Module3

Module3: Overview of Planning

POM & OB notes by Rahul Sir’s MBA/BBA Classes

1. Introduction:-

Planning is the basic function of management. Planning is done to achieve the objectives of the
organization. Without planning no business can function smoothly. Whenever there is a goal to achieve,
planning is required otherwise the activities will go hay
haywire.
wire. Plans are set within a timeframe and they set
out how various resources of the organization will work towards achieving the objectives. Planning forms
that part of management which lays down the objectives and various activities to be performed for the
t
attainment of these objectives. It helps in deciding in advance, What is to be done, How it is to be done,
When it is to be done, and By whom it is to be done? Answering all these things is called planning. It
bridges the gap between where we are and wh
where
ere we want to go. It can also be said that plans are related
to creativity. The other functions of management like organising, staffing, directing & controlling
depends on planning. Without planning these all are meaningless. Planning provides direction to
t all
managerial functions.
Definitions of planning:
Some important definitions of planning as given by various experts are:
According to M.E Harley,” Planning is deciding in advance what is to be done. It involves the selection
of objectives, Policies, Procedures and Programmes from among alternatives.”
According to Koontz and O’ Donnell,
Donnell,”” Planning is deciding in advance what to do, how to do it, when
to do it and who is to do it.” Planning bridges the gap between where we are and where we want to go. It
I
makes possible things to occur which would not otherwise occur”.
According to
2. Nature of Planning:-
The planning has following aspects:
a) Contribution to purpose: - Planning helps in the achievement of enterprise goals and objectives.
Plans focus on purposes. Planning identifies irrelevant actions and helps in determining actions which
will lead toward the accomplishment of objectives and thus reduces wastages as well. Planning focus on
desired ends. Without plans, actions become merely random acti
activity, leading to chaos.

(a) Primacy of planning:- Planning is the first function of management. All other functions like
organising, staffing, leading and controlling follow planning. Without planning, other function of
management cannot be completed. Ap
Apart
art from being the first function, planning is required continuously
for performance of every function of management for example, organisation structure requires planning ,
so does staffing. Similarly, planning is needed in case of leading and controlling as well.

Rahul Sir’s MBA/BBA Classes Page 1

 Module3
Module3: Overview of Planning
POM & OB notes by Rahul Sir’s MBA/BBA Classes

(b) Pervasive: Planning is not the job of high

high-level
level managers only but planning is a function of all
managers. However, nature of planning varies with the hierarchical levels. Higher level managers
formulate strategic plans while lower level man
managers
agers are engaged in day to day planning within the
framework of top level plans. Also, higher level managers spend more time in planning as compared to
the middle level or lower level managers. It is therefore, clear that all managers working in an enterprise
enterp
are involved in planning but the breath of planning vary with the level of authority.

(c) Planning considers limiting factors: - Planning should be realistic. Planning should be done keeping
in mind the available resources. Unrealistic plans can nev
never
er achieve the desired result. If a manager
ignores the limiting resources, planning is bound to fail. For example, if the raw material is scarce in
supply, then the raw material will be a limiting factor. Keeping in mind the availability of raw material,
production planning and sales target should be decided.

(d) Efficiency of plans: Plans must be efficient

efficient. Efficient plans contribute to purpose and objectives by
offsetting the costs and other unsought consequences. A plan can contribute to the attainment
attainmen of
objectives, but if it does so at too high or unnecessarily high costs, it is not efficient. It should aim at
eliminating all wastages. Efficiency implies the normal ratio of input to output.

3. Importance of planning
Planning function has four important goals: To offset uncertainty and changes, focus attention on
objectives, gain economical operation and to facilitate control. These have been discussed in detail below:
(a) To offset uncertainty and changes: - Planning is always made in respect to future. Future is
uncertain. Planning assumes more importance in wake of increasing size and complexities of business
organizations. Business environment is constantly changing, new techniques are being deployed. Buying
behaviour
our of customers is changing. So in all these cases planning is important to offset the risks of
changes and uncertainty. Planning helps us to anticipate changes and plan actions accordingly.

(b) To focus attention on objectives: - Planning helps in defining

ning the objectives of the organization
clearly. Its directs all efforts towards achievement of the specified goals. In this way planning contributes
to the attainment of the objectives of the organizations by eliminating unnecessary actions and focussing
on the desired ends .

Rahul Sir’s MBA/BBA Classes Page 2

 Module3
Module3: Overview of Planning
POM & OB notes by Rahul Sir’s MBA/BBA Classes

(c) Minimise cost - Planning minimizes costs because by emphasising on efficient operations. It clearly
specifies what is required to done and directs the efforts toward the attainment of the goals. It coordinates
the efforts of the entire organisation by clearly specifying the goals which eliminates wastages.

(d) To facilitate control:-Planning

Planning facilitates the function of controlling and therefore it is considered as
the foundation of control. Planning prescribes standards with re
respect
spect to work, time and cost. By
comparing the actual work performance with the standards laid down, deviations are identified and in
case the work performance is not as desired, the person concerned is held responsible.

4. Process of planning or Steps iin planning

Figure 1: Planning Process or Steps in Planning

The planning process consists of the following steps:

(1) Being aware of opportunity:
Awareness of an opportunity is the real starting point for planning. It includes identifying all possible
future opportunities and then analysing them in the light of the organisation’s strengths & weaknesses.
Awareness of the opportunity in terms of organ
organisational
isational capabilities helps in setting realistic objectives.
So, as a first step, planning requires realistic diagnosis of the opportunity situation.

Rahul Sir’s MBA/BBA Classes Page 3

 Module3
Module3: Overview of Planning
POM & OB notes by Rahul Sir’s MBA/BBA Classes

(2) Establishing objectives:

Opportunities provide the path for setting objectives. Objectives specify 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 network of
strategies, policies ,procedures, rules, budgets and programs. At first overall objectives of the organization
are determined and based on that, the objectives of each department are laid down. Objectives should be
clear, definite and simple.. The objectives should be communicated to everyone in the organisation so that
they fully contribute to the successful attainment of objecti
objectives.
(3) Considering the planning premises:
Planning premises is the boundary under which plans will operate. This boundary is determined by both
anticipated internal and external environment. These factors affect the practicality of planning and need to
be forecasted. The accuracy with which these factors are forecasted determines the success of planning.

(4) Identifying the alternative courses: - There are many methods of doing a work. On the basis of
objectives of the organisation and the boundaries identified alternative courses of achieving the objectives
are discovered. For example, if the objective is to expand the organisation, it can be done by either
expanding the existing business by adding a new product line eg. if a company is engaged in producing
pro
only men’s products then it can start manufacturing women’s products or by purchasing or taking over
any other business. Keeping in mind the limiting factors all alternative courses of action should be
identified. More the alternatives, better it is as firm has many choices out of which best option could be
explored.
There is other side of it as well. It is not as difficult to find out alternative courses as it is to reduce the list
of alternative courses. Limiting factor should be considering while finding out alternatives for example if
finance is limiting factor then while identifying alternatives availability of finance should be kept in mind.
(5) Comparing the alternatives in the light of goals sought: - All those alternative courses which meet
the expectations of the minimum preliminary criteria are selected for intensive study. It will be seen as to
what extent a particular alternative can help in the attainment of the objectives of the organisation. Every
Eve
alternative has merits and demerits. For example, one course may appear to be the more profitable but
require a large cash outlay and a slow payback, another may be less profitable but involve less risk still
another may better suit the company in long
long-range
range objectives. After comparing all alternatives, the best
alternative is selected.
(6) Formulating Supportive plans:
To give practical shape to the main plan, many subsidiary plans are needed. These subsidiary plans or sub
plans are not independent plans
ans but only a reflection of the main plan. For example, different plans for the

Rahul Sir’s MBA/BBA Classes Page 4

 Module3
Module3: Overview of Planning
POM & OB notes by Rahul Sir’s MBA/BBA Classes

purchase department, sales department, finance department, personnel department etc are prepared in
light of the objectives of the organisation.
(7) Implementing the plans:
After the main plan and the subsidiary plans are formulated, they remain to be implemented.
Implementation should be done carefully. Even the best plan will not achieve the objectives if badly
implemented. For successful implementation plans should be comm
communicated
unicated to everyone in the
organisation.
(8) Reviewing plans:

The process of planning does not end with the implementation of plans. It is of great importance that there
is a constant review of plans so as to ensure success in the uncertain future. The moment there appears to
be changes in the internal and external environment, plans should be moulded accordingly. In this way we
can say planning is a continuously moving process.

5. Type of plans
Plans can be classified on the basis of time (long term and short term plans), on the basis of level (upper
level, middle level and lower level plans) and on the basis of repetitiveness (plans used only once and
plans used many times). But main organizational plans can be categorized as under:
under:-
Those include plans that are used over and over again because they focus on organizational situations that
occur repeatedly.

Rahul Sir’s MBA/BBA Classes Page 5

 Module3
Module3: Overview of Planning
POM & OB notes by Rahul Sir’s MBA/BBA Classes

1. Standing Plans: Standing plans are used over a long period of time , and can be altered as per the
change in circumstances.
(a) The policy: - Policy is a standing plan that furnishes broad guidelines for action which are consistent
with reaching organizational
ional objectives. For e.g policy for employee interaction
(b) Procedures: - Procedures are standing plans that outline a series of related actions that must be taken
to accomplish a particular task. For ex. Procedures for internal reporting.
(c) Rules: - Rules designate specific required action. A rule indicates what an organization member
should or should not do. For ex. No smoking in the office or prescribing a dress code.

2. Single used plans: Single used plans are created to address short term chall
challenges.
enges. They are
narrow in scope as compared to standing plans.

(a) Program: - Program is a single used plan encompassing a range of projects. ee.g
.g Budget, which is a
statement that expresses the expected results in numerical terms. It may be referred to aass ‘a
‘ numberized
program’.
(b) Project: A project is a single used plan having less scope than a programme. e.g an outline for an
advertising campaign .
Based on the levels of the organization Plans are cate
categorized as Strategic Plans, Tactical Plan &
Operational Plans.

Rahul Sir’s MBA/BBA Classes Page 6

 Module3
Module3: Overview of Planning
POM & OB notes by Rahul Sir’s MBA/BBA Classes

Why do plans fail?

If managers know why plan fail, they can take steps to eliminate the factors that cause failure and thereby
increase the probability that their plans will be successful. Plans fail when:
when:-
(1) Corporate planning is not integrated into the management system.
(2) Lack of understanding of the different steps of planning process.
(3) Lack
k of participation of managers at different levels in the organization in planning activities.
(4) Lack of coordination of different departments in planning and vesting the Responsibility for planning
to the planning department only.
(5) Management expects
ts that plans developed will be realized with little effort.
(6) Over ambitious planning. At the starting phase, too much is attempted at once.
(7) Faulty implementation of the plans.
(8) Lack of understanding of the plans which may be due to poor commu
communication
nication of the plans or because
of failure to grasp the overall planning process.
(9) Financial projections are confused with planning.
(10) Inadequate inputs are used for planning.

Rahul Sir’s MBA/BBA Classes Page 7