EFFECTIVE
espite the overwhelming role of
PLANNING
rganisations face obsta
organisation obstacles in planning in the effective
are given below:
management, many
formulating effective plans. Some of these obstacles
Inadequate inputs. Effective
Aateinformation about the internalplanning requires accurate, adequate and
and external upto-
I+becomes very difficult to tormulate environments of the
fnformation about past events and likelygood plans when reliableorganisation.
and timely
future events is not
forecasting and poor record-keeping may be the cause available. Faulty
required data. Difficulty in developing accurate responsible for lack of
planning
premises is a
limiting factor in

2. Lack of ability. Planning is an intellectual

process requiring creative thinking,
and conceptual skills. When the managers of an
enterprise do not possess high
level of analytical ability, sound judgement, fertile a

imagination and fortitude to

chooseand become committed efective planning is not possible.
3. Sudden emergencies. Planning is a time-consuming process and it may delay
action. When prompt action is urgent to exploit an opportunity, there is hardly any
time for advance planning. In times of sudden and unexpected emergencies,
planning becomes difficult. During period of rapid change, advance planning is
not possible.

4. Need for creativity Planning stifles employee initiative and tends to make
operations inflexible. Where a high degree of innovation and creativity are essential
detailed and widespread planning may not be
desirable.
5. Resistance to change. A serious obstacle to planning arises due to the paive
not materialise
ude of executives who like to ignore changes, hoping they would have greater
1s
ajor psychological barrier to planning. is not onlyoftern
Executives
ra da
5r for the present than for the future. The present more certan
that resist of thought
d re, it is also more desirable. People develop patterns
change.
5.16

5.11. MAKING PLANNING CTIVE Business Managems

PLANNING)
Thefollowing points
1. A
can serve as

sound system should be created for

the keys to
success with nning
(CONSIDERATIONS
events. It must, however, be
remembered that mere accur forecasting
the fuby
without keeping in view
2.
Planning should not extrapolating
changes in present activities will be the pfa
focus should not be degenerate
into a game of und esiPrese
trable
simply financial
on
planning to be used as a means for
achievingmustnumbers. The
achieving
goals. Managers
D
be kept flexible. achieving
3. Planning should the pet ideas
of a fewn
ot allow
Plan's
events.
Contingent plans may be preparedexecution should be orien
Organisational resources should be
it might be better to set committed
to
adapt to changing even
to build a up a small plant that canstep by step. For examnl
large plant. All plans should be easily be expanded thple,
year. A good
monitoring reviewed and revised
system
4. All plans must be realistic and is needed for
this ever
purpose.
disparate items. practical. This requires proper
5.
Planning should be an synthesis of
of all members interactive process. The
of an
organisation
support of top management is
necessary
cooperation
for effective
and
participation
an effective is also
required. planning. Active
6.
means of Planning
ensuring wide participation in committees can be
Developing
the
a
plan should not be an end planning.
leeway to make in itself.
Managers must be given
managers to cope withadjustments wherever necessary. Plans should enable
7. change rather than
Resistance to change should
careful dissemination of be overcome restricting change.
should be given information, through patient selling of ideas,
access to
communicated and explained.relevant aggressive leadership. Every
8. information. All plans manager
Planning All
process is complex of plans must be properly timed.
a
should be
are
interrelated. Therefore, many major and
one
plan supports the others.different plans should
derivative plans whicn
plans An be
To sum
will lead to more
effective intermeshed network coordinated
of
so that

planning:
up, the
following measures planning.
are
major and minor
1. Set
clear-cut objectives.
helpful in overcoming
2.
obstacles to
Develop sound
a
3. Create
4.
carefully management information
planning premises. system.
5.
Develop dynamic
a
outlook
Keep plans flexible. among managers.
6. Provide
required resources.
7.Undertake a cost-benefit
analysis of all plans.
5.12. APPROACHES TO
PLANNING
There are two main
approaches to
participative approach. These planning-() The directive
approaches are approach, and (i) the
compared below.
 Process Planning
o fF 5.17
N a t u

and
ea n d

Table 5.2: Approaches to Planning

to planning Participative approach to planning
Directive approach
Features A technica impersonal A motivational tool for shaping the
developing and
informa tion performance and development of people on
motion
using activity. job.
commitment is Involvement methods do not foster anxiety
nResults.Genuine
achieved when objectives are and the human needs to reduce it.
seldom
externally imposed.
Behavioural
Consequen ces. Too Humanistic, action oriented and practical.
mechanistic.
Injects a sense of achievement and promotes
commitment to goals.
environment is
Appropriate. Appropriate
where the Appropriate where
4.
environment is unpredictable. reasonable predictable.

SUMMARY
1. Planning is the process of deciding the objectives to be achieved and selecting ways
and achieving them.
means of
forward
2. Planning is goal-oriented, primary function, pervasive, intellectual, on-going,
looking, integrated process and seeks efficiency.
3. Planning focuses attention on goals, reduced, risk, provides direction, encourages
creativity, helps in coordination, guides decision-making, facilitates decentralisation,
improves efficiency and facilitates control.
4. Planning suffers from inaccuracy, rigidity, time-consuming, resistance, false security,
pressure tactics and external constraints.
5. Contribution to objectives, efficiency, primacy, planning premises, policy frame work,
timing, alternatives, limiting factor, commitment flexibility, navigational change and
competitive strategies are the principles of planning.
6. Planning is of several types: (a) long-term medium term and short term, () corporate,
disional and departmental, () strategic and operational.
7. Analysing the environment, establishing objectives, determining planning premises,
developing alternatives, evaluating alternatives selecting the best course and
formulating derivative plans are the steps in planning.
8. Planning premises can be external or internal, tangible or intangible, controllable or
uncontrollable.
9. Inadequate imputs, lack of ability, sudden emergencies, need for creativity, and
resistance to change are obstacles to effective planning.
10. Sound forecasting, flexibility, realism, interaction, good information system are the
main steps for making planning effective.

KEY WORDS
Corporate Planning Operational Planning
Planning Premises Strategic Planning

TEST QUESTIONS
Very Short-Answer Questions
1.
What is (Madras, 2012)
2 What is planning
the importance of (Madras, 2003
planning