PLANNING

MEANING

The first and the foremost function

of management is planning.
Planning is deciding in advance what
should be done.
It is future oriented.

Makes it possible to work

systematically.
DEFINITION OF PLANNING

 According to Koontz and O’Donnell

“Planning is deciding in advance
 What to do? (Aim)

 How to do? (Practice)

 When to do? (Time)

 Who is to do? (Workers)

 It bridges the gap from where we are to

where we want to go”.

 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- MAIN ASPECT

Setting Setting objectives for a given time frame

Selecting Selecting best possible alternatives

Formulatin Formulating various cources of action to achieve them

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IMPORTANCE OF PLANNING
(MERITS OR ADVANTAGES OF
PLANNING)

As the primary function of management, planning is

considered vital in every sphere of activity. The
importance of planning may be stated as following:
1. It focuses on objective
 Once the objective of the business has been fixed, the

next step is to prepare a plan for its effective

accomplishment. The enterprise objective cannot be
realized overnight. It must be achieved gradually over a
certain period.
2. It helps to avoid wastage of resources
 Planning makes it possible to make optimum use of the

available resources, namely, time, money, materials

and machines. This is possible as the employees and
the executives know beforehand what they have to do.
3. It ensures efficiency as well as effectiveness
 Efficiency is ensured by doing right things and
effectiveness is achieved by doing things right. Planning
helps to do not only right things but also things right. Each
department knows what it is supposed to do well in
advance as a result of planning.
4. It reduces risk and uncertainty
 Planning is for future use and future is uncertain. While

planning, future uncertainties are anticipated and

adequate provisions are made to meet or overcome the
same.
5. It provides for co-ordination
 The work done in any organisation is a team-work.

Different departments participate in the process of goal

attainment. Planning makes the responsibilities of each
individual and department very clear. Thus, planning by
explaining the responsibilities of each individual and
department provides scope for co-operation and co-
ordination.
 STEPS IN PLANNING
Step 1: To Step 3: To
Step 2: To
establish determine
establish planning
objectives which alternative course
premises
are verifiable of action

Step 4: To Step 6: To secure

Step 5: To
evaluate the co-operation and
formulate
alternatives and participation of all
derivative plans
select the best employees

Step 7: To
measure and
control the
progress through
follow-up 7
 STEPS IN PLANNING

Step 1: To establish objectives which are verifiable

 Identify goals of the organization

 Internal(Financial position of company, human resources
available, manufacturing facility, company image, etc.)
and external environment(Government rules and
regulations, Socio-economic condition of the society,
competition level, suppliers' reliability) of the
organization has to be studied
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Step 2: To establish planning premises
 Planning premises are assumptions of future market
conditions which become the basis for current planning
process.
 Planning premises usually relate to cost and availability
of raw materials, labour, power, product demands,
population trends, technology growth, government
policies etc.

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Step 3: To determine alternative course of action
 Search and list all possible alternatives in order to be compared and
analytically evaluated.

Step 4: To evaluate the alternatives and select the best

 Select most suitable and best course of action.
 Alternatives have to be compared and evaluated with respect to their
expected contribution to organizational goals.
 Evaluation and selection is often done with the help of quantitative
techniques and operations research.

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Step 5: To formulate derivative plans
 Management has to formulate derivative plans or
secondary plans to support the basic plan.
 Derivative plans are sub plans or departmental plans.

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Step 6: To secure co-operation and participation of all
employees
 Involving employees in planning process enhances their co-
operation and participation.
 Continuous suggestions, complaints and criticisms must be solicited
from the employees.

Step 7: To measure and control the progress through follow-

up
 Continuous evaluation of plans help in identifying recurring
mistakes and avoiding them in future.

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 PLANNING PREMISES
 Planning premises are assumptions of future market
conditions which become the basis for current planning
process.
 Planning premises have to be established even before
planning.
 To establish planning premises means to forecast future
business conditions under which a plan has to operate.
 Planning premises provide bedrock upon which the plans are
based. 13
 CLASSIFICATION OF PLANNING PREMISES

1. Internal and External premises

2. Tangible and Intangible premises

3. Controllable, Semi-controllable and Uncontrollable

premises

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 INTERNAL AND EXTERNAL PREMISES
Internal premises
 Internal premises are those factors which exist within organization
and are generally under the control of management.
 Internal premises include – men, money, machinery, materials and
methods.

External premises
 External premises are those factors which exist outside the purview
of the organization and are generally not under the control of the
management.
 External premises include government policies, general economy of
country, technological trends, climatic conditions etc.

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 TANGIBLE AND INTANGIBLE PREMISES
Tangible premises
 Tangible premises are those which are quantifiable in nature.
 For Example, production quality, quality standards, capital required,
machinery to purchase.
 These info. Is needed for planning and are quantifiable and
measurable in nature.

Intangible premises
 Intangible premises are those which are abstract and non-
quantifiable in nature.
 For Example, company image, brand loyalty, political situation etc.,
are needed for planning but are qualitative in character.

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Types of Plans
FREQUENCY OF USE
 Standing plans
• Rules: reflects the actions or guidelines that do not permit
analysis specifying what is not permissible and what is
permissible
• Policies: guide decision making, general statements of
intent, guide behaviour. for example, no employee can accept
favours from an outside company that is powerful in value to
take undue advantage over
• Procedures: just like rules they help to guide actions
mentioning a series of steps that need to be followed while
performing a specific task
 Single-use plans
• Projects: short-term action plans used to complete various
parts of a program
• Programs: a combination of rules, procedures and policies
necessary to carry out the action
• Budgets: the plans described in numerical terms
FORMS OF PLANNING

1. STARTEGIC PLANNING: involves what the major

goals of the entire organisation will be and what
policies will guide the organisation in its pursuit
of the goals.
2. TACTICAL PLANNING: involves deciding
specifically how the resources of the
organisation will be used to help the
organisation achieve its strategic goals.
PLANNING TIME LINES

Strategic 2 Years 5 Years

Plans

6 months
Tactical 2 years
30 days

Operational 6 months

0 1 2 3 4 5 6
Years
 Strategic Planning Tactical Planning Operational Planning

Long range plans Intermediate range plans Short range plans

Time Frame: 3 or more

Time Frame: 2-3 years Time Frame: one year
years
Responsibility of top Responsibility of middle Responsibility of lower
Management management level management
Concerned with Concerned with
Concerned with
objectives, policies, procedures, projects and
schedules and methods
programmes strategies
Responsible for Responsible for covering
Responsible for overall integrating the work of day-to-day operation and
progress of the company various department of the implementing internal
organization goals
Focus on planning and Focus on directing and
Focus on co-ordination
forecasting controlling

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HOW PLANNING WORKS?

The organization’s

• Purpose • Mission • Values • Directions

Strategic goals Strategic plans

Tactical goals Tactical plans

Operational goals Operational plans

KINDS OF PLANNING (ON THE BASIS OF
TIME)

LONG TERM PLANNING

MEDIUM-TERM PLANNING

SHORT-TERM PLANNING
1. Long-term planning: Long-term planning covers
a long period in future. Eg. 5,10 or 15 years. It takes
into account all long-term economic, social and
technological factors as well as their influence on the
long-term objectives of the organisation, eg.
Development of new product.
2. Medium – term planning : Also known as
intermediate Planning It focuses on a period between
2 to 5 years, such planning is more detailed and
specific than long term planning eg., plans for
purchase of materials, sales etc.
3. Short-term planning: Such planning covers a
short period usually one year. It contains a detailed
outline of certain specific activities to be completed
with a specific time limit, e.g planning for annual
production, sales etc. It may be called activity
planning.
ACCORDING TO THE SCOPE:
PLANNING TYPES

CORPORATE PLANNING

DIVISIONAL PLANNING
[Link] Planning: Corporate planning or
organisational planning is concerned with the
organisation as a whole. It is usually long term and
is done by the top level of Management.

5. Divisional Planning: Divisional planning

determines the scope and activities of each
division, eg., production, sales, finance, personnel
etc..., This plan focus on specific functional areas
of business.
TOOLS – PLANNING STRATEGIES
SWOT ANALYSIS
 SWOT is a state art tool to evaluate potential
strengths, weaknesses, as well as opportunities,
and threats of an organization. This analysis can
show potential business development as well as
possible internal and external business
environmental changes.