Session: 03 POM Planning

According to Koontz, “Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap
from where we are & where we want to be”.
A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is
determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways &
means for accomplishment of predetermined goals. Planning is necessary to ensure proper utilization of human &
nonhuman resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion,
uncertainties, risks, wastages etc.

Planning pervades at all the levels of organization. But the scope of planning is not the same at each level of
organization. Higher the level of organization, the broader the scope of planning will be. Planning may be long
term and short term.

Plans commit individuals, departments, organizations, and the resources of each to specific actions for the future.
Effectively designed organizational goals fit into a hierarchy so that the achievement of goals at low levels permits
the attainment of high-level goals. This process is called a means-ends chain because low-level goals lead to
accomplishment of high-level goals.

Based on their characteristic there can be three major types of plans that can help managers achieve their
organization's goals: strategic, tactical, and operational. Operational plans lead to the achievement of tactical
plans, which in turn lead to the attainment of strategic plans. In addition to these three types of plans, managers
should also develop a contingency plan in case their original plans fail.

A strategic plan is an outline of steps designed with the goals of the entire organization as a whole in mind, rather
than with the goals of specific divisions or departments. Strategic planning begins with an organization's mission.

Strategic plans look ahead over the next two, three, five, or even more years to move the organization from where
it currently is to where it wants to be. Requiring multilevel involvement, these plans demand harmony among all
levels of management within the organization. Top-level management develops the directional objectives for the
entire organization, while lower levels of management develop compatible objectives and plans to achieve them.
Top management's strategic plan for the entire organization becomes the framework and sets dimensions for the
lower level planning.

A tactical plan is concerned with what the lower level units within each division must do, how they must do it, and
who is in charge at each level. Tactics are the means needed to activate a strategy and make it work.

Tactical plans are concerned with shorter time frames and narrower scopes than are strategic plans. These plans
usually span one year or less because they are considered short-term goals. Long-term goals, on the other hand,
can take several years or more to accomplish. Normally, it is the middle manager's responsibility to take the broad
strategic plan and identify specific tactical actions.

An operational plan is one that a manager uses to accomplish his or her job responsibilities. Supervisors, team
leaders, and facilitators develop operational plans to support tactical plans. Operational plans can be a single-use
plan or an ongoing plan.
The specific results expected from departments, work groups, and individuals are the operational goals. These
goals are precise and measurable. “Process 150 sales applications each week” or “Publish 20 books this quarter”
are examples of operational goals.

All the different levels of management should have plans that work together to accomplish the organization's
purpose. The plans of the top-, middle-, and first-level managers of an organization should work together to
achieve the main goal.

All managers plan basically the same way, but the kinds of plans they develop and the amount of time they spend
on planning vary. Here are some examples:

 Top-level managers are concerned with longer time periods and with plans for larger organizational units.
Their planning includes developing the mission for the organizational units, the organizational objective, and
major policy areas. These goals are called strategic goals or objectives.
 Middle-level managers' planning responsibilities center on translating broad objectives of top-level
management into more specific goals for work units. These goals are called tactical goals or objectives.
 First-level managers are involved in day-to-day plans, such as scheduling work hours, deciding what work
will be done and by whom, and developing structures to reach these goals. These goals are called
operational goals or objectives.

If a first-level manager develops a set of plans that contradicts that of a middle-level manager, conflicts will result.
Therefore, all managers must work together when planning their activities and the activities of others.

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Q1: Define Planning and explain its characteristics?

A: It is the basic function of management. Planning is the process of bridging the gap between where we are and
where we want to be in the future. In other words, planning is “looking ahead, relating today’s events with
tomorrow’s possibilities.”
According to Koontz, “Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap
from where we are & where we want to be”.
A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is
determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways &
means for accomplishment of predetermined goals. Planning is necessary to ensure proper utilization of human &
nonhuman resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion,
uncertainties, risks, wastages etc.

Planning pervades at all the levels of organization. But the scope of planning is not the same at each level of
organization. Higher the level of organization, broader the scope of planning. Planning may be long term and short
term.

Characteristics of Planning
1. Planning is goal-oriented.
a. Planning is made to achieve desired objective of business.
b. The goals established should general acceptance otherwise individual efforts & energies will go misguided and
misdirected.
c. Planning identifies the action that would lead to desired goals quickly & economically.
d. It provides sense of direction to various activities. E.g. General Motors is trying to capture the Indian Car Market
by launching new car models suitable to India.
2. Planning is looking ahead.
a. Planning is done for future.
b. It requires peeping in future, analyzing it and predicting it.
c. Thus planning is based on forecasting.
d. A plan is a synthesis of forecast.
e. It is a mental predisposition for things to happen in future.
3. Planning is an intellectual process.
a. Planning is a mental exercise involving creative thinking, sound judgment and imagination.
b. It is not a mere guesswork but a rotational thinking.
c. A manager can prepare sound plans only if he has sound judgment, foresight and imagination.
d. Planning is always based on goals, facts and considered estimates.
4. Planning involves choice & decision making.
a. Planning essentially involves choice among various alternatives.
b. Therefore, if there is only one possible course of action, there is no need planning because there is no choice.
c. Thus, decision making is an integral part of planning.
d. A manager is surrounded by no. of alternatives. He has to pick the best depending upon requirements &
resources of the enterprises.
5. Planning is the primary function of management / Primacy of Planning.
a. Planning lays foundation for other functions of management.
b. It serves as a guide for organizing, staffing, directing and controlling.
c. All the functions of management are performed within the framework of plans laid out.
d. Therefore planning is the basic or fundamental function of management.
6. Planning is a Continuous Process.
a. Planning is a never ending function due to the dynamic business environment.
b. Plans are also prepared for specific period of time and at the end of that period, plans are subjected to
revaluation and review in the light of new requirements and changing conditions.
c. Planning never comes to an end till the enterprise exists issues, problems may keep cropping up and they have
to be tackled by planning effectively.
7. Planning is all Pervasive.
a. It is required at all levels of management and in all departments of enterprise.
b. Of course, the scope of planning may differ from one level to another.
c. The top level may be more concerned about planning the organization as a whole whereas the middle level may
be more specific in departmental plans and the lower level plans implementation of the same.
8. Planning is designed for efficiency.
a. Planning leads to accomplishment of objectives at the minimum possible cost.
b. It avoids wastage of resources and ensures adequate and optimum utilization of resources.
c. A plan is worthless or useless if it does not value the cost incurred on it.
d. Therefore planning must lead to saving of time, effort and money.
e. Planning leads to proper utilization of men, money, materials, methods and machines.
9. Planning is Flexible.
a. Planning is done for the future.
b. Since future is unpredictable, planning must provide enough room to cope with the changes in customer’s
demand, competition, govt. policies etc.
c. Under changed circumstances, the original plan of action must be revised and updated to male it more practical.

Q2: Explain briefly the steps involved in planning process

A: Steps in Planning Function

Planning function of management involves following steps:-
1. Establishment of objectives
a. Planning requires a systematic approach.
b. Planning starts with the setting of goals and objectives to be achieved.
c. Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts.
d. Moreover objectives focus the attention of managers on the end results to be achieved.
e. As a matter of fact, objectives provide nucleus to the planning process.
Therefore, objectives should be stated in a clear, precise and unambiguous language. Otherwise the activities
undertaken are bound to be ineffective.
f. As far as possible, objectives should be stated in quantitative terms. For example, Number of men is working,
wages given, units produced, etc. But such an objective cannot be stated in quantitative terms like performance of
quality control manager, effectiveness of personnel manager.
g. Such goals should be specified in qualitative terms.
h. Hence objectives should be practical, acceptable, workable and achievable.
2. Establishment of Planning Premises
a. Planning premises are the assumptions about the lively shape of events in future.
b. They serve as a basis of planning.
c. Establishment of planning premises is concerned with determining where one tends to deviate from the actual
plans and causes of such deviations.
d. It is to find out what obstacles are there in the way of business during the course of operations.
e. Establishment of planning premises is concerned to take such steps that avoid these obstacles to a great extent.
f. Planning premises may be internal or external. Internal includes capital investment policy, management labour
relations, philosophy of management, etc. Whereas external includes socio- economic, political and economical
changes.
g. Internal premises are controllable whereas external are non- controllable.
3. Choice of alternative course of action
a. When forecast are available and premises are established, a number of alternative course of actions have to be
considered.
b. For this purpose, each and every alternative will be evaluated by weighing its pros and cons in the light of
resources available and requirements of the organization.
c. The merits, demerits as well as the consequences of each alternative must be examined before the choice is
being made.
d. After objective and scientific evaluation, the best alternative is chosen.
e. The planners should take help of various quantitative techniques to judge the stability of an alternative.
4. Formulation of derivative plans
a. Derivative plans are the sub plans or secondary plans which help in the achievement of main plan.
b. Secondary plans will flow from the basic plan. These are meant to support and expedite the achievement of
basic plans.
c. These detail plans include policies, procedures, rules, programmes, budgets, schedules, etc. For example, if
profit maximization is the main aim of the enterprise, derivative plans will include sales maximization, production
maximization, and cost minimization.
d. Derivative plans indicate time schedule and sequence of accomplishing various tasks.
5. Securing Co-operation
a. After the plans have been determined, it is necessary rather advisable to take subordinates or those who have
to implement these plans into confidence.
b. The purposes behind taking them into confidence are :-
a. Subordinates may feel motivated since they are involved in decision making process.
b. The organization may be able to get valuable suggestions and improvement in formulation as well as
implementation of plans.
c. Also the employees will be more interested in the execution of these plans.
6. Follow up/Appraisal of plans
a. After choosing a particular course of action, it is put into action.
b. After the selected plan is implemented, it is important to appraise its effectiveness.
c. This is done on the basis of feedback or information received from departments or persons concerned.
d. This enables the management to correct deviations or modify the plan.
e. This step establishes a link between planning and controlling function.
f. The follow up must go side by side the implementation of plans so that in the light of observations made, future
plans can be made more realistic.

Q3: Write a note on the various types of plans used in planning?