UNIT 4 - PLANNING

Meaning/Concept-

Planning is deciding in advance what to do, how to do when to do, and who is to do it. Planning bridges
the gap from where we are to where we want to go. lt is one of the basic managerial functions.

Concept:
Planning involves setting objectives and developing appropriate courses of action to achieve these
objectives. Thus, it is closely connected with creativity and innovation.

Importance of Planning:-

1. Planning provides directions :

 By stating in advance how work is to be done planning provides direction for action.
 If there was no planning, employees would be working in different directions.
 The organisation would not be able to achieve its goals efficiently.
2. Planning reduces the risks of uncertainty :-
 Planning is an activity which enables a manager to look ahead and anticipate changes.
 It then considers the impact of change and develops appropriate responses.
3. Planning reduces overlapping and wasteful activities :-
 Planning serves as the basis of coordinating the activities and efforts of different
departments and individuals.
 This helps to minimise useless and redundant activities.
4. Planning promotes innovative ideas :
 Planning is the first function of management.
 Managers get the opportunity to develop new ideas and new ideas can take the shape
of concrete plans.
5. Planning facilitates decision making :
 Under planning targets are laid down.
 The manager has to evaluate each alternative and select the best alternative.
6. Planning establishes standards for controlling :-
 Planning provides the standards against which the actual performance can be measured
and evaluated.
 Control is blind without planning.
 Thus planning provides the basis for control.

Features of Planning:

1. Planning focuses on achieving objectives:

 Planning is required to achieve the organisational objectives.
 If performance is not moving in that direction then changes have to be made in the
plans.
2. Planning is a primary function of management:
  It is a primary function and provides basis for all other functions depend on planning.
 It is also called Primacy of Planning.
 It precedes all managerial functions i.e. planning, organising, directing, staffing, and
controlling.
3. Planning is pervasive:
 It is required at all levels in every type of an organisation.
 Top level management makes strategic plans.
 Middle and lower level management make sub plans for the implementation of main
plans
4. Planning is continuous process:
 It is required as long as the organization survives.
 The changes have to be incorporated in the business so as to produce goods as per
customer’s demand.
5. Planning is futuristic:
 It means looking ahead into the future and making provisions to tackle future events.
 Managers consider situations and events have occurred in the past and might occur in
the future inside and outside the organisation before making plans for the future.
 It is also called Forward Looking.
6. Planning involves decision making:
 It is a decision-making or a choosing process.
 It involves choice among various alternative course of action.
7. Planning is a mental exercise:
 Planning involves imagination, foresight and thinking.
 The objectives and course of action are decided after a lot of thinking and groundwork.
 It is an intellectual process.

Limitations of Planning:-

(A) Internal Limitations:

1. Planning leads to rigidity :

 Planning discourages individual initiative & creativity.
 The managers do not make changes according to changing business environment.
 They stop taking or giving suggestions and new ideas.
 Thus detailed planning may create a rigid framework in the organisation.

2. Planning may not work in dynamic environment :

 Planning is based on anticipation of future happenings.
 Future is uncertain and dynamic
 It is not always possible to accurately assess future trends in the environment.
3. Planning reduces creativity:
 Planning is done by top management.
 Middle and lower management are neither allowed to deviate from plans nor permitted
to act on their own
 They only carry out orders.
  Thus initiative and creativity in them gets lost.
4. Planning involves huge costs :
 When plans are drawn up, huge costs are involved in their formulation.
 Expenses on Board meetings, discussions with professional experts and preliminary
investigations to find out the feasibility of the plan involve lots of costs and time
5. Planning is a time consuming process:
 Planning require collection of information, analysis and interpretation which require lot
of time.
 Sometimes plans to be drawn up take so much of time that there is not much time left
for their implementation.
6. Planning does not guarantee success :
 The success of an enterprise is possible only when plans are properly drawn and
implemented.
 Sometimes managers depend on previously tried successful plans, but it is not always
true that a plan which has worked before will work effectively again.

(B) External limitations of Planning:

7. Natural calamities:
 These are beyond the control of managers and can cause plans to fail.
 E.g. flood, earthquake, famine etc
8. Changes in government policies:
 These influence the business activities significantly.
 E.g. changes in industrial policy, bank rates etc
9. Strategies of competitors:
 Change in competitors strategies lead plans to fail
 E.g. introducing new model of mobile phone by Samsung may lead to failure of plan of
introducing a new model of phone by nokia
10. Technological changes:
 New technology leads to high cost of production, more competition etc
 Plans fail due to these increased problems
11. Changes in fashion, taste etc:
 Sudden changes in fashion, style, tastes will affect the sales.
 This will lead to sales plan being a failure.

Planning Process:-

1. Setting Objectives :
 The first and foremost step is setting objectives.
 Objectives may be set for the entire organisation and each department.
2. Developing premises :
 Planning premises are the assumptions about the likely shape of events in future.
 lt forecasts the obstacles, problems or limitations in the path of the effective planning
because of which the plans may deviate.
 Planning premises supply relevant facts & information relating to future.
3. Identifying alternative courses of action :-
 Once objectives are set and premises are developed.
 Then the next step would be to act upon them.
 All the alterative courses of action should be identified.
4. Evaluating alternative Courses :
 The next step is to be weigh pros and cons of each alternative.
 Each course will have many variables which have to be weighed against each other.
5. Selecting an alternative :-
 After comparison and evaluation, the best alternative is chosen for reaching
organisation objectives.
 On the basis of merits, demerits, resources and consequences, the best plan has to be
adopted. It must be the most feasible, profitable and with least negative consequences.
6. Implementing the plan :
 Once the plans are developed they are put into action.
 Successful implementation of the plan ensures understanding and whole-hearted
cooperation of all the employees.
7. Follow up action :
 To see whether plans are being implemented, activities are performed according to
schedule.
 In case of any deviations, changes are made in the plans.