Unit II – Planning

Planning:

 It is the intellectual process of deciding in advance what is to be done, when,

where, how and for whom is to be done.
 It bridges the gap from where we are to where we want to go.
 It is the primary function of management without which no other functions can
be performed.
 It is forward looking.

Planning is nothing but thinking before the -action takes place. It helps us to take a
peep into the future and decide in advance the way to deal with the situations, which
we are going to encounter in future. It involves logical thinking and rational decision

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making.

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Managerial function: Planning is a first and foremost managerial function provides

the base for other functions of the management, i.e. organising, staffing, directing
and controlling, as they are performed within the periphery of the plans made.

Goal oriented: It focuses on defining the goals of the organisation, identifying

alternative courses of action and deciding the appropriate action plan, which is to be
undertaken for reaching the goals.

Pervasive: It is pervasive in the sense that it is present in all the segments and is
required at all the levels of the organisation. Although, the scope of planning varies
at different levels and departments.
Continuous Process: Plans are made for a specific term, say for a month, quarter,
year, and so on. Once that period is over, new plans are drawn, considering the
organisation’s present and future requirements and conditions. Therefore, it is an
ongoing process, as the plans are framed, executed and followed by another plan.

Intellectual Process: It is a mental exercise at it involves the application of mind, to

think, forecast, imagine intelligently and innovate etc.

Futuristic: In the process of planning we take a sneak peek of the future. It

encompasses looking into the future, to analyse and predict it so that the
organisation can face future challenges effectively.

Decision making: Decisions are made regarding the choice of alternative courses
of action that can be undertaken to reach the goal. The alternative chosen should be
best among all, with the least number of the negative and highest number of positive

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outcomes.

Importance of Planning

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1. It helps managers to improve future performance, by establishing objectives and
selecting a course of action, for the benefit of the organisation.
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2. It minimises risk and uncertainty, by looking ahead into the future.

3. It facilitates the coordination of activities. Thus, reduces overlapping among

activities and eliminates unproductive work.

4. It states in advance, what should be done in future, so it provides direction for

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action.

5. It uncovers and identifies future opportunities and threats.

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6. It sets out standards for controlling. It compares actual performance with the
standard performance and efforts are made to correct the same.

7. Planning is present in all types of organisations, households, sectors, economies,

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etc.

We need to plan because the future is highly uncertain and no one can predict the
future with 100% accuracy, as the conditions can change anytime. Hence, planning
is the basic requirement of any organization for the survival, growth and success.

Steps involved in Planning/Planning Process:

1. Recognizing Need for Action

An important part of the planning process is to be aware of the business

opportunities in the firm’s external environment as well as within the firm.
Once such opportunities get recognized the managers can recognize the actions that
need to be taken to realize them.

A realistic look must be taken at the prospect of these new opportunities and SWOT
analysis should be done.

2. Setting Objectives

This is the second and perhaps the most important step of the planning process.
Here we establish the objectives for the whole organization and also individual
departments.

Objectives can be long term and short term as well. They indicate the end result the
company wishes to achieve.

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3. Developing Premises/Assumptions

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Planning is always done keeping the future in mind however, the future is always
uncertain. So, in the function of management certain assumptions will have to be
made. These assumptions are the premises. Such assumptions are made in the
form of forecasts, existing plans, past policies, etc.
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These planning premises are also of two types – internal and external.

External assumptions deal with factors such as political environment, social

environment, the advancement of technology, competition, government policies, etc.
Internal assumptions deal with policies, availability of resources, quality of
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management, etc.

These assumptions being made should be uniform across the organization. All
managers should be aware of these premises and should agree with them.
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4. Identifying Alternatives

The fourth step of the planning process is to identify the alternatives available to the
managers. There is no one way to achieve the objectives of the firm, there is a
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multitude of choices. All of these alternative courses should be identified. There must
be options available to the manager.

5. Examining Alternate Course of Action

The next step of the planning process is to evaluate and closely examine each of the
alternative plans. Every option will go through an examination where all the pros and
cons will be weighed. The alternative plans need to be evaluated in light of the
organizational objectives.

6. Selecting the Alternative Course of Action

Finally, we reach the decision making stage of the planning process. Now the best
and most feasible plan will be chosen to be implemented. The ideal plan is the most
profitable one with the least amount of negative consequences and is also adaptable
to dynamic situations.

7. Formulating Supporting Plan

Once you have chosen the plan to be implemented, managers will have to come up
with one or more supporting plans. These secondary plans help with the
implementation of the main plan.

8. Implementation of the Plan

And finally, we come to the last step of the planning process, implementation of the
plan. This is when all the other functions of management come into play and the plan

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is put into action to achieve the objectives of the organization.
TYPES OF PLANS

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Many different types of plans are adopted by managers to conduct operations, and
monitor and control organisational activities. Three such most commonly used plans
are hierarchical, frequency of-use (repetitiveness) and contingency plans.
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I Hierarchical Plans
These plans are drawn at three major hierarchical levels, namely, the institutional,
the managerialand the technical core.
1. Strategic Plans
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Strategic plans generally involve planning at the top institutional level of an

organisation. Strategic plans define the organisation's long-term vision and how
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the organisation intends to make its vision a reality. In short, strategic planning is
the determination of the basic long-term objectives of an enterprise and the
adoption of courses of action and allocation of resources necessary to achieve
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these goals.
2. Intermediate or Administrative Plans
Intermediate planning is done at the middle level of the management. It is done to
allocate organisational resources and co-ordinate internal subdivisions of the
organisation. It is also a process of determining the contributions that sub-units
can make with allocated resources.
3. Operational Plan
Operational planning is the process of determining how specific tasks can best be
accomplished on time with available resources. This is also done to cover the
 day-to-day operations of an organisation. As such, many operating plans are
designed to govern the workings of the organisation's technical core.

II. Frequency-of-use Plans

Plans can also be categorised according to frequencyof repetitiveness of use. They
are broadly classified as standing plans and single use plans.
1. Standing Plans
Standing Plans are drawn to cover issues that managers face repeatedly. For
example, managers may be facing the problem of late-coming quite often.
Managers may, therefore, design a standing plan to be implemented

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automatically each time an employee is late for work. Policies, Procedures,
and Rules are some of the most common standing plans.
a. Policies: In most cases policies are standing plans. These are broad-

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based statements of understanding or general statement of intent. Policies
define an area or provide limits within which decisions are to be made
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ensure that the decision will be consistent with, and contribute to, an
objective. Policies are types of plans that allow decision- makers some
discretion to carry out a plan. Otherwise, there will be no difference
between policies and rules. Policies must allow for some discretion
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(freedom to decide what should be done in a particular situation).

Since policies are general in nature, they provide guidelines as to how the
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employees will carry out their jobs. While policies provide managers with
some flexibility in approaching various organisational problems, this
generality again makes policies rather vague. Control becomes difficult
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when people start interpreting policy meaning and purpose differently.

b. Rules: Like policies, rules, too, are standing plans that guide action. Rules
spell out specifically what employees are supposed to do or not to do. For
example, the no-smoking campaign launched by some organisations is
supported by some organisational rules. As opposed to policies, rules do
not permit exercise of individual discretion. Instead, rules specify what
actions will be taken (or not taken) and what behaviour is permitted or not.
 c. Procedures: Like rules, procedures are standing plans that provide
guidance for action. They are plans that establish a required method of
handling future activities.

Procedures establish customary ways for handling certain activities: hiring

a clerk participating in a co-operative housing society, obtaining a loan
from a bank. The major characteristic of a procedure is that it represents a
chronological sequencing of events. It specifies a series of steps that must
be taken to accomplish a task.

2. Single-use Plans

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Single-use plans are prepared for single for unique situations or problems and are
normally discarded or replaced after one use. Generally, three types of single-use

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plans are used. These are programmes, projects and budgets.

(a) Budgets: It refers to the quantitative expression of the plan of action.

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Budgets describe the desired results in numerical terms.

A budget is that planning which provides details about estimated money,

material, time and other resources for the achievement of pre-determined
objectives of various departments.
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For example, the sales department’s budget gives estimated figures about the
type of material that will be purchased, its quantity, the time of purchase and the
amount to be spent on it. Similarly, budget of other departments are also
prepared.
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III. Contingency Plans

As we already know, the process of planning is based on certain premises about
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what is likely to occur in the environment of an organisation. Contingency plans are

made to deal with situations that might crop up if these assumptions turn out to be
wrong. Thus contingency planning is the development of alternative courses of
action to be taken if events disrupt a planned course of action. A contingency plan
allows management to act immediately, if such unforeseen events as strikes,
boycotts, natural disasters or major economic changes render existing plans
inoperable or unsuitable.