What is Planning?

  • Post last modified:28 February 2022
  • Reading time:33 mins read

STRETAGIC PLANNING

Fig 1.1 Planning

In 1983, a chemistry student Ranganathan set out to sell shampoos with Rs 15,000 in his pocket. It was a market with 200 odd companies, dominated by the big daddy?

Hindustan Lever Ltd. From the beginning, Ranganathan knew that many people outside the great Indian middle-class could not afford to spend sixty rupees on shampoo, but they could definitely afford a Re.

1 sachet. After clearly visualizing this gap, he treated the „Chik? sachet and began selling the same on bicycle. To boost up the sales, he came out with another brilliant idea: „

Return five shampoo sachets and get one Chik sachet free.’ The idea clicked in frugal rural households of Tamil Nadu. Volumes tripled, the revenues took care of distribution and the brand name stuck.

The liberalisation measures of 1990s helped him grab every opportunity to expand his market to every nook and corner of India. He began advertising first on regional satellite channels and consolidated his brands – Chik, Nyle (herbal shampoo), and the ever popular Fair ever fairness cream – in the southern markets before launching them nationally.

Now, CavinKare Group (a synonym of beauty and grace in Tamil literature) has crossed a turnover of 8819 million INR in 2009-2010 with employee strength of 1520, on an all India network of 1300 Stockists catering to about 25 lake outlets nationally.

In a market dominated by multinationals, Ranganathan created his own space through careful, elaborate planning of what prompts buyers to go after a product. In a capital-hungry, labor-surplus market, he found the answer. Find a novel cost-effective product and position it in such a way that cannot be easily challenged.

This simple chemistry student has already taught some great marketing lessons to multinationals and has proved that even small firms can grow and prosper in a tough environment if they are able to exploit their unique ideas (strengths) through proactive thinking and careful planning.

Today, CavinKare, having established a firm foothold in the national market, is increasing its popularity in the international arena. A dedicated Research and Development center, equipped with the latest equipment and technologies, constantly supports the various divisions of this company in their endeavor.

The Company, which primarily relied on contract manufacturing for many years, has now set up its own world-class plant at Hardware to cater to the demand of both domestic and international market. Planning: Deciding in advance what to do, how to do it, when to do it and who is to do it.

Meaning and Definition of Planning

Successful managers try to visualize the problems before they turn into emergencies. As pointed out by Terry, “successful managers deal with foreseen problems and unsuccessful manager?s struggle with unforeseen problems. The difference lies in planning.” Managers charged with responsibility of achieving definite targets do not wait for future.

They make the future. To introduce the original action by removing present difficulties, anticipating future problems, changing the goals to suit the internal and external changes, experiment with creative ideas and take the initiative, attempting „to shape the future and create a more desirable environment.

Fig 1.2 Planning and Forecasting

A plan is a forecast for accomplishment. It is a predetermined course of action. It is today?s projection for tomorrow?s activity. In other words, to plan is to produce a scheme for future action, to bring about specified results at a specified cost in a specified period. Management thinkers have defined the term in two ways:

Based on futurity

  • Planning is a trap laid down to capture the future. (Allen)
  • Planning is deciding in advance what is to be done in future. (Koontz).
  • Planning is informed anticipation of future. (Haimann)
  • Planning is „anticipatory? decision-making. (R.L, Ackoff)

Based on thinking

Planning is a thinking process, an organized foresight, a vision based on fact and experience that is required for intelligent action. (Alford and Beatt).

Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. (Koontz and O?Donnell).

A plan is a specific, documented intention consisting of an objective and an action statement. The objective portion is the end and the action statements represent means to that end. Stated another way, objectives give management targets to shoot at, whereas action statements provide the arrows for hitting the targets. Properly conceived plans tell what, where and how something is to be done.


Features of Planning

Planning has a number of characteristics:

Planning is goal-oriented.

  • Planning is made to achieve the desired objective of business.
  • Goals established should be generally accepted.
  • Planning locates action which leads to goals quickly and economically.
  • Planning shows a sense of direction to various activities.

Planning is looking ahead

  • It is done for future.
  • It requires peeping in future, analyzing it and predicting it.
  • It is based on forecasting.
  • It is a synthesis of forecast.
  • It is a mental predisposition for things to happen in future.

Planning is an intellectual process

  • It is a mental exercise which includes lucrative thinking, judgment and imagination.
  • It involves not mere guesswork but rotational thinking.
  • It depends on goals, facts and considered estimates.

Planning involves choice and informed decision-making

  • It basically involves selecting from various alternatives.
  • It is not applicable in single course of action as it attains no choice.
  • The decision-making involves an integral part of planning.
  • It gives more options to managers to select the best as per needs.
  • It basically involves selecting from various alternatives.
  • o It is not applicable in single course of action as it attains no choice.
  • The decision-making involves an integral part of planning.
  • It gives more options to managers to select the best as per needs.

Planning is the primary function of management. / Primacy of Planning

  • It lays the foundation for other functions of management.
  • It serves as guide for organizing, staffing, directing and controlling.
  • It carries complete functions of management inside a framework.
  • It is the main function of management.

Planning is a continuous process

  • It serves as never-ending process due to dynamic business environment.
  • It is prepared for particular time and is subject to revaluation and review.
  • It will remain continuous till enterprise issues get completed.

Planning is all-pervasive

It is needed at every level of management and everywhere in enterprise.

It varies with scope of work.

Top level involves in planning, middle level involves in departmental plans while lower level will implement the same plan.

Planning is designed for efficiency.

  • It leads to complete objectives at lowest cost.
  • It avoids wastage of resources and ensures good use of resources.
  • It is worth or useless till it results in value of cost which occurs.
  • It results in saving time, effort and money.
  • It leads to correct use of men, money, materials, methods and machines .

Planning is Flexible

It should give enough room to cope with changes occurs with customer demand, competition, government policies, etc.

The original plan should keep on updating if any circumstance for change occurs.


Steps in Planning Process

Steps in Planning Function

Planning function of management involves the following steps:

Establishment of objectives

  • The objective of planning is basically a straight approach.
  • Planning should begin with setting up of goals and objectives.
  • The objectives should carry a base for doing various activities with certain direction of efforts.
  • An objective will stress on managers attention on particular result to get executed.
  • Another idea of objectives is to show clear, precise and straight meaning.
  • Objectives should be explained with clear quantitative terms.
  • The goals of objectives should be explained clearly in qualitative terms.
  • Objective should be practical, clear, adaptable, workable and achievable.

Establishment of Planning Premises

  • It is an assumption of events which could happen in future.
  • It is the start of planning process.
  • It relates to finding a trend which deflects from real plans.
  • It locates the hindrances which appear in business at particular course of operations.
  • It concerns with taking particular steps which broadly avoids hindrances. o It can be internal or external which covers capital investment policy, management labor relations and socioeconomic and economical changes.
  • In this you can control internal premises where as external premises cannot be controlled.

Choice Of Alternative Course Of Action

  • In case of forecasts and premises, various alternative actions can be considered.
  • It can be calculated based on pros and cons under light of resource present and need of organisation.
  • It examines merits, demerits and consequences of every alternative before making any selection.
  • Once objective and scientific evaluation is done, then the correct option is selected.
  • Planners with the help of quantitative techniques will be able to verify the stability of such alternative.

Formulation Of Derivative Plans

  • It is the secondary plans that are responsible for giving any help to achievement of main plan.
  • This plan moves from the main plan which will support and speed up the success of the main plans.
  • It covers policies, procedures, rules, program me, budgets, schedules, etc.
  • It shows time schedule as well as series of achieving different tasks.

Securing Co-operation

Once the plan has designed, then it is advisable to take people into confidence who are linked with it.

The idea of taking subordinates into confidence as get motivation and the organization receives valuable suggestions with the idea to enhance it further.

Follow up/Appraisal of plans

  • Once the action is decided, now it will be put into practice.
  • After implementation of particular plan, it is advisable to judge its performance.
  • The judgment is based on feedback or information from various departments or concerned people.
  • With this, the management can take correct deviations or can modify the plan.
  • All these make a link among planning and controlling function.

Importance of Planning

Planning facilitates management by objectives

  • Planning starts with finding of an objective.
  • It shows the reason for starting different activities.
  • With this, the objective becomes clear and particular.
  • With planning, an employee will be more focused towards objectives and goals.
  • There will be no path, if there is no planning.

Planning minimizes uncertainties

  • In business, there occur lots of uncertainties.
  • Because of such uncertainties, there occurs risk factor in every business.
  • With planning, the uncertainties can be lowered as it anticipates any future occurrences.
  • Since future cannot be predicted 100%, so with the help of planning, the management will come to know about future activities.

Planning facilitates co-ordination

  • It is seen that planning moves around organizational goals.
  • In this, all activities are aimed at common goals.
  • There is a combined effort all the way in an enterprise in departments and groups.
  • It keeps away from replication of efforts which results in good coordination.
  • It solves the problems related to work performance which aims as altering the same.

Planning improves employee’s morale

  • With planning, an atmosphere of order and discipline originates that takes it as a serious aspect.
  • Through planning employees will come to know what is required from them which results in obtaining conformity.

Planning helps in achieving economy

  • Good planning results in safer economy as it leads to allocation of resources.
  • It makes admissible for correct use of resources for economic operations.
  • There will no wastage of resources if choosing correct use will can add to objectives of an enterprise.

Planning facilitates controlling

  • With planning it is possible to go ahead with fixed planned goals and standards of presentation.
  • The basic of controlling is provided.
  • An effective system of controlling is impossible without presence of good thought plans.

Planning provides competitive edge

  • Planning uses change in work methods, quality, quantity designs, extension of work, redefining of goals, etc.
  • The forecasting will secure the future of an enterprise and at the same time calculate the future motives of competitors.

Planning encourages innovations

  • With planning process, managers will be able to suggest ways and different means in order to improve performance.
  • It is a decision making function which caters creative thinking and imagination which shows innovative methods and growth operations of an enterprise.

Advantages and Disadvantages of Planning Advantages

  • Planning forces the manager to generate a blueprint of line of action for doing objectives.
  • With planning, there exists order and reasonableness in an organization.
  • It encourages the employees to deliver best which led to earning of reward.
  • This will develop healthy attitude in work, which further boost the morale and efficiency of employees.
  • It lead to per-determined goals that will helped to compare actual performance.
  • It is seen that planning and controlling are opposite sides of a coin.
  • With planning, best use of resources, good quality production and aggressive strength of enterprise can be enhanced.

Disadvantages

  • With planning the administration becomes inflexible.
  • It requires advance policies, procedures and program mes.
  • It is restricted to individual freedom.
  • It is restricted to individual interests not for an enterprise.
  • Due to collection of information, it is a time consuming process.

It does not work at time of emergency or crisis when faster decisions are needed.

  • Planning depends on thought which is not accurate as a result of future stability.
  • Planning is not cost effective as lot of time and money spends on collection, analysis and evaluation of information.

Principles of Planning

To be useful, planning should try to incorporate some of the time-tested and inter-related principles, beautifully summed up by Koontz thus:

Principle of contribution to objectives

Every plan should help in the achievement of organizational objectives

Principle of primacy of planning

Planning precedes all other managerial functions. It is the first and the foremost function to be followed
in the process of management.

Principle of pervasiveness of planning

Planning is an all-pervasive function. It is important to all managers regardless of their level in the organization.

Principle of flexibility

By flexibility of a plan, we need to highlight its ability to switch gears, change direction to adapt to changing situations without unnecessary cost (ability to vary product mix, shift marketing effort geographically, raise additional funds on favorable terms, reshuffle and relocate personnel quickly, change organization structure etc. are all included in this exercise).

Principle of periodicity

Plans should be integrated and interconnected in such a way as to achieve the stated objectives economically and efficiently. A manager should review events and expectations regularly, refine and redraw the plan and keep it on track.

Principle of planning premises

Every plan is based on carefully considered assumptions, known as planning premises. “The more the individuals charged with planning, understand and agree “to utilize consistent planning premises, the more coordinated enterprise planning will be.

Principle of limiting factor

While choosing an appropriate course of action among different alternatives, the limiting or critical factor (such as money, manpower, machinery, materials, management) should be recognized and given due weight age. When ignored, the critical factor would seriously affect the process of planning and make it impossible to achieve goals.


Approaches of Planning

Managers follow various approaches to planning based on the extent of participation, authority, delegation and competency level of managers working at various levels, namely:

Top-down approach

n most family-owned enterprises, authority and responsibility for planning is centralized at the top. The top management defines the mission, lays down strategies, and specific action plans to achieve the stated goals and then pass on to the people working at lower level.

Bottom-up approach

Thinking and doing aspects in the planning process are two sides of the same coin. Hence, if lower level managers are drawn into the preparation and implementation of plans, their loyalty and commitment would go up automatically.

Composite approach

In this approach, a middle path is chosen to facilitate the smooth implementation of the plans. Here the top management offers guidelines, sees boundaries and encourage the middle and lower level executives to come out with tentative plan.

Team approach

In this, the job of planning is assigned to a team of managers having requisite experience in various functional areas. They prepare the draft plans, taking internal as well as external factors into 51 account. The tentative plans are forwarded to the top management for approval.


Types of Plans

This planning types can be understood from many perspectives. They are five such type of plans, they are shown below.

Figure 1.3 Types of Plans

Hierarchical Plans

Here, the word hierarchy means different levels of management, so in organization three levels plan are there. There are: Strategic, Administrative and Operational Plans. All these levels are interdependent and support each other to achieve organizational goals.

Strategic Plans

At the top, strategic plans are there, it define and design the long term vision, mission and value statement for the organization. In strategic plans, it is planned that how this vision and mission will be integrated in its general and task environment.

Administrative Plans

After strategic plans, administrative layer is at middle level. In this level, various resources are distributed to internal units and functional areas of management. They also coordinate with all subdivisions of the organization. They become a link between vision development and vision implementation.

Operational Plans

Operational plans is at bottom in hierarchical plans. This is also known as technical core. It plans for day today operation, actual execution of vision, mission and divisional level work is done at this level.

Frequency of Use Plans

These plans are based on its usage rate, time ans whether they are repetitive in nature or used for only single time.

Standing Plans

  • This plans are concerned with those activities which are repetitive in nature. Standing plans include mission, strategies, policies, rules and procedure.
  • Mission – Unique aim which is created to achieve the vision of the organization;
  • Policy – General guideline or statement which is formulated by the organization for the guidance of its personnel;
  • Rules – It is a statement about what is permissible and what is not permissible in the organization;
  • Procedure – It is an instruction about how to complete a particular task.

Single Use Plans

These plans have single use in practice. In such plan, organization develops a very specific – SOP, is known as Standard Operating Procedure. They are:

Objective

A specific result that an organization has to achieve within a time frame and with available resources;

Strategy

A plan of action designed to achieve a long term goal by relating strengths and weaknesses of an organization with opportunities and threats out of the changing environment;

Program me: A program me is a collection of organizational resources that is geared to accomplish a certain major goal or set of goals;

Project

A complex set of policies, procedures, rules and budgets designed to meet specific situations and all other needful actions required for implementing a given course of action;

Budget

A budget is a formal statement of estimated income and expenses based on future plans and objectives in numerical terms.

Time Frame Plans

These type of plans are mainly linked with time line of completion in the organization.

Short range plans

They are for several hours to a year. They are more specific and with detail in nature.

Medium range plans

They are normally from one to five years.

Long range plans

They are normally for more than five years. They are more directional, less with details and more informal in nature.

Organizational Scope Plans

These type of plans are basically connected with the scope of it, broad to very narrow plans. Business plan are normally very broad whereas tactical plans are very narrow in scope. They are as under:

Business Plan

Focus on company’s business and its competitive market.

Functional / Unit Level Plans

Here, focus is on the day-to-day operations of lower-level organization units; like – marketing, human resources, accounting, and operations plans (production).


Tactical Plan

Division-level or unit-level plans designed to help an organization accomplish its strategic plans.

Contingency Plan

Contingency plan is alternative courses of action that are to be implemented if events disrupt a planned course of action. This type plan is called Plan B. it is more in use, when natural disaster, terrorist attack, boycotts or mahamari like coronavirus of 2020 at a Global level takes place in the society or country.


The concept of Management by Objectives was introduced by management guru Peter Drucker in his book The Practice of Management in 1954. This concept is used as strategic management model and somewhere it is known as a performance management approach.

It is an approach to improve the performance by clearly defining objectives that are agreed to both management and its employees.

MBO develops motivation, commitment and communication among employees, because individual objectives are decided after their consultation. Success of MBO is based on the support of top management, clarity of objectives and trained managers who can execute it.

There are total 5 steps in MBO process, they are:

  • Determine or revise the organizational objectives of the entire company;
  • Translate the organizational objectives to employees;
  • Stimulating participation of employees in deciding individual objectives;
  • Monitoring the progress of employees;
  • Evaluate and reward employee progress.

What Is Planning?

In 1983, a chemistry student Ranganathan set out to sell shampoos with Rs 15,000 in his pocket. It was a market with 200 odd companies, dominated by the big daddy.Hindustan Lever Ltd. From the beginning, Ranganathan knew that many people outside the great Indian middle-class could not afford to spend sixty rupees on shampoo, but the

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