UNIT-4

PLANNING

Planning:
 Planning is arrangement of objectives and future course of action to be taken to achieve defined goals
effectively. It includes what is to be done, how is to be done, when is to be done, and by whom is to be done

Characteristics of planning:
1. Primary function: Planning is the initial function of management. all the other managerial functions depend on
planning.
2. Focus on goal: Planning helps to focus on organizational goals by defining clear line of action and
responsibility of all levels of management.
3. Future oriented: It decides future course of action.
4. Continuous activity: - Planning is a continuous process up to the existence of organization
5. Minimize uncertainty: It helps to minimize uncertainty by forecasting and anticipating future uncertainties.
6. Organizational effectiveness: Planning helps to eliminate wastages and utilize the available resources in a
proper way.
Types of plans:
On the basis of hierarchy:
1. Corporate plan
 It is a long-term plan prepared by top level management after environmental scanning.
 It defines the objectives of the organization and strategy to achieve defined objectives.
 There is high degree of uncertainty in such plans.
2. Tactical plan
 The middle level management prepares tactical plan.
 It is the subdivision of corporate plan.
 It is prepared to perform divisional activities like production, finance, marketing, personnel and others.
3. Operational plan
 Lower-level management prepares this kind of plan.
 It is a specific action plan for each activity of the unit.
 It involves a schedule of each unit of work to implement a tactical plan.
 It concentrates on the best use of resources.
On the based-on use:
4. Single use plan
 Single use plan is prepared for specific purpose in non-programmed situation.
 It is prepared for non-repetitive activities.
 Examples: programs and budget.
5. Standing use plan
 This plan is prepared for programmed decision-making situations in an organization.
 This plan gives broad guidelines for repetitive activities.
 The examples are objectives, rules, policies etc.

Based on flexibility:
6. Specific plan
 It is developed for a particular department or unit about the activities to be performed. All clearly stated plans
are specific plans.
7. Flexible plan
 It is changeable, dynamic in nature
  On the basis of time and condition based on time and situation.

Purpose of planning:

1. Facilitates Accomplishment of Objectives: The aim of planning is to facilitate the attainment of objectives. It
focuses its attention on the objectives of the organization. It states the objectives of each department in the
organization and of the enterprise as a whole. This helps personnel to see the enterprise in its entirety and see how
their actions contribute to its ultimate goals. Planning forces the managers to consider the future and revise its
plans if necessary for achieving the objectives.
2. Ensures Economy in Operations: Since planning emphasizes efficient operation and consistency, it minimizes
costs and gains economical operation. Coordinated group effort, even flow of work and deliberate decisions is due
to planning.
3. Precedes Control: Control involves those activities which are carried out to force events to conform to plans.
Plans serves as standards of performance. Control seeks to compare actual performance with set standards. So,
control cannot be exercised without plans.
4. Provides for Future Contingency: Planning is required because future is uncertain. Planning enables the
management to look into the future and discover suitable alternative course of action. Planning helps the
management to have a clear-cut idea about the future and to frame a suitable programme for action. Even when
the future is highly certain, planning is essential to decide the best course of action.
5. Facilitates Optimum Utilization of Resources: Various resources that are relevant to an organization namely,
funds, physical resources, manpower, technological know-how, etc., are by and large inadequate due to demand
from competing organizations and have alternative uses. This necessitates the organization to make the best
possible use of resources. Planning facilitates optimum use of available resources.
6. Pr-requisites for other Managerial Functions: The purposes of planning is to provide a conceptual and concrete
basis for initiating and undertaking other managerial functions like staffing, organizing, directing and control.
Planning is a primary function and it goes a long way to improve efficiency of other functions of management and
makes the management tasks more effective
7. All Pervasive Function: Planning is a function of managers at all levels though the scope, nature and extent of
planning differs from one enterprise to another and from one level to another. Irrespective of the level and area of
his operation, each and every manager has to perform this function. Planning at the top level will be fundamental,
broad and far-reaching. Managers at other levels may plan about their departmental activities for a short period.

Contingency factors in planning

A. Manager’s Level in the organization

 Strategic plans at higher level
 Operational plans at lower level
B. Degree of environmental uncertainty
 Stable environment: Specific plans
 Dynamic environment: Specific but flexible plans
C. Length of future commitments
 Current plans affecting future commitments must be sufficiently long-term to meet the commitments
A. Managers' level in the organization
Operational planning usually dominates the planning activities of lower-level managers. A managers move up
through the levels of the organization, their planning becomes more strategy oriented.
B. Degree of environmental uncertainty
The greater the environmental uncertainty, the more plans should be directional an emphasis placed on the
short term.
1. When uncertainty is high, plans should be specific, but flexible.
2. Managers must be prepared to rework and amend plans, or even to abandon their plans
C. Time frame of plans
 1. Commitment concept means that plans should extend far enough to meet those commitments made when that
the plans were developed.
2. Planning for too long or for too short a time period is inefficient and ineffective

Objectives of Planning
Planning in organization serve to realize the following objectives:
1. To reduces uncertainty
2. To bring co-operation and co-ordination in the organization
3. To bring economy in operations
4. Helps to anticipate unpredictable contingencies
5. To achieve the pre-determined goals
6. To reduce competition.

Process of Planning
1. Analyze opportunities
2. Setting goals
3. Determination of premises
4. Determination of alternatives
5. Evaluation of alternatives
6. Selecting a best course of action
7. Formulation of derivative plans
8. Implementation of plan
9. Reviewing the planning process

1. Analyze opportunities
 This is the pre step of planning and essential to make a successful plan.
 In this step SWOT analysis is done from the environment.
 Strength and weaknesses are from internal environment and threats and opportunities are from external
environment.
2. Setting goals
 This is the first and actual starting point of planning.
 Goals must be specific, clear and practical.
 Goals must be set by considering the organizational resources and opportunities.
3. Determination of premises
 Premises are the assumptions of the future based on which plan is formulated.
 Premises may be internal or external and tangible or intangible.
 Examples are capital investment, cost per unit, goodwill, motivation etc.
4. Determination of alternatives
 Managers must determine various courses of action for the achievement of objectives.
 To get the best course of action, different alternatives are identified.
 The management must develop the alternatives through the support of experienced and intellectual experts.
5. Evaluation of alternatives
 This is a logical step to evaluate each alternative from cost and benefit point of view.
 Management must apply broad based analytical approach for such evaluation.
 Alternatives are studied in terms of factors like risk, responsibility, resources, technology etc.
6. Selecting best course of action
 After evaluating, manager must select one best course of action.
 For this manager must consider experience, present situation and future contingencies.
7. Formulation of derivative plans
 Derivative plans are formulated to help the better implementation of basic plan.
 Derivative plans are formulated for each department of organization.
8. Implementation of plan
 This step brings all the paper work in action.
 For proper implementation, manager takes certain steps like communication with employees, provide guidance,
arrangement of resources etc.
9. Reviewing the planning process
 Managers take this step to evaluate the actual performance and find out if there are any deviations.
 It helps to take corrective measures on time.
 It also helps to adapt with the environment.

The Foundation of Planning

• Planning is an attempt to manage the future: what is to be accomplished and how. In essence, "planning is the
process of determining objectives and assessing the way these objectives can best be achieved." This process
determines where the organization should be going, why, and how.
1. We can proper define planning: As a process that involves defining the organization’s goals, establishing an
overall strategy for achieving those goals.
2. Why plan?: Planning is a way to anticipate and offset change. Planning reduces contradiction, inconsistency,
overlapping and wasteful activities
3. Relation between planning and performance: On the basis of research, we draw following conclusion. In high
profit, high return on assets and other positive financial results. Quality of planning process and implementation
contributes to high performance that does the extent of planning
4. Elements of planning: Goals desired outcomes for individuals, groups or entire organizational plan. Plans are
documents that outline how goals are going to be met
5. Frequency of use:
single use plan: A onetime specifically designed to meet the needs of a unique situation. for e.g., programs, projects
etc.
Standing plans: On going plans that provide guidance for activities performed repeatedly. for e.g., rules, policies etc.
6. On the basis of time period: With reference to time frame plans are divided into 3 categories i.e., short term
plans, intermediate term plans, long term plans.

What is the real objective?

Objective reality means that something is actual (so it exists) independent of the mind. ... It is actually hard to state a
purely objective reality example, as one needs to describe it in concepts that are interpreted by the mind.

Stated Objectives:
Stated objective are what the company states to the public as the official mission. Stated objectives are expressed
objectives, found in an organization's yearly report, sanction, advertising declarations, and in public explanations
made by managers. ... The two targets and objectives should be quantifiable (measure as a quantity) and explicit
(clear).

Multiplicity of Objectives
At every level in the hierarchy of objectives, goals are like to be multiple. But to many objectives tend to dilute
the needed for their accomplishment and way unduly highlight minor objectives to the determent of major
objectives it is true that minor goals should not be given the status of important objectives. It would hardly be
useful for an upper-level manager to occupy his or her time for attaining task like maintaining correspondence or
attending routine meetings.
Management by Objectives (MBO) is now practiced around the world. Yet despite its wide applications, it is not
away clear what is meant by MBO. Some still think of it as an appraisal tool; others see it as a motivational
technique; still other considers MBO is a planning and control device. It could be called as a comprehensive
managerial system that integrates many key managerial activities in systematic manner and that is consciously
directed towards the effective and efficient achievement of organizational and individual objective
Benefits of Management by objectives
 Improvement
  Clear clarifications of organizational roles and structures
 Encouragement does personal commitment.
 Development of effective controls
Weakness of Management by objectives
 Failure in communicating philosophy to lower levels.
 Failure in giving guidelines to goal setters.
 Difficulty in setting goals.
 Emphasis on short term goals.
 Danger of inflexibility.

Traditional objectives setting

 In traditional goal setting, goals set by top managers flow down through the organization and become sub
goals for each organizational area.
 This traditional perspective assumes that top managers know what’s best because they see the “big picture”.
And the goals passed down to each succeeding level guide individual employees as they work to achieve those
assigned goals.