The Role of Planning As A Fundamental Management Function For Achieving Effectiveness in Business Organizations
The Role of Planning As A Fundamental Management Function For Achieving Effectiveness in Business Organizations
The Role of Planning As A Fundamental Management Function For Achieving Effectiveness in Business Organizations
Katerina Kareska
Faculty of Economics, Goce Delcev Univesity - Stip
E-mail: katekareska@gmail.com
Abstract
The main aim of the paper is to investigate the process of planning as one of the fundamental
management functions and tools in more details. Moreover, the paper makes an overview of all
advantages of implementing the well planning system for achieving best companies’ results.
Planning is a process of setting companies’ goals, making assumptions about the business
environment in which those goals should be archived and making a choice about the actions,
means and ways in order to achieve the goals. Actually, planning is a system activity that
determines when, how and who will perform a separate work activity. In fact, planning is a
process that managers apply to identify and choose appropriate goals and directions for action
for the organization. On the other hand, the plan is a list of steps and procedures for using time
and resources to achieve the specified goals. The fact that planning system has significant
advantages for organizations indicate that each business organization should include planning
at all levels of management, with the aim of making a quality strategy. Accordingly, there is:
operational planning, tactical planning, strategic planning and contingent (multivariate) planning.
It’s no matter what king of planning the company is trying to implement, it’s not an easy job.
Hence, the effectiveness in making a good planning system as a step towards creating the best
corporate strategy is essential for achieving the best business results. In fact, the planning
system minimizes uncertainty, facilitates coordination, improves moral principles, increases
effectiveness and efficiency, facilitates control
The management of each organization has the task of using the available
resources in the best possible way to meet the set goals, and thus greater efficiency
and effectiveness.
Here is the question: how does management manage to do it? The answer is
given through the basic managerial functions:1 planning, organizing, running and
controlling. In this paper, the primary function of management-planning will be
elaborated. Planning determines the vision, mission and goals of the organization,
formulates strategies for achieving goals, develops plans, implements them, and ectr.
Efficiency2, in fact, is a measure of how well or how productively the resources are used
to achieve the goals, while effectiveness3 is a measure of the appropriateness of the
objectives that managers choose to pursue for the organization and the extent to which
it accomplishes those goals.
Planning is the primary function of management. It is often thought that planning is the
first among the equal functions of management. Each management process begins with
planning that can be defined as a process of setting future goals, assumptions about the
environment in which to be realized and choosing the directions of action, the means
and ways of achieving the goals.4 It is a system activity that determines when, how and
who will perform a separate work activity. In fact, planning is a process that managers
apply to identify and choose appropriate goals and directions for action for the
organization.5 On the other hand, the plan is a list of steps and procedures for using
1
R. E. Griffin, R. J. Ebert, „Business, Prentice Hall, Englewood Cliffs“, New Jersy, 1989, p. 103
2
Gareth R. Jones, Jenifer M. George, “Современ менаџмент”, Глобал комуникации, 2008, стр.6-7
3
Ibid
4
Bahtijarevic- Siber, F., „Organizaciska teorija“, Informator, Zagreb, 1991, str. 231
5
A. Chandler, „Strategy and Structure: Chapters in the history of the American Enterprise“ (Cambridge,
MA: MIT Press, 1962)
More specifically, the planning process is shown through its phases, which are
explained below in the text
6
Шуклев, Бобек и Дракулевски, Љубомир, „Стратегиски менаџмент“, Економски факултет, второ,
изменето и проширено издание, Скопје, 2001, стр.28-29
7
Ibid, p.10
8
Gareth R. Jones, Jenifer M. George, “Современ менаџмент”, оп. цит., стр.297-300
1. A systematic approach incorporating itself:
• setting objectives;
• making efforts to undertake activities;
• focusing management on achieving goals;
• The objectives set should be clear, unambiguous, specific and precise so that
the activities can be effective;
• setting quantitative performance for the perpetrators of the activities; And
• setting qualitative performance of the performers of the activities; A
• The goals set should be acceptable, practicable and feasible;
2. Choice of alternative and course of action, which includes:
• availability of many alternatives;
• evaluating alternatives through their strengths and weaknesses;
• objective and scientific consideration of alternatives;
• Choosing the right alternative;
Types of planning
The fact that planning influences the development and operation of organizations
is undeniable. Each organization should include planning at all levels of management,
with the aim of making a quality strategy. Accordingly, there is:
- operational planning,
- tactical planning,
- strategic planning and
- contingent (multivariate) planning.
Advantages of planning
Each management activity starts with planning. Planning allows management to create
and create appropriate plans, to select the best alternative strategies that will
correspond with the goals set. That is why the following advantages are achieved by
planning:
9
Шуклев, Бобек, „Менаџмент на малиот бизнис“, четврто издание, Економски факултет,
Скопје,2006, стр.190
10 th
Donald f. Kuratko, Richard M. Hodgetts, „erpreneurship- A contemporary approach, 5 ed., Harcourt
College Publishers, Fort Worth, 2001, p.468
11
Masic, Branislav i dr., „Menadzment- principi, koncepti I procesi“,Univerzitet Singidunum, cetvrto
izmenjeno i dopunjeno izdanje, Beograd, 2010, str. 131-132
1. It is the first management function that is aimed at achieving the set goals,
- starts setting goals,
- emphasizes the need for various activities,
- Defines the goals precisely and clearly,
- focus employees on achieving goals,
- is a guide to any organization,
- provides a principle of rationality in the organization;
2. Planning minimizes uncertainty
- it eliminates the uncertainty, ie it reduces it to a minimum,
- minimize the risks in the operation,
- predict future events;
3. Planning facilitates coordination and
- is the basis for defining the organization's general plans,
- directs all activities towards the general goal,
- increases integration between sectors and departments;
4. Planning improves moral principles.
- Creates a working atmosphere and discipline in the organization
- Employees align their behavior with organizational culture,
- Motivates employees for the finest performance of tasks;
5. Planning increases effectiveness and efficiency, respectively
- enables effective and efficient accomplishment of tasks,
- provides optimal use of resources;
6. Planning facilitates control and
- provides a basis for control,
- can not imagine an effective control system without the existence of meaningful
plans,
- provides predetermined goals that are compared with actual performance,
- Planning and control are in an unbreakable correlation;
7. Planning provides a competitive advantadge and
- allows changing the methods of work, but also variations to a certain extent,
which provide a competitive advantage,
- it is followed by forecasting that enables the assessment of competitive
activities and facing future challenges,
- leads to the best use of resources, providing better quality, and imply greater
competitiveness in relation to other organizations;
8. Planning encourages innovation, so
- management has the opportunity to suggest ways to improve performance,
- is the basis for making decisions that involve creativity, all of which leads to
innovation.
Disadvantages of planning
Like any other function and planning, of course, there are some shortcomings,
among which are:
1. rigidity that
- involves prior determination of policies, procedures and programs and their
consistency,
- there is no room for individual freedom,
- does not allow individual experimentation;
2. inappropriate planning
- it can happen when the plans have individual goals, and not to cover the goals
of the organization,
- plans may not correspond to the set general objectives,
- there may be bias in the implementation of individual plans;
3. Time, which means that
- Sometimes it takes a long time to gather certain information for preparation of
planning,
- in certain situations, the organization should make quick decisions and
implement plans that may not correspond to the particular situation;
4. Probability, i.e.
- planning is based on forecasting,
- estimates can be wrong due to the uncertainty of the future,
- any change in the factors from the environment causes changes in the plans,
- plans do not always reflect real situations,
- when implementing the plans, there should always be a certain reserve;
5. Certainty that suggests that
- can cause a false sense of security for the future,
- the changes of the environment should always be monitored,
- untimely shares;
6. Resources, i.e.
- collecting, analyzing and evaluating individual information sometimes takes a lot
of time, effort and money ... (resources).
Summary