Unit -2

PLANNING
Index

What is Planning?
Types of Planning
Advantages
Limitations
 “PLANNING”

 Planning is deciding in advance what is to be done,

when, where, how and by whom it is to be done.
 Planning bridges the gap from where we are to where we
want to go.
 It includes the selection of objectives, policies,
procedures and programmes from among
alternatives
TYPES OF

PLANNING
 PLANNING

ACTITVITY PERIOD APPROA FORMULATI IMPORTA

CH ON CE
N
COVERED
Long Short
term term FORMAL INFORMAL

Corporate
PROACTIVE
REACTIVE
STRATEGIC
OPERATIO
N AL
Functional
ACTIVITY COVERED
Corporate Planning :
 Determines long-term objectives of an organisation as
whole
 Generates plans to achieve these objectives
 Future orientated
 Integrated

Functional planning :
 Undertaken for sub functions witin each major
functions
 Derived from corporate planning.
 Segmental
 TIME-PERIOD
Depends on the type of the buisness and structure of
the organisation.

LONG TERM :
 Strategic in nature.
 Involves generally 3-5 years.
 It relates to matters like new
product ,product diversification .
SHORT
TERM
•
:
Short term planning typically covers time
frames of less than one year in order to assist
their company in moving gradually toward its
longer term.
• Examples are the skills of the employees and
their attitudes. The condition of production
equipment or product quality problems are also
short-term concerns.
 APPROACH
PROACTIVE PLANNING :
 Designing suitable course of action in anticipation of likely
changes in relevant environment.
 To take decision in advance.
 Eg : Emergency organisations

REACTIVE PLANNING :
 Reactive planning is the process whereby future action is
dictated as a response to whatever has already, or is now
occurring.
 Eg. Hotel Manager.
DEGREE OF FORMALISATION
FORMAL PLANNING :
 It is a structured plan.
 It has some procedure to follow.
 Written record is followed in formal plan.
 Eg. Five year plan of a country.

INFORMAL PLANNING
 It is unstructured plan.
 It does not have any procedure to follow.
 No record is maintained for future purpose.
IMPORTANCE OF CONTENTS
STRATEGIC :
 It sets future directions of the
organization in which it wants to proceed in future.
 It involves a time horizon of more than one year and for most
of the organization it ranges between 3 and 5 years.
 Strategic plans are generally developed by top level
management.
 Eg. diversification of business into new lines,
planned
grown rate in sales.
OPERATIONAL

 Operational plans are developed to determine

the steps necessary for achieving tactical
goals..
 They are used as a guide for day to day
operation by department managers.
 These plans may cover a time frame of few
months, weeks or even a few days.
ADVANTAGES
Planning facilitates management by
objectives
Planning minimizes uncertainties
Planning facilitates co-ordination
Planning improves employee’s
moral
Planning helps in achieving
economies
Planning facilitates controlling
Planning provides competitive edge
 Planning facilitates management by
objectives
 Planning begins with determination of objectives.
 It highlights the purposes for which various activities are
to be undertaken.
 In fact, it makes objectives more clear and specific.
 Planning helps in focusing the attention of employees on
the objectives or goals of enterprise.
 Without planning an organization has no guide.
 Planning compels manager to prepare a Blue-print of
the courses of action to be followed for accomplishment
of objectives.
 Therefore, planning brings order and rationality into the
organization.
Planning minimize uncertainties

 Business is full of uncertainties.

 There are risks of various types due to uncertainties.
 Planning helps in reducing uncertainties of future as it
involves anticipation of future events.
 Although future cannot be predicted with cent percent
accuracy but planning helps management to anticipate
future and prepare for risks by necessary provisions
to meet unexpected turn of events.
 Therefore with the help of planning, uncertainties can
be forecasted which helps in preparing standbys as
a result, uncertainties are minimized to a great
extent.
Planning facilitates coordination
 Planning revolves around organizational goals.
 All activities are directed towards common goals.
 There is an integrated effort throughout the
enterprise in various departments and groups.
 It avoids duplication of efforts. In other words, it
leads to better co-ordination.
 It helps in finding out problems of work
performance and aims at rectifying the same.
 Planning improves employee’s
morale
 Planning creates an atmosphere of order and
discipline in organization.
 Employees know in advance what is expected of
them and therefore conformity can be achieved
easily.
 This encourages employees to show their best
and also earn reward for the same.
 Planning creates a healthy attitude towards work
environment which helps in boosting employees
morale and efficiency
 Planning helps in achieving
economies
 Effective planning secures economy since it leads to
orderly allocation ofresources to various operations.
 It also facilitates optimum utilization of resources which
brings economy in operations.
 It also avoids wastage of resources by selecting most
appropriate use that will contribute to the objective of
enterprise. For example, raw materials can be purchased
in bulk and transportation cost can be minimized. At the
same time it ensures regular supply for the production
department, that is, overall efficiency
 Planning facilitates controlling

 Planning facilitates existence of certain planned

goals and standard of performance.
 It provides basis of controlling.
 We cannot think of an effective system of controlling
without existence of well thought out plans.
 Planning provides pre-determined goals against
which actual performance is compared.
 In fact, planning and controlling are the two sides of
a same coin. If planning is root, controlling is the fruit .
 Planning provides competitive
edge
 Planning provides competitive edge to the enterprise over
the others which do not have effective planning. This is
because of the fact that planning may involve changing in
work methods, quality, quantity designs, extension of
work, redefining of goals, etc.
 With the help of forecasting not only the enterprise
secures its future but at the same time it is able to
estimate the future motives of it’s competitor which helps
in facing future challenges.
 Therefore, planning leads to best utilization of possible
resources, improves quality of production and thus
the competitive strength of the enterprise is improved
Planning encourages
innovations.
 In the process of planning, managers have the
opportunities of suggesting ways and means of
improving performance.
 Planning is basically a decision making function
which involves creative thinking and imagination
that ultimately leads to innovation of methods
and operations for growth and prosperity of the
enterprise
Limitations of
Planning
Costly process
 Planning involves too much expenditure. Money
and effort both are required in planning.
 Planning includes collecting information, data
forecasting and evaluation of alternatives. It
requires salary and allowances to the experts in
the process of providing services.
 So, planning has been accepted as costly
process by small and medium size organization
 Time consuming

 Planning is the time consuming process. It delays the

business activity to come in action.
 In the process of planning following the procedures of
planning takes a lot of time which may create problem
to the organization where immediate action has to be
made. So in such situation planning is not suitable.
 False sense of security
 Planning encourages false sense of
security against future risk and uncertainty.
As future is uncertain, it is unpredictable.
Therefore, planning cannot give accurate
and reliable results.
Rapid change

 Rapid changes in technology ,consumer tastes

and prefernces are further limitations to planning.

 Eg.: Planning in aircraft, chemical, electronic and

information industries is specially complicated due
to acceptionally complex and rapidly changing
production technology.