Planning
• Planning is deciding in advance what to do and how to do.
• It is one of the basic managerial functions.
• Before doing something, the manager must formulate an idea of how to work on a particular task.
Thus, planning is closely connected with creativity and innovation.
• But the manager would first have to set objectives, only then will a manager know where he has to
go.
• Planning seeks to bridge the gap between where we are and where we want to go.
• Planning is what managers at all levels do. It requires taking decisions since it involves making a
choice from alternative courses of action.
• Planning, thus, involves setting objectives and developing appropriate courses of action to achieve
these objectives.
• Objectives provide directionfor all managerial decisions and actions.
Planning
One of the ways to do so would be to define planning as setting objectives for a given time period,
formulating various courses of action to achieve them, and then selecting the best possible alternative
from among the various courses of action available.
Importance of Planning
1. Planning provides directions:
By stating in advance how work is to be done planning provides direction for action.
Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding
what action should be taken and in which direction.
If goals are well defined, employees are aware of what the organisation has to do and what they must do
to achieve those goals.
Importance of Planning
2. Planning reduces the risks of uncertainty
Planning is an activity which enables a manager to look ahead and anticipate changes.
By deciding in advance the tasks to be performed, planning shows the way to deal with changes and
uncertain events.
Changes or events cannot be eliminated but they can be anticipated and managerial responses to them
can be developed.
Importance of Planning
3. Planning reduces overlapping and wasteful activities:
Planning serves as the basis of coordinating the activities and efforts of different divisions, departments
and individuals.
It helps in avoiding confusion and misunderstanding.
Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions.
Importance of Planning
4. Planning promotes innovative ideas:
Since planning is the first function of management, new ideas can take the shape of concrete plans.
It is the most challenging activity for the management as it guides all future actions leading to growth
and prosperity of the business.
Importance of Planning
5. Planning facilitates decision making:
Planning helps the manager to look into the future and make a choice from amongst various alternative
courses of action.
The manager has to evaluate each alternative and select the most viable proposition.
Planning involves setting targets and predicting future conditions, thus helping in taking rational
decisions.
Importance of Planning
6. Planning establishes standards for controlling:
Planning involves setting of goals.
The entire managerial process is concerned with accomplishing predetermined goals through planning,
organising, staffing, directing and controlling.
Planning provides the goals or standards against which actual performance is measured.
By comparing actual performance with some standard, managers can know whether they have actually
been able to attain the goals.
If there is any deviation it can be corrected. Therefore, we can say that planning is a prerequisite for
controlling.
Features of Planning
1. Planning focuses on achieving objectives.
2. Planning is a primary function of management.
3. Planning is pervasive.
4. Planning is continuous.
5. Planning is futuristic / forward-looking.
6. Planning involves decision making.
7. Planning is a mental exercise.
Limitations of Planning
2. Panning
5. Planning is 6. Planning
1. Planning may not 3. Planning 4. Planning
a time- does not
leads to work in reduces involves huge
consuming guarantee
rigidity. a dynamic creativity. costs.
process. success.
environment
PLANNING PROCESS
3. Identifying
1. Setting alternative [Link] an 7. Follow-up
objectives. courses of alternative. Action.
action.
4. Evaluating 6.
2. Developing
Alternative Implementing
Premises.
Courses. the plan.
TYPES OF PLANS
Single-Use Standing Plans
(policies, procedures,
Plans methods and Rules)
TYPES OF PLANS
Objectives
Strategy
Policy
Procedure
Method
Rule
Programme
Budget
1. Objectives
The first step in planning is setting objectives.
Objectives, therefore, can be said to be the desired future position that the management would like to
reach.
Objectives are very basic to the organisation and they are defined as ends which the management
seeks to achieve by its operations.
Therefore, an objective simply stated is what you would like to achieve, i.e., the end result of activities.
For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable
rate of return on investment, earn a 20% profit from business. They represent the end point of planning.
1. Objectives
All other managerial activities are also directed towards achieving these objectives.
They are usually set by top management of the organization and focus on broad, general issues.
They define the future state of affairs which the organization strives to realise.
They serve as a guide for overall business planning. Different departments or units in the organisation
may have their own objectives.
Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms,
in the form of a written statement of desired results to be achieved within
a given time period.
1. Objectives (Contd.)
All other managerial activities are also directed towards achieving these objectives.
They are usually set by top management of the organization and focus on broad, general issues.
They define the future state of affairs which the organization strives to realise.
They serve as a guide for overall business planning. Different departments or units in the organisation
may have their own objectives.
Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms,
in the form of a written statement of desired results to be achieved within
a given time period.
Objectives Vs Goals
2. Strategy
A strategy provides the broad contours of an organisation’s business.
It will also refer to future decisions defining the organisations direction and scope in the long run. Thus,
we can say a strategy is a comprehensive plan for accomplishing an organization objectives. This
comprehensive plan will include three dimensions,
(i) determining long term objectives,
(ii) adopting a particular course of action, and
(iii) allocating resources necessary to achieve the objective.
Whenever a strategy is formulated, the business environment needs to be taken into consideration. The
changes in the economic, political, social, legal and technological environment will affect an
organisation’s strategy. Strategies usually take the course of forming the organisation’s identity in the
business environment.
2. Strategy (Contd.)
Major strategic decisions will include decisions like whether the organisation will continue to be in the
same line of business, or combine new lines of activity with the existing business or seek to acquire a
dominant position in the same market.
For example, a company’s marketing strategy has to address certain questions i.e., who are the
customers?
what is the demand for the product?
Which channel of distribution to use?
What is the pricing policy? and
how do we advertise the product.
These and many more issues need to be resolved while formulating a marketing strategy for any
organisation.
3. Policy
Policies are general statements that guide thinking or channelise energies towards a particular direction.
Policies provide a basis for interpreting strategy which is usually stated in general terms.
They are guides to managerial action and decisions in the implementation of strategy.
For example, the company may have a recruitment policy, pricing policy within which objectives are set
and decisions are made. If there is an established policy, it becomes easier to resolve problems or issues.
As such, a policy is the general response to a particular problem or situation.
There are policies for all levels and departments in the organization ranging from major company policies
to minor policies. Major company policies are for all to know i.e., customers, clients, competitors etc.,
whereas minor polices are applicable to insiders and contain minute details of information vital to the
employees of an organisation. But there has to be some basis for divulging information to others.
3. Policy (Contd.)
Policies define the broad parameters within which a manager may function.
The manager may use his/her discretion to interpret and apply a policy.
For example, the decisions taken under a Purchase Policy would be in the nature of manufacturing or
buying decisions. Should a company make or buy its requirements of packages, transport services,
printing of stationery, water and power supply and other items?
How should vendors be selected for procuring supplies?
How many suppliers should a company make purchases from?
What is the criteria for choosing suppliers. All these queries would be addressed by the
Purchase Policy.
4. Procedure
Procedures are routine steps on how to carry out activities.
They detail the exact manner in which any work is to be performed. They are specified in a chronological
order.
For example, there may be a procedure for requisitioning supplies before production.
Procedures are specified steps to be followed in particular circumstances. They are generally
meant for insiders to follow. The sequence of steps or actions to be taken are generally to enforce a
policy and to attain pre-determined objectives.
Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a
broad policy framework.
4. Method
Methods provide the prescribed ways or manner in which a task has to be performed considering
the objective.
It deals with a task comprising one step of a procedure and specifies how this step is to be performed.
The method may vary from task to task.
Selection of proper method saves time, money and effort and increases efficiency.
For imparting training to employees at various level from top management to supervisory, different
methods can be adopted. For example for higher level management orientation programmes, lectures
and seminars can be organised whereas at the supervisory level, on the job training methods and work-
oriented methods are appropriate.
5. Rule
Rules are specific statements that inform what is to be done.
They do not allow for any flexibility or discretion.
It reflects a managerial decision that a certain action must or must not be taken. They are usually the
simplest type of plans because there is no compromise or change unless a policy decision is taken.
6. Programme
Programmes are detailed statements about a project which outlines the objectives, policies, procedures,
rules, tasks, human and physical resources required and the budget to implement any course of action.
Programmes will include the entire gamut of activities as well as the organisation’s policy and how it will
contribute to the overall business plan.
The minutest details are worked out i.e., procedures, rules, budgets, within the broad policy framework.
7. Budget
A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies
future facts and figures.
For example, a sales budget may forecast the sales of different products in each area for a particular
month.
A budget may also be prepared to show the number of workers required in the factory at peak
production times. Since budget represents all items in numbers, it becomes easier to compare actual
figures with expected figures and take corrective action subsequently. Thus, a budget is also a control
device from which deviations can be taken care of. But making a budget involves forecasting, therefore, it
clearly comes under planning. It is a fundamental planning instrument in many organisations.
Types of Planning
Case Study 1
Super Fine Rice Ltd. has the largest share of 55% in the market. The company’s policy is to sell only for
cash. In 2015, for the first time company’s number one position in the industry has been threatened
because other companies started selling rice on credit* also. But the managers of Super Fine Rice Ltd.
continued to rely on it’s previously tried and tested successful plans which didn”t work because the
environment is not static. This led to decline in sales of Super Fine Rice Ltd. The above situation is
indicating two limitations of planning which led to decline in it sales.
Identify these limitations.
Case Study 1
The two limitations of planning which led to decline in it sales are:
• Planning does not guarantee success.
• Planning may not work in dynamic environment.
Case Study 2
Laxmi Chemicals Ltd., a soap manufacturing company, wanted to increase its market share from 30% to
55% in the long-run. A recent report submitted by the Research & Development Department of the
company had predicted a growing trend of herbal and organic products. On the basis of this report, the
company decided to diversify into new variety of soaps with natural ingredients having benefits and
fragrances of Jasmine, Rose, Lavender, Mogra, Lemon Grass, Green Apple, Strawberry etc. The Unique
Selling Proposition (USP) was to promote eco-friendly living in the contemporary life style. The company
decided to allocate 30 crores to achieve the objective.
Identify the type of one of the functions of management mentioned above which will help the company
to acquire dominant position in the market.
Case Study 2
Strategy is the type of plan which will help the company to acquire dominant position in the market.
Case Study 3
Suhasini, a home science graduate from a reputed college, has recently done a cookery course. She
wished to start her own venture with a goal to provide ‘health food’ at reasonable prices. She discussed
her idea with her teacher (mentor) who encouraged her. After analysing various options for starting her
business venture, they short listed the option to sell ready made and ‘ready to make’ vegetable shakes
and sattu milk shakes. Then, they weighed the pros and cons of both the short listed options.
1. Name the function of management being discussed above and give any one of its characteristics.
2. Also briefly discuss any three limitations of the function discussed in the case.
Case Study 3
1. Planning is the function of management which is being discussed above.
Planning involves decision-making: Planning essentially involves application of rational thinking to choose the
best alternative among the various available alternatives in order to achieve the desired goals efficiently and
effectively.
2. The limitations of planning are described below:
1. Planning may not work in a dynamic environment: The business environment is dy¬namic in nature. Every
organisation has to constantly adapt itself to changes in its environment in order to survive and grow. However,
it is difficult to anticipate all the likely future changes in the environment with utmost accuracy. Hence, even
with planning, everything cannot be foreseen.
2. Planning reduces creativity: The top management undertakes planning of various activities whereas the other
members are expected to merely implement these plans. This restricts the creativity of the middle level
managers as they are neither allowed to deviate from plans nor are they permitted to act on their own.
3. Planning involves huge costs: The process of planning involves huge cost in terms of time and money as
detailed planning is based on a series of scientific calculations. Moreover, it may include a number of related
costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary
investigations to find out the viability of the plan. As a result, the expenses on planning may turn out to be
much more than benefits derived from it.
Case Study 4
Two years ago, Madhu completed her degree in food technology. She worked for sometime in a company
that manufactured chutneys, pickles and murabbas. She was not happy in the company and decided to
have her own organic food processing unit for the same. She set the objectives and the targets and
formulated an action plan to achieve the same.
One of her objectives was to earn 10% profit on the amount invested in the first year. It was decided that
raw materials like fruits, vegetables, spices, etc. will be purchased on three months credit from farmers
cultivating only organic crops. She also decided to follow the steps required for marketing of the products
through her own outlets. She appointed Mohan as the Production Manager who decided the exact
manner in which the production activities were to be carried out. Mohan also prepared a statement
showing the number of workers that will be required in the factory throughout the year. Madhu informed
Mohan about her area wise sales target for different products for the forthcoming quarter. While working
on the production table, a penalty of ? 100 per day for not wearing caps, gloves and apron was
announced.
Quoting lines from the above paragraph, identify and explain the different types of plans discussed.
Case Study 4
The different types of plans discussed above are listed below:
1. Objectives: Objectives are the end results of the activities that-an organisation seeks to achieve through its
existence. All other activities within the organisation are directed towards achieving these objectives.
“One of her objectives was to earn 10% profit on the amount invested in the first year.”
2. Policy: A policy is a set of general guidelines that helps in managerial decision making and action.
“It was decided that the raw materials like fruits, vegetables, spices, etc. will be purchased on three months
credit from farmers cultivating only organic crops.”
3. Procedure: A procedure contains a series of specific steps to be performed in a chronological order to carry
out the routine activities.
“She also decided to follow the steps required for marketing of the products through her own outlets.”
“The exact manner in which the production activities are to be carried out.”
4. Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Dont’s that guide the
behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation.
“While working on the production table, a penalty of ? 100 per day for not wearing caps, gloves and aprons
was announced.”
5. Budget: A budget refes to a financial plan that is expressed in numerical terms.
“Mohan also prepared a statement showing the number of workers different products for the forthcoming
quater.”
Case Study 5
Rahul, a worker, is given a target of assembling two computers per day. Due to his habit of doing things
differently, an idea struck him which would not only reduce the assembling time of computers but would
also reduce the cost of production of the computers. Instead of appreciating him, Rahul’s supervisor
ordered him to complete the work as per the methods and techniques decided earlier as nothing could
be changed at that stage. The above paragraph describes one of the limitations of the planning function
of management. Name and explain that limitation.
Case Study 5
The limitation of the planning function of management described in the above paragraph is that
‘planning reduces creativity.’ The top management undertakes planning of various policies and
procedures whereas the other members are expected to merely implement these plans. This restricts the
creativity of the middle level managers as they are neither allowed to deviate from plans, nor permitted
to act on their own.
Case Study 6
Josh Ltd. is a one of the largest two-wheeler manufacturer in India. It has a market share of about 42% in
the two-wheeler category. The company had witnessed almost a 35% drop in the booking as the currency
crunch was prompting people to withhold new purchases due to demonetisation. Therefore, the
production manager of the company had decided to align production to factor in slower sales in the
market.
In context of the above case:
1. Identify and explain the function of management being discussed in the above lines.
2. Which limitations of the function of management as identified in part (a) of the question was the
production manager trying to overcome due to demonetisation?
Case Study 6
1. Planning is the function of management which is being discussed in the above lines.
Planning is deciding in advance what to do, how to do, when to do and who has to do it. Thus, it
involves setting objectives and developing an appropriate course of action to achieve these
objectives.
2. The production manager is trying to overcome the following limitations of planning:
1. Rigidity
2. Planning may not work in dynamic environment
Case Study 8
Flipkart is an e-commerce company founded in the year 2007 by Sachin Bansal and Binny Bansal. The
company is registered in Singapore, but has its headquarters in Bangaluru, India.
The company seeks to increase traffic (more clicks on their products) and boost sales and revenue
through integration of Mobile Apps, Display, Pay Per Click and Search Engine Optimization.
In order to dispel the fear of people related to shopping online, Flipkart was the first company to
implement the popular ‘Cash on Delivery’ facility. All the products sold by the company under a particular
category may have different return/replacement period.
Flipkart allows multiple payment options such as cash on delivery, credit or debit card transactions, net
banking, e-gift voucher and card swipe on delivery. The company operates both ways when an order is
received. The products for which it holds inventory are dispatched by it directly.
For the products they do not store in inventory, they just send the order received by them to the supplier
who ships it. The company plans to spend about Rs 75 crores on e-Commerce advertising in the year
2016. Flipkart reserves the right to terminate your membership and/or refuse to provide you with access
to the website if it is brought to Flipkart’s notice or if it is discovered that you are under the age of 18
years. This is because as per the Indian Contract Act, 1872, the minors, un-discharged insolvents, etc. are
not eligible to use the website.
In context of the above case, identify and explain the different types of plans being used by Flipkart by
quoting lines from the paragraph.
Case Study 8
• The different types of plans being used by Flipkart are listed below:
1. Objectives: Objectives are the end results of the activities that an organisation seeks to achieve
through its existence. All other activities within the organisation are directed towards achieving
these objectives.
“The company seeks to increase traffic (more clicks on their products) and boost sales and revenue
through integration of Mobile Apps, Display, Pay Per Click and Search Engine Optimization.”
2. Strategy: A strategy is a comprehensive plan for achieving the objectives of the organisation. This
comprehensive plan involves:
1. determining long term objectives
2. adopting a particular course of action
3. allocating resources necessary to achieve the objective.
“In order to dispel the fear of people related to shopping online, Flipkart
was the first company to implement the popular ‘Cash On Delivery’
facility.”
Case Study 8
3. Policy: A policy is a siet of general guidelines that help in managerial decision making and action.
“All the products sold by the company under a particular category may have different return/replacement
period.”
4. Method: A method refers to the prescribed ways or manner in which a task has to be performed
considering the objective.
“Flipkart allows multiple payment options such as cash on delivery, credit or debit card transactions, net
banking, e-gift voucher and card swipe on delivery.”
5. Procedure: A procedure contains a series of specific steps to be performed in a chronological order to
carry out the routine activities.
“The company operates both ways when an order is received. The products for which it holds inventory
are dispatched by it directly. For the products they do not store in inventory, they just send the order
received by them to the supplier who ships it.”
Case Study 8
6. Budget: A budget refers to a financial plan that is expressed in -numerical terms.
“The company plans to spend about ? 75 crores on e-commerce advertising in the year 2016.”
7. Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Don’ts that guide
the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its
violation.
“Flipkart reserves the right to terminate your membership and/or refuse to provide you with access to
the Website if it is brought to Flipkart’s notice or if it is discovered that you are under the age of 18 years.
This is because as per the Indian Contract Act, 1872, the minors, un-discharged insolvents etc. are not
eligible to use the Website.”
