MEANING OF PLANNING

Planning is the process of deciding in advance what to do and how to do it. It is a fundamental
managerial function that involves formulating ideas for tasks, setting objectives, and developing
courses of action to achieve those objectives. Planning provides direction, reduces uncertainty,
minimizes overlapping activities, promotes innovative ideas, facilitates decision-making, and
establishes standards for control.

IMPORTANCE OF PLANNING

1. Provides Directions: Planning offers clear objectives and directions for actions, ensuring
coordination within an organization.

2. Reduces Risks of Uncertainty: Planning helps anticipate changes and uncertainties, allowing
proactive responses.

3. Reduces Overlapping and Wasteful Activities: It minimizes confusion and redundant tasks,
leading to efficient operations.

4. Promotes Innovative Ideas: Planning fosters creativity and innovation by guiding future
actions.

5. Facilitates Decision Making: It involves evaluating alternatives and selecting the most viable
course of action.

6. Establishes Standards for Controlling: Planning sets goals and standards for performance
evaluation and control.

NATURE OF PLANNING:

1. Focus on Achieving Objectives: Planning is purposeful and aims to achieve predetermined

organizational goals.

2. Primary Function of Management: It precedes other managerial functions and provides the
foundation for them.

3. Pervasive: Planning is required at all levels and departments within an organization.

4. Continuous: Plans are developed for specific time frames, and the process is ongoing.

5. Futuristic: Planning looks ahead to meet future events effectively.

6. Involves Decision Making: It requires choosing from various alternatives based on
forecasting.

7. Mental Exercise: Planning involves intellectual activity and systematic thinking.

LIMITATIONS OF PLANNING:

1. Leads to Rigidity: Overly defined plans can hinder adaptability to changing circumstances.

2. May Not Work in a Dynamic Environment: Rapid changes in the environment can disrupt
plans.

3. Reduces Creativity: Excessive planning can stifle creativity and innovation.

4. Involves Costs: Planning incurs costs, including time, money, and resources.

5. Time-Consuming: Planning can be time-consuming, leaving less time for implementation.

6. Does Not Guarantee Success: Success depends on proper implementation of plans.

PLANNING PROCESS:

1. Setting Objectives: Clear objectives are established for the organization and its units.

2. Developing Premises: Planning relies on assumptions or premises about the future.

3. Identifying Alternative Courses of Action: Various options for achieving objectives are
identified.

4. Evaluating Alternative Courses: Pros and cons of each alternative are weighed.

5. Selecting an Alternative: The best course of action is chosen.

6. Implementing the Plan: The chosen plan is put into action, often involving organizing
resources.

7. Follow-Up Action: Monitoring ensures that plans are executed as intended.

Types of Plans:

Plans are crucial for organizations to make informed decisions and carry out projects.
Plans can be categorized into two main types: single-use plans and standing plans.
Examples of single-use plans include budgets, programs, and specific projects, while standing
plans encompass policies, procedures, methods, and rules.
Strategic plans are centered on the overall objectives of the organization and consist of mission
statements, objectives or goals, and strategies.
Tactical plans deal with the actions required by lower-level units within each division to
implement a strategy.
Operational plans outline the specific outcomes expected from departments, work groups, and
individuals. They can be either single-use or standing plans.
Single-use plans are used for activities that do not recur, such as programs and budgets, while
standing plans are typically formulated once and maintain their relevance over time, such as
policies, procedures, and rules.

FORECASTING METHODS:

1. Field Survey: Collects information from people concerning various aspects.

2. Opinion Poll: Assesses the opinions of knowledgeable individuals, experts, or

representatives.

3. Business Barometers: Uses index numbers to measure economic trends and fluctuations.

4. Time Series Analysis: Decomposes historical series into components to project future trends.

5. Extrapolation: Projects future trends based on past behavior of a series.

6. Regression Analysis: Reveals relationships between interrelated variables.

7. Input-Output Analysis: Forecasts output based on input and vice versa.

8. Econometric Models: Utilizes mathematical models to express relationships among variables.

Barriers to Effective Planning:

1. Difficulty of Accurate Premising: Planning relies on premises, which can be challenging to

establish due to the dynamic nature of the future.

2. Problems of Rapid Change: Rapid environmental changes complicate long-term planning.

3. Internal Inflexibilities: Organizational policies, procedures, and capital investments can limit
planning flexibility.

4. External Inflexibilities: Factors like political climate, trade unions, and technological changes
impose constraints on planning.

5. Time and Cost Factors: Planning is time-consuming and can be costly if not limited.
6. Failure of People in Planning: People involved in planning can fail due to various reasons,
including lack of commitment, unclear objectives, and reluctance to embrace change.