Meaning

“Planning is deciding in advance what should be done”.

“Involves selecting missions and objectives as well as the actions to achieve them, which requires decision – making that is, choosing a course of action from among alternatives”.

“Planning is outlining a future course of action in order to achieve an objective”.

“Planning is looking ahead”“Planning is getting ready to do something tomorrow”.“Plan is a trap laid down to capture the future”.

Definition

“Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap from where we are to where we want to go” – Koontz and O’Donnell.

“Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guess” – Urwick.

“Planning is deciding the best alternative among others to perform different managerial operations in order to achieve the predetermined goal” – Henry Fayol.

“Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures and programmes from among alternatives” – M.E. Hurley.

Definition

“Planning is a concept of executive action that embodies the skills of anticipating, influencing and controlling the nature and direction of changes” – Mc Farland.

“Planning is the process of thinking through and making explicit the strategy, action and relationships necessary to accomplish an overall objective or purpose” – Cleland and King.

“Planning is selecting and relating of facts in the visualization and formation of proposed activities believed necessary to achieve desired results” – George R. Terry.

“Planning is a thinking process, the organized foresight, the vision based on fact and experience, that is required for intelligent action” – Alford and Beaty.

Purpose of planning

To achieve objectives rise questions like – Why am I making this planWhat am I trying to accomplishWhat resources do I need to execute the plan

To make the things happenTo meet the uncertaintiesTo plan out to solve the problemsForesee the future and predict the

consequences of actions

Purpose of planning

To cope with changesMarket competitionsPreserve on the resources increase Product life – cycle are becoming shorter due to

rapid technological changes.Built in the plans to meet the unexpected

changesTo control the eventsPlanning and controlPlanning provides necessary yardsticks to

measure the performance.

Principles of planning

Effectiveness in planning depends on the understanding of the following principles –

Take time to planHasty planning with in correct information.Any plan is a decision regarding a future course of action.Planning can be top down and bottom upOver all plan thus formulated by the top mgmt is spilt into

departmental plans.Plans for production, marketing, finance, personnel etc. –

top down approach planning.Top mgmt needs information from lower level – that is,

about the realities at the ground level in terms of strengths and weakness. In this bottom up approach, the initiative for planning comes from the lower levels in the organization.

Principles of planningInvolves and communicate with all those concerned To improve the quality of the product (quality control

plan) may require the co-operation of the people in the production, finance, marketing departments.

It is necessary to involve the concerned people in those departments

Plans must be flexible and dynamicAdequate flexibility has to be built into a plan, in a

dynamic environment, to meet the unexpected changes.Evaluate and reviseEvaluation of the plan at regular intervals is necessary

to make sure that it is contributing to the objectives.From time to time look back to evaluate and revise the

plan.

Relationship of planning and controlling

New plans

Planning implementation controlling: no undesirable deviations

of plans comparing plans from plans

with results undesirable deviation 

Corrective action   

Types of plans Plans can be classified as – Mission or purposeObjectives or goalsStrategies PolicesProcedures RulesProgramBudgets

Types of plans Mission or purpose Identifies the basic purpose or functions or tracks of an

enterprise or agency or any part of it.Objectives or goalsEnds towards which activity is aimed. They represent not only the end point of planning but also the

end toward which organizing, staffing, leading and controlled are aimed.

StrategiesThe determination of basic long – term objectives of an

enterprise and adoption of course of action and allocation of resources necessary to achieve these goals.

Policies General statements or understandings the guide or channel

thinking in decision – making.

Types of plans ProceduresPlans that establish a required method of handling future

activities.Rules Spell out specific required actions or non-actions, allowing

no discretion.ProgramsA complex of goals, policies, procedures, rules, task

assignments, steps to be taken, resources to be employed and other elements necessary to carryout a given course of action.

Budget A statement of expected results expressed in numerical

terms.

Steps in Planning

Being aware of opportunitySetting objectives or goalsConsidering planning premisesIdentifying alternativeComparing alternatives in light of goalsChoosing an alternativeFormulating supporting plansQuantifying plans by making budgets.

Steps in PlanningBeing aware of opportunity In light of: the market competition what customers want our strengths our weakness

Setting objectives or goals (establish goals) Where we want to be and what we want to accomplish and when Considering planning premises (establish planning premises) In what environment – internal or external Will our plans operate? Internal premises – include sales forecasts, policies of the

organization, skills, attitudes and beliefs of the people, the resources of the organizations.

Steps in PlanningExternal premises – relate to those factors in the

environment outside the organization. They include technological changes, general economic conditions, govt. policies and attitude towards business, demographic trends, socio – cultural changes in the society, political stability, production cost and their behavior, degree of competition in the market, availability of various resources etc.

Premises are tangible and intangible – Tangible factors quantitative

Intangible factors non – quantitative Identifying AlternativesWhat are the most promising alternatives to

accomplishing our objectives. 

Steps in PlanningComparing alternatives in light of goalsWhich alternatives will give us the best chance of meeting

our goals at the lowest cost and highest profit. Choosing an alternativeSelecting the course of action we will pursue.

Formulating supporting plansSuch as plans to – buy equipments, buy materials, hire and

train workers, develop a new product.

Quantifying plans by making budgets.Develop such budgets as – volume and price of sales,

operating expenses necessary for plans, expenditures for capital equipment.

Strategic Planning

Strategic planning is long – term / range planning.

“The process of determining the major objectives of an organization and the policies and strategies that will govern the acquisition, use and disposition of resources to achieve those objectives”.

Two function of strategic planningAnticipates future opportunities and threatsProvides clarity of purpose and direction

Characteristic or features of planning

Planning is the primary functionGoal – orientedAll – pervasive (done at all levels)Intellectual activityFuture orientedIntegrated approach (must be a link between

the plans of different depts.)Continuous process

Merits of planning

Focuses on objectivesHelps to avoid “no work or work pressure”Helps to avoid wastage of resourcesEnsures efficiency as well as effectiveness.Reduces rise and uncertaintyProvides for co-ordinationFacilitates controlPlanning also provide scope for

decentralization.

Demerits of planning

Uncertain nature

Expensive

Rigidity

Loss of initiative

Ignorance of sub ordinates interest

Complacent attitude

Special Aspects of Planning

Forecasting

Premising

Management Information System (MIS)

Forecasting

MeaningForecasting is an integral part of the planning process.

Since plans have to operate in future, it becomes imperative for management to make an accurate forecast of likely future events and conditions with which enterprise plans may have confrontation, in future. In fact, the more accurate the forecasting is, the more sound will be the planning premises on which the plans will be based.

Forecasting is the heart of planning process, and the best laid plans of the enterprise might fail when substantial inaccuracies are discovered subsequently in the forecasts of future conditions made by the management.

Techniques of forecasting

Forecasting implies making an estimation of relevant feature conditions and events.

Some techniques for making a best estimation of relevant future conditions and events are –

Historical analysis of past events – in some country and other countries, as to some extent, history is likely to repeat itself.

Astrological analysis of relevant future conditions – managements in the western countries even have been depending on astrological forecasts of likely business conditions and events.

Mathematical and statistical techniques – e.g. index numbers, time – series analysis, cor-relation and regression techniques, probability etc.

Collections of data through surveys – making forecasts on the basis of collected data.

Seeking opinions of experts – experts from the field of finance, marketing, technology politics, taxation etc. might management in better appreciating and judging future business conditions.

Premising Premises is a key step in planning process

Premising refers to establishment of assumptions by management about relevant future conditions – economic, social, political, technological etc. on which the plans will be based. Premising is based on forecasting.

Premising

Process of Plan Development

Development of Plans Building

Premising Secondary Foundation

Forecasting Primary

Foundation

Classification of planning premises into following categories

Internal and external premises

Controllable and controllable premises

Quantitative and qualitative premises

Internal and external premises

Internal premises : are relevant internal conditions of the enterprise on which plans will be based.

Management strategies, policies and programmes Organizational structure flexibilities Human relations in the enterprise Manpower potential Availability of finance Approved sales forecasts etc.

External premises: are relevant external conditions of the enterprise on which plans will be based.

Political conditions Social conditions General economic conditions Technological conditions Competitive conditions Factors market conditions (eg. Labour availability, raw materials

availability etc.) 

Controllable and controllable premises

Controllable premises are those over which management has control, while uncontrollable premises are those which are beyond the control of management. There may be semi – controllable premises also, which are partly within the control of management and partly beyond the control of management.

Controllable premises – Advertising programmes and policies Expansion programmes Policy of centralization / decentralizationUncontrollable premises – Acts of good Population growth Price trends Political environment Technological environmentSemi – controllable premises – Labour turnover Labour efficiency Pricing policy 

Quantitative and qualitative premises

Quantitative premises are those factors which can be expressed numerically, while qualitative premises are factors which could not be so expressed. Quantitative premises are tangible, while qualitative premises are intangible

Quantitative premises Finance availability Sales forecasts Population trends Price trends Plant capacity utilization

Qualitative premises Human relations in the enterprise Morale of employees Prestige or reputation of the enterprise Political stability

Management Information System (MIS)

MIS is an assemblage of personnel and facilities organized into an integrated system by which – relevant, adequate and timely information is supplied to executive.

Steps in MISMIS can be built around electronic computers, in case of a

big organization.MIS consists of following stepsAssembly - collection of dataProcessing – editing of data, their classification and

summationStorage and retrieval – indexing, coding, filing of information

and getting back information.Evaluation – determination of accuracy and relevance of dataDissemination – supplying the relevant information in the

proper form and at the right time.

SWOT AnalysisSWOT analysis is a key concept in the world of

corporate planning, strategy formulation and other practical spheres of management.

Concept of SWOTStrength – SWeakness – W Opportunity – O Threats – T S Internal environment W O External environment T

Management Information System (MIS)

Criteria for evaluating information supplied by MIS

Quantity of informationQuality of informationRelevance of informationTimeliness of informationAdvantage of MISSound Planning and decision – making Prevents unnecessary duplication of effortsFacilitates decentralization

Purpose of SWOT

To capitalize on the strengths of the company

To overcome the weakness of the company

To exploit fully the opportunities available in the

external environment

To manage successfully the threats posed by the

external environment