Notes - Planning

Planning

Quick Revision

1. Planning is deciding in advance the objectives to be achieved during a given period, formulating alternative courses of action to achieve them and selecting the best course of action.

According to ME Hurley, "Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures and programmes among alternatives."

2. Features of Planning

(i) Planning Focuses on Achieving Objectives It contributes to achieve pre-determined organisational goals by deciding in advance various methods, procedures and steps to be taken.

(ii) Planning is Primary Function of Management It is the base for other functions of management. Other functions of management like organising, staffing, directing and controlling are performed within the framework of plans drawn.

(iii) Planning is Pervasive Planning is required at all levels of management as well as in all departments of the organisation.

(iv) Planning is Continuous Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. At the end of that period there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process.

(v) Planning is Futuristic In planning, forecasting about the future is made. Through forecasting future events and conditions are anticipated and plans are done accordingly.

(vi) Planning involves Decision-making In planning, evaluation of different alternatives is done and one alternative is selected. Thus, there is definitely one decision-making.

(vii) Planning is a Mental Exercise It requires application of mind involving foresight and intelligence. It is an intellectual process of thinking.

3. Importance of Planning

(i) Planning provides Direction In planning, goals are determined. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve the goals.

(ii) Planning reduces the Risk of Uncertainty Future is uncertain which mean no one can predict the future accurately but planning helps in reducing the risk by doing changes according to the needs.

(iii) Planning reduces Overlapping and Wasteful Activities Through planning, everyone comes to know about the things which they need to do and in what way or method. As everyone knows what to do and how to do, there is no overlapping of work.

(iv) Planning promotes Innovative Ideas In planning, new ideas taken place put into concrete ideas, thus it is a challenging activity which help the managers to grow and lead to me growth of business.

(v) Planning facilitates Decision-making In planning, managers have to evaluate each alternatives in the form of its merits and demerits. Thus it helps in taking rational decisions.

(vi) Planning establishes Standards for Controlling Planning provides standards against which actual performance is measured. By comparing actual performance with the standard, managers can know whether they have actually been able to attain as per the set standards or not.

4. Limitations of Planning

(i) Internal Limitations

(a) Planning leads to Rigidity In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. Following a pre-decided plan, when circumstances have changed, may not turn out to be in the organisations interest.

(b) Planning may not Work in a Dynamic Environment The business environment is dynamic and nothing is constant. The environment consists of a number of dimensions like economic, political, physical, legal and social dimensions. Change in these dimensions may affect the business.

(c) Planning reduces Creativity Only top level managers are allowed to make the plan. With the planning, the middle and lower managers of the organisation start working rigidly and they become the blind followers of the plan only.

(d) Planning involves Huge Costs Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional experts to carry on this process.

(e) Planning is a Time Consuming Sometimes lot of time is needed in developing planning premises. Thus, where immediate decisions has to be taken, the planning is of no use.

(f) Planning does not Guarantee Success Planning only provides a base for analyzing future. It is not a solution for future course of action.

(ii) External Limitations

(a) Unforeseen Events Natural calamities like floods, earthquakes, etc are beyond the control of managers, they cause failure of plans.

(b) Political Outlook Political outlook towards industries and their intervention also affects the company's plans.

(c) Environmental Changes Changes in social, economic, legal and technological environment may affect forecasting and planning.

(d) Competitors' Strategy Sometimes, a change in the strategy of competitor may lead to failure of planning.

5. Process of Planning Planning is to decide in advance what to do and how to do. It is an activity, which follows certain logical steps, which are as follows

(i) Setting Objectives Plans are prepared to achieve certain objectives or goals.

(ii) Developing Premises Planning is concerned with future, which is uncertain. Therefore, the manager is required to make certain assumptions about future and these assumptions are known as premises.

(iii) Identify Alternative Courses of Action In this step, the manager identifies all possible alternatives and collects and analyse all relevant information related to these alternatives.

(iv) Evaluating Alternative Courses This step is to weigh the pros and cons of each alternative.

(v) Selecting an Alternative In this step, the best plan has to be selected by the manager.

(vi) Implementing the Plan This step is concerned with putting the plan into action.

(vii) Follow Up Planning is a continuous process, so that the managers keep on following up the plans to see that activities are being performed as per the schedule or not.