PLANNING

Planning is the process of setting goals and creating steps you can follow to achieve those
goals. Doing so helps guide you and makes it more likely that you reach success, which can
be especially helpful if you're part of a company's management team. This means learning
how to plan efficiently can help you achieve your management goals.

According to M.E Harley,” Planning is deciding in advance what is to be done. It involves the
selection of objectives, Policies, Procedures and Programmes from among alternatives.”

According to Koontz and O’ Donnell,” Planning is deciding in advance what to do, how to do
it, when to do it and who is to do it.” Planning bridges the gap between where we are and
where we want to go. It makes possible things to occur which would not otherwise occur”.

Features
1. Goal oriented: Planning focuses on setting and achieving specific organizational
objectives. It ensures that all actions are directed towards a common goal.

2. Foundation of management: It forms the base for all other management functions,
such as organizing, directing, and controlling, by providing a clear roadmap for
action.

3. All pervasive: Planning is required at all levels of management and across all
departments, ensuring a unified direction for the entire organization.

4. Mental exercise: It involves critical thinking and analyzing various factors like market
conditions, available resources, and potential risks to create effective strategies.

5. Continuous process: Planning is an ongoing activity. As circumstances change, plans

are revisited, adjusted, and refined to stay relevant.

6. Involves choice: It requires decision-making, as managers must evaluate different

options and select the best course of action to achieve objectives.

7. Forward-looking: Planning anticipates future challenges and opportunities, helping

the organization to proactively prepare for upcoming events.

8. Flexible: Plans need to be adaptable, allowing the organization to make adjustments

in response to unforeseen changes or new developments.

Importance
 Planning provides direction: Planning provides direction and a sense of purpose for
the organisation. It helps an organisation decide what to do and when to do it. It
reduces aimless activity and makes action more meaningful.
 Planning provides a unifying framework: A plan helps people to set priorities and
put effort accordingly. Plans help in coordinating effort at various levels and within
various departments. In the absence of a plan, the organisation would be pulled in
different directions, creating confusion and misunderstanding at various levels.

 Planning is economical: Effective plans coordinate organisational work and eliminate

unproductive effort. Facilities are employed to the best advantage. By focusing
attention on what is to be done, how and when it is to be done, plans help an
organisation to economically utilize the physical and financial resources. This,
ultimately, improves efficiency of operations.

 Planning reduces the risks of uncertainty: Planning helps an organisation to cope

with an uncertain future. Planning minimizes the chances of mistakes and
unpleasant surprises because objectives, policies and strategies are formulated after
a careful scrutiny of internal as well as external environment. Planning, thus, seeks to
minimize risk while taking advantage of opportunities.

 Planning facilitates decision making: Decision-making involves searching of various

alternative courses of action, evaluating them and selecting the best one. Planned
targets serve as the criteria for the evaluation of different alternatives so that the
best one may be chosen. If there are no plans for the future, there are few guidelines
for making current decisions.

 Planning encourages innovation and creativity: Planning involves looking ahead and
preparing for the future. The process of looking ahead forces an organisation to be
alert of opportunities and threats in the environment. It forces managers to find out
new and improved ways of doing things in order to remain competitive and avoid
the threats in the environment.

 Planning improves morale: When goals are properly defined, work assignments can
be fixed and everyone can begin to contribute to the achievement of these goals.
This produces improvements in morale. Further, planning permits employees to
participate in the thinking process. This helps them develop a broad mentality. Also,
when the plan is actually translated into action, they feel that it is their own plan.

 Planning facilities control: Planning and controlling functions are said to be ‘Siamese
twins’ (inseparable twins). There is nothing to control without planning and without
proper control, planning proves to be a wasteful and an unproductive exercise. Plans
serve as yardsticks for measuring performance. They help in channelizing behaviour
in the right direction.
Principles of Planning
 Principle of contribution to objectives: Every plan should help in the achievement of
organisational objectives.
 Principle of primacy of planning: Planning precedes all other managerial functions. It
is the first and the foremost function to be followed in the process of management.
 Principle of pervasiveness of planning: Planning is an all-pervasive function. It is
important to all managers regardless of their level in the organisation.
 Principle of flexibility: By flexibility of a plan is meant its ability to switch gears,
change direction to adapt to changing situations without unnecessary cost (ability to
vary product mix, shift marketing effort geographically, raise additional funds on
favourable terms, reshuffle and relocate personnel quickly, change organisation
structure etc.).
 Principle of periodicity: Plans should be integrated and interconnected in such a way
as to achieve the stated objectives economically and efficiently. A manager should
review events and expectations regularly; refine and redraw the plan and keep it on
track.
 Principle of planning premises: Every plan is based on carefully considered
assumptions, known as planning premises.

 Principle of limiting factor: While choosing an appropriate course of action among

different alternatives, the limiting or critical factor (such as money, manpower,
machinery, materials, management) should be recognised and given due weightage.
When ignored, the critical factor would seriously impact the process of planning and
make it impossible to achieve goals.

Process of Planning
 Establishing objectives: The first step in the planning process is to identify the goals
of the organisation. The internal as well as external conditions affecting the
organisation must be thoroughly examined before setting objectives. The objectives
so derived must clearly indicate what is to be achieved, where action should take
place, and who is to perform it, how it is to be undertaken and when it to be
accomplished is. In other words, managers must provide clear guidelines for
organisational efforts, so that activities can be kept on the right track.

 Developing premises: After setting objectives, it is necessary to outline planning

premises. Premises are assumptions about the environment in which plans are made
and implemented. Thus, assumptions about the likely impact of important
environmental factors such as market demand for goods, cost of raw materials,
technology to be used, population growth, government policy, etc. on the future
plans are made.
  Evaluating alternatives and selection: After establishing the objectives and planning
premises, the alternative courses of action have to be considered. The pros and cons
as well as the consequences of each alternative course of action must be examined
thoroughly before a choice is made.

 Formulating derivative plans: After selecting the best course of action, the
management has to formulate the secondary plans to support the basic plan. The
plans derived for various departments, units, activities, etc., in a detailed manner are
known as ‘derivative plans’. For example, the basic production plan requires a
number of things such as availability of plant and machinery, training of employees,
provision of adequate finance, etc. To ensure the success of a basic plan, the
derivative plans must indicate the time schedule and sequence of performing various
tasks.

 Securing cooperation and participation: The successful implementation of a plan

depends, to a large extent, on the whole-hearted cooperation of the employees. In
view of this, management should involve operations people in the planning
activities.

 Providing for follow-up: Plans have to be reviewed continually to ensure their

relevance and effectiveness. In the course of implementing plans, certain facts may
come to light that were not even thought of earlier. In the light of these changed
conditions, plans have to be revised. Without such a regular follow-up, plans may
become out-of-date and useless. Moreover, such a step ensures the implementation
plans along right lines.

Limitations of Planning

 Rigidity: Plans put the activities of an enterprise in a rigid framework. New

opportunities are often ignored or rejected because of the commitment to existing
plans. Managers, too, would be reluctant to reorient their plans suitably, because it
involves serious mental work to put everything in black and white change the same
all over again.

 Costly and time consuming: Planning is costly. It is expensive in terms of time spent
to formulate the plans, the manpower required to do the planning and resources
needed to execute the plan. The collection of information, evaluation of alternatives,
selection of a suitable course of action, etc., may consume lot of executive time and
organisational resources.

 Employee resistance: One of the frequent complaints made against the planning
process is that it is done by specialists who are not in touch with operations. As a
result, operating people who are not involved in planning tend to resist the planning
 process. Planning ‘imposed from above’ often leads to resentment and resistance
from those forced to execute.

 False sense of security: Elaborate planning may create a false sense of security in the
organisation. Managers may begin to feel that everything is well taken care of. They
begin to assume that as long as plans are adhered to, there will not be any problems.
As a result, they fail to take note of environmental changes and the need to review,
restructure and reorient the old plans in an appropriate way.

 Managerial deficiencies: Planning is an intellectually demanding function. Since

managers are assessed on the basis of results, they begin to discount long-range
plans, and adopt short-range plans which would put them in a comfortable position.
This may harm organisational interests in the long-run.

 Planning prevents innovation: Planning demands commitment to written policies,

procedures and rules etc. It restricts a manager unnecessarily to defined areas. The
executive is prevented from experimenting with novel ideas, venturing into risky but
profitable areas and exploring the untested yet lucrative grounds.

Types of Planning
1. Long Range Planning (LRP) vs. Short Range Planning (SRP): LRP focuses on a future period
of several years and is strategic, while SRP is for short-term goals, usually less than a year,
and focuses on immediate operations.

2. Operational Planning vs. Strategic Planning: Operational planning deals with day-to-day
operations and short-term goals, while strategic planning focuses on long-term objectives
and the overall direction of an organization.

3. Formal vs. Informal Planning: Formal planning is structured and documented, often
following a clear process, whereas informal planning is flexible, less structured, and can
evolve organically.

4. Functional vs. Corporate Planning: Functional planning is concerned with specific

departments like marketing or finance, while corporate planning covers the entire
organization's overall strategy and objectives.

5. Proactive vs. Reactive Planning: Proactive planning anticipates future challenges and
changes, taking steps in advance, while reactive planning responds to issues as they arise,
focusing on solving immediate problems.