Planning

Planning involves setting objectives and developing appropriate course of action to achieve those
objectives.

Features of Planning
a. Planning focuses on achieving objectives as it is purposeful activity that focuses on predetermined
specific goals
b. Planning is a primary function of management as it lays down the base for the other functions of
management
c. Planning is pervasive as it is necessary in every level of management and also in every department
of the organisation
d. Planning is continuous as after the plans for a specified period are achieved, new plans are drawn for
the future
e. Planning is futuristic as it involves preparing the organization to meet the future events effectively
and efficiently
f. Planning involves decision making as it involves selection of best goals and also selection of best
alternative course of action to meet the goals
g. Planning is a mental exercise as it requires the manager to have adequate foresight, intelligence and
sound judgment

Importance of Planning
a. Planning provides direction every employee is clear about the goals and how to achieve them in an
efficient and effective manner
b. Planning reduces the risk of uncertainty as it involves forecasting the changes or uncertain event in
the future
c. Planning reduces overlapping and wasteful activities as it coordinates activities between different
departments and individuals and also eliminates wasteful activities
d. Planning promotes innovative ideas as it explores new ideas
e. Planning facilitates decision making as it involves selection of best goals and also selection of best
alternative course of action to meet the goals
f. Planning establishes standards for controlling as it involves setting of standards (goals) on the basis
of which actual performance is measured, compared and deviations corrected

Internal Limitations of Planning

a. Planning leads to rigidity when the predetermined plans are followed even when the circumstances
may have changed
b. Planning may not work in a dynamic environment as the forces affecting constantly change and the
organisation may not be able to predict each change accurately
c. Planning reduces creativity as the lower level managers are required to follow the plans set by the
top management without any deviation
d. Planning involves huge costs in terms of time and money, as a they are checked and rechecked for
accuracy with the help of professional experts
e. Planning is a time consuming activity and the opportunity may be lost by the time the plans are
ready for implementation
f. Planning does not guarantee success especially if the management is laid back in its execution
simply because the plans had worked the previous time

External Limitations of Planning

Sometimes plans fail due to the following limitations on which the management has no control :
a. Natural Calamity such as earthquake, tsunami, floods may result in failure of plans
b. Change in competitor’s policy that was not predicted on time by the manager may lead to
the failure of plans
c. Change in taste/fashion/trend in the market that is against the expectations of the planners
may lead to failure of plans
 d. Change in technologies may also result in failure of plans
e. Change in government or economic policies may lead to failure of plans if the changes are
not anticipated

Process of Planning
i. Setting objectives involves setting specific, measurable and time bound targets for each department
and employees
ii. Developing premises involves making certain assumptions about the future about demand for the
product, policy change, interest rates tax rates etc
iii. Identifying alternative courses of actions that could be taken up to meet the targets
iv. Evaluating alternative courses by measuring the likely positive and negative points including risk-
return trade off, EPS, dividend, interest etc
v. Selecting an alternative by adopting the best plan that is most feasible, profitable and has least
negative outcomes
vi. Implementing the plan involves other managerial functions by organizing machine, material, labour
etc
vii. Follow up action involves monitoring the actual performance as per the plan or standards set

Types of Plans
 Single use plan is developed for a one-time event or project and cannot be repeated in future. For
Example : Budgets and Programmes
 Standing Plan is used for activities that occur regularly over a period of time and helps to improve
efficiency in routine decision making. For example: Policy, Rules, Method, Procedure
 Strategies and Objectives are neither single use nor standing plans

Types of Plans on the basis of what the plan seeks to achieve:

1. Objective
 Objectives are ends towards all activities are directed.
 Objectives are the desired future position that the management would like to reach.
 Objectives may be quantitative or qualitative. They serve as a guide for overall business planning.

2. Strategy
 Strategy is a comprehensive plan drafted by the top management keeping in mind the business
environment.
 It is formulated by keeping n mind the changes in the changes in the economic, political, social, legal
and technological environment.
 It will also refer to future decisions defining the organisations direction and scope in the long run.
This comprehensive plan will include three dimensions:
a. determining long term objectives,
b. adopting a particular course of action, and
c. allocating resources necessary to achieve the objective.
3. Policy
 Policy is an organisation’s general response to a particular problem to address it.
 Policies are general statements that guide thinking or channelise energies towards a particular
direction.
 They are guides to managerial action and decisions in the implementation of strategy.
 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.

4. Rules
 Rules are code of conduct or general instructions to create a disciplined environment in the
organization.
 They are specific statements that tell what is to be done.
5. Procedure
 Procedure is a sequence of steps to be followed in an exact manner to accomplish an activity.
 They detail the exact manner or the chronological order in which any work is to be performed.
 The sequences of steps or actions to be taken are generally to enforce a policy and to attain
predetermined objectives.
 Policies and procedures are interlinked with each other.

6. Method
 Method is a systematic way of doing a routine or repetitive job.
 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.

7. Budget
 Budget is the statement of expected result expressed in numeric terms.
 It is a plan which quantifies future facts and figures.
 Making a budget involves forecasting, therefore, it comes under planning.
 A budget is also a control device from which deviations can be taken care of.

8. Programme
 Programme is a combination of other plans like objectives, policies, rules procedures
etc that are aimed at accomplishment of a particular project