WHAT IS PLANNING?
When we talk of planning, it simply refers to deciding in advance what is to be done and
how it is to be done? For example, you decide in advance where to study and what to study (to go in for Business Studies and Accountancy or Physics and Chemistry) etc. and plan for the admission, transport arrangement and purchase of books and stationeries etc. Thus, planning is a systematic way of deciding about and doing things in a purposeful manner. In the context of business organisations and their
management it may be defined as the process of setting future objectives and deciding on
the ways and means of achieving them. In the words of M.E. Hurley “planning is deciding
in advance what is to be done in future. It involves the selection of objectives, policies,
procedures and programmes from among the alternatives”.
FEATURES OF PLANNING
The basic features of planning can be summarised as follows:
(a) Planning is the primary function of management as every activity needs to be planned
before it is actually performed. In other words, planning precedes all other managerial
functions and provides the very basis for organising, staffing, directing and controlling.
(b) Planning is always goal directed. A manager cannot plan anything unless he knows
what he wants to achieve. For example, you cannot plan for a journey unless you
know where you want to go. Thus, planning is taking such steps so as to achieve the
desired goal.
(c) Planning is pervasive at all levels of management and so also for all functional area.
Managers at the top level plan for the entire organisation. They make plans for a long
period and lay down the objectives for the organisation as a whole. Middle-level
managers make quarterly, half-yearly and yearly plans for the departments under them.
Foremen and office supervisors plan for a workshop or a section of the office. They
make plans for a short period, i.e., for the next day, next week or next month.
(d) Planning is always futuristic. It is deciding in advance what to do, how to do, etc. It
requires collection of information about various matters relating to business and then
choosing a course of action for the future. However, while planning for the future, it
does take past experience and current situation into consideration.
(e) Planning is an intellectual activity and requires certain conceptual skills to look ahead
into the future. It needs good foresight and sound judgment to anticipate future events,
develop alternative courses of action and make the right choice.
(f) Planning is a continuous process. In organisations plans are made for a specific period
followed by new plans for further period. Sometimes the conditions or circumstance
change requiring the plans to be revised. For example, a sugar factory situated in
upper regions of Uttar Pradesh had planned for 1,000 tonnes of sugar during the last
quarter of the year. Accordingly, the management planned for procurement of sugar
cane from the nearby areas. Unfortunately, there was snowfall leading to loss of crop.
This made the management to change their plan and procure sugarcane from far off
areas like Haryana and Rajasthan and also revise their planned production of 1000 to
800 tonnes. Thus, planning is a continuous activity in organisations.
(g) Planning basically involves making choices. Need for planning arises when goals/
objectives are many and alternatives to achieve them are also plenty. While planning,
alternatives are evaluated and a choice is made regarding which course of action is to
be followed.
(h) Planning is flexible. Planning is done on the basis of some forecasts which may not
materalise. Hence, plans have to be changed in accordance with the changed conditions.
Activities are planned with certain assumptions, which may not come true. Managers
must make provision for alternate strategies and plans as indicate in the earlier example
of a sugar factory.
IMPORTANCE OF PLANNING
Planning is the most importance of all the management functions. Some of the importance
are as follows:
(a) Planning reduces uncertainty, risk and confusion in operation. Through planning, the
future course of action is known to all and so, everybody knows exactly what needs
to be done. This gives a sense of direction resulting in efficiency in operations.
(b) Planning guides the decision making by the managers. Planning of goals to be achieved
and the course of action to be followed to achieve the goal act as a guide in their own
decision making and action plans.
(c) Planning helps in achieving coordination and facilitates control. Proper planning
integrates the tasks at the operational level, thereby making coordination more effective.
It also helps in identifying deviations and taking the corrective action.
(d) Planning with an element of flexibility makes the organisation adaptable. In other words
planning makes the organisation capable of coping with the changing environment and
facing challenges.
(e) Planning leads to economy and efficiency in operations. Best methods are selected
out of available choices, thus, reducing overlapping and wasteful activities.
(f) Planning begins with the determination of objectives and directed towards their
achievement. It keeps the executive alive and alert. Managers have to review the
progress periodically and recast their strategies to meet the objectives.
It should be noted that planning also has certain limitations, as the plans are based on
certain assumptions and incomplete information. Hence, the management has to be vigilant
and provide for necessary flexibility to take care of changed situations.
THE PLANNING PROCESS/STEPS IN PLANNING
Planning in organisation follows a step-by-step process without which it may be difficult
to build up proper plans and ensure their implementation. Such steps are as follows.
1. Establishment of Objectives
All of us know that every organisation has some goals that it wants to achieve. Planning
actually starts with defining these goals in more concrete, clear and unambiguous terms.
This enables the management in gaining clarity on what they have to achieve and then plan
all activities accordingly. Hence establishing organisational objective is a pre-requisite for
good and meaningful planning.
2. Making Assumptions (establishing premises) about the External and Internal
Conditions
Making assumptions about the future environment of business is the second step in planning.
For example, it may be assumed that there will not be any change in tax laws and that there
will be sufficient funds available to meet its financial requirements. These assumptions
about the future environment of the business are known as planning premises. These
premises may be external or internal. External planning premises relate to conditions
outside the business. Internal planning premises relate to conditions prevailing within the
organisation.
External planning premises include assumptions about the market demand and nature of
competition, laws affecting the business, availability of resources, and changes in technology.
If the management can visualise the likely changes in the external conditions, they can take
steps to solve problems arising there from and plan to take advantage of the emerging
business opportunities. Government policies and laws, for example, affect the decisions of
managers to a great extent. Advance knowledge of the likely changes in government policy
enables managers to plan their activities more appropriately.
Internal planning premises relate to conditions within an organisation. These conditions
include cost, methods and techniques of production, employees, type of machinery and
equipment, etc. All these constitute the internal resources which determine as to what the
organisation is capable of achieving.
The study of external conditions enables a business unit to know the opportunities available
in the market. Hundreds of opportunities are available to a business unit, but it cannot take
advantage of every opportunity. It has to decide what it will produce and distribute in the
light of what it can do i.e., on the basis of the study of internal factors and then plan
accordingly.
3. Development of Alternative Courses of Action
The next step in planning is to identify the alternative courses of action to achieve the
objectives set. For example, to achieve the objective of increasing the profits of a business
unit, any one or more of the following alternatives can be used:
• Increase the sale of its existing products
• Improve product quality
• Add new products/product lines
• Increase the prices of products
• Reduce costs
4. Evaluation of Alternatives
Evaluation of alternatives is the fourth step in planning. When alternative courses of action
are there before a manager, he has to examine the feasibility and the possible results of
each course of action before selecting the best course. Certain alternatives may not be
practicable. Management should ignore such alternatives. For example, to maximise profits
the management may not think of reducing the wages of workers as it may not be workable.
Similarly, if prices are increased, the business unit may not be able to face competition in
the market. So, the management should evaluate each of the remaining alternatives and
work out how far they help in meeting the objectives and whether these are workable in
the light of available resources.
5. Selecting the Appropriate Course of Action
After evaluating the alternatives the manager will select that alternative which gives maximum
benefit at minimum cost. In selecting the best course from among the alternatives, managers
should also keep in mind their own limitations of resources. So in making the final selection
from among the alternative courses of action, the management will ultimately be guided by:
(a) the opportunities provided by the external environment; and
(b) the ability of the business unit to take advantage of these opportunities.
6. Arranging for implementation
After the management has finalised their choice, it should build up the necessary strategies
and action plan for its implementation in due consultation with all key personnel who are to
implement it.
When we talk of planning, it simply refers to deciding in advance what is to be done and
how it is to be done? For example, you decide in advance where to study and what to study (to go in for Business Studies and Accountancy or Physics and Chemistry) etc. and plan for the admission, transport arrangement and purchase of books and stationeries etc. Thus, planning is a systematic way of deciding about and doing things in a purposeful manner. In the context of business organisations and their
management it may be defined as the process of setting future objectives and deciding on
the ways and means of achieving them. In the words of M.E. Hurley “planning is deciding
in advance what is to be done in future. It involves the selection of objectives, policies,
procedures and programmes from among the alternatives”.
FEATURES OF PLANNING
The basic features of planning can be summarised as follows:
(a) Planning is the primary function of management as every activity needs to be planned
before it is actually performed. In other words, planning precedes all other managerial
functions and provides the very basis for organising, staffing, directing and controlling.
(b) Planning is always goal directed. A manager cannot plan anything unless he knows
what he wants to achieve. For example, you cannot plan for a journey unless you
know where you want to go. Thus, planning is taking such steps so as to achieve the
desired goal.
(c) Planning is pervasive at all levels of management and so also for all functional area.
Managers at the top level plan for the entire organisation. They make plans for a long
period and lay down the objectives for the organisation as a whole. Middle-level
managers make quarterly, half-yearly and yearly plans for the departments under them.
Foremen and office supervisors plan for a workshop or a section of the office. They
make plans for a short period, i.e., for the next day, next week or next month.
(d) Planning is always futuristic. It is deciding in advance what to do, how to do, etc. It
requires collection of information about various matters relating to business and then
choosing a course of action for the future. However, while planning for the future, it
does take past experience and current situation into consideration.
(e) Planning is an intellectual activity and requires certain conceptual skills to look ahead
into the future. It needs good foresight and sound judgment to anticipate future events,
develop alternative courses of action and make the right choice.
(f) Planning is a continuous process. In organisations plans are made for a specific period
followed by new plans for further period. Sometimes the conditions or circumstance
change requiring the plans to be revised. For example, a sugar factory situated in
upper regions of Uttar Pradesh had planned for 1,000 tonnes of sugar during the last
quarter of the year. Accordingly, the management planned for procurement of sugar
cane from the nearby areas. Unfortunately, there was snowfall leading to loss of crop.
This made the management to change their plan and procure sugarcane from far off
areas like Haryana and Rajasthan and also revise their planned production of 1000 to
800 tonnes. Thus, planning is a continuous activity in organisations.
(g) Planning basically involves making choices. Need for planning arises when goals/
objectives are many and alternatives to achieve them are also plenty. While planning,
alternatives are evaluated and a choice is made regarding which course of action is to
be followed.
(h) Planning is flexible. Planning is done on the basis of some forecasts which may not
materalise. Hence, plans have to be changed in accordance with the changed conditions.
Activities are planned with certain assumptions, which may not come true. Managers
must make provision for alternate strategies and plans as indicate in the earlier example
of a sugar factory.
IMPORTANCE OF PLANNING
Planning is the most importance of all the management functions. Some of the importance
are as follows:
(a) Planning reduces uncertainty, risk and confusion in operation. Through planning, the
future course of action is known to all and so, everybody knows exactly what needs
to be done. This gives a sense of direction resulting in efficiency in operations.
(b) Planning guides the decision making by the managers. Planning of goals to be achieved
and the course of action to be followed to achieve the goal act as a guide in their own
decision making and action plans.
(c) Planning helps in achieving coordination and facilitates control. Proper planning
integrates the tasks at the operational level, thereby making coordination more effective.
It also helps in identifying deviations and taking the corrective action.
(d) Planning with an element of flexibility makes the organisation adaptable. In other words
planning makes the organisation capable of coping with the changing environment and
facing challenges.
(e) Planning leads to economy and efficiency in operations. Best methods are selected
out of available choices, thus, reducing overlapping and wasteful activities.
(f) Planning begins with the determination of objectives and directed towards their
achievement. It keeps the executive alive and alert. Managers have to review the
progress periodically and recast their strategies to meet the objectives.
It should be noted that planning also has certain limitations, as the plans are based on
certain assumptions and incomplete information. Hence, the management has to be vigilant
and provide for necessary flexibility to take care of changed situations.
THE PLANNING PROCESS/STEPS IN PLANNING
Planning in organisation follows a step-by-step process without which it may be difficult
to build up proper plans and ensure their implementation. Such steps are as follows.
1. Establishment of Objectives
All of us know that every organisation has some goals that it wants to achieve. Planning
actually starts with defining these goals in more concrete, clear and unambiguous terms.
This enables the management in gaining clarity on what they have to achieve and then plan
all activities accordingly. Hence establishing organisational objective is a pre-requisite for
good and meaningful planning.
2. Making Assumptions (establishing premises) about the External and Internal
Conditions
Making assumptions about the future environment of business is the second step in planning.
For example, it may be assumed that there will not be any change in tax laws and that there
will be sufficient funds available to meet its financial requirements. These assumptions
about the future environment of the business are known as planning premises. These
premises may be external or internal. External planning premises relate to conditions
outside the business. Internal planning premises relate to conditions prevailing within the
organisation.
External planning premises include assumptions about the market demand and nature of
competition, laws affecting the business, availability of resources, and changes in technology.
If the management can visualise the likely changes in the external conditions, they can take
steps to solve problems arising there from and plan to take advantage of the emerging
business opportunities. Government policies and laws, for example, affect the decisions of
managers to a great extent. Advance knowledge of the likely changes in government policy
enables managers to plan their activities more appropriately.
Internal planning premises relate to conditions within an organisation. These conditions
include cost, methods and techniques of production, employees, type of machinery and
equipment, etc. All these constitute the internal resources which determine as to what the
organisation is capable of achieving.
The study of external conditions enables a business unit to know the opportunities available
in the market. Hundreds of opportunities are available to a business unit, but it cannot take
advantage of every opportunity. It has to decide what it will produce and distribute in the
light of what it can do i.e., on the basis of the study of internal factors and then plan
accordingly.
3. Development of Alternative Courses of Action
The next step in planning is to identify the alternative courses of action to achieve the
objectives set. For example, to achieve the objective of increasing the profits of a business
unit, any one or more of the following alternatives can be used:
• Increase the sale of its existing products
• Improve product quality
• Add new products/product lines
• Increase the prices of products
• Reduce costs
4. Evaluation of Alternatives
Evaluation of alternatives is the fourth step in planning. When alternative courses of action
are there before a manager, he has to examine the feasibility and the possible results of
each course of action before selecting the best course. Certain alternatives may not be
practicable. Management should ignore such alternatives. For example, to maximise profits
the management may not think of reducing the wages of workers as it may not be workable.
Similarly, if prices are increased, the business unit may not be able to face competition in
the market. So, the management should evaluate each of the remaining alternatives and
work out how far they help in meeting the objectives and whether these are workable in
the light of available resources.
5. Selecting the Appropriate Course of Action
After evaluating the alternatives the manager will select that alternative which gives maximum
benefit at minimum cost. In selecting the best course from among the alternatives, managers
should also keep in mind their own limitations of resources. So in making the final selection
from among the alternative courses of action, the management will ultimately be guided by:
(a) the opportunities provided by the external environment; and
(b) the ability of the business unit to take advantage of these opportunities.
6. Arranging for implementation
After the management has finalised their choice, it should build up the necessary strategies
and action plan for its implementation in due consultation with all key personnel who are to
implement it.
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