Planning

Planning is the primary function of management and occupies the first position in the
management process. It is the starting point of the whole management process as other
management functions are related to planning function. Planning, in simple words, means to
decide the objectives clearly and to prepare a plan. Thereafter to take suitable steps for the
execution of the plan. Planning function is performed by managers at all levels. It is deciding the
objective to be achieved and taking suitable follow-up steps for achieving the same.

In planning, various business problems are studied, decisions are taken regarding the future
course of action and business activities are adjusted accordingly. Thus, planning means deciding
in advance the objectives to be achieved and preparing plans/programmes for achieving them.
In other words, planning is the process of foreseeing desired objectives - anticipating problems
and developing solutions. It serves as a core of the whole management process.

Planning bridges the gap from where we are to where we want to go. In the
absence of planning, events are left to chance. A plan is to-day's projection for
tomorrow's activity.

Where We Where We
Stand Want to Go

According to Philip Kotler,

"Planning is deciding in the present what to do in the future.

Planning can be defined as “thinking in advance what is to be done, when it is to

be done, how it is to be done and by whom it should be done”.

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 Features/Nature/Characteristic of Planning

1. Planning contributes to Objectives

Planning starts with the determination
of objectives. We cannot think of planning in absence of objective. After setting
up of the objectives, planning decides the methods, procedures and steps to be
taken for achievement of set objectives. Planners also help and bring changes in
the plan if things are not moving in the direction of objectives.

For example, if an organisation has the objective of manufacturing 1500

washing machines and in one month only 80 washing machines are
manufactured, then changes are made in the plan to achieve the final objective.

2. Planning is Primary function of management:

Planning is the primary or first
function to be performed by every manager. No other function can be executed
by the manager without performing planning function because objectives are set
up in planning and other functions depend on the objectives only.

For example, in organizing function, managers assign authority and

responsibility to the employees and level of authority and responsibility depends
upon objectives of the company. Similarly, in staffing the employees are
appointed. The number and type of employees again depends on the objectives
of the company. So planning always proceeds and remains at no. 1 as compared
to other functions

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 3. Pervasive:
Planning is required at all levels of the management. It
is not a function restricted to top level managers only but planning is done by
managers at every level. Formation of major plan and framing of overall policies is
the task of top level managers whereas departmental managers form plan for
their respective departments. And lower level managers make plans to support
the overall objectives and to carry on day to day activities.

4. Planning is futuristic/Forward looking:

Planning always means looking
ahead or planning is a futuristic function. Planning is never done for the past. All
the managers try to make predictions and assumptions for future and these
predictions are made on the basis of past experiences of the manager and with
the regular and intelligent scanning of the general environment.

5. Planning is continuous:
Planning is a never ending or continuous process
because after making plans also one has to be in touch with the changes in
changing environment and in the selection of one best way.

So, after making plans also planners keep making changes in the plans according
to the requirement of the company. For example, if the plan is made during the
boom period and during its execution there is depression period then planners
have to make changes according to the conditions prevailing.

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 6. Planning involves decision making:
The planning function is needed only when
different alternatives are available and we have to select most suitable
alternative. We cannot imagine planning in absence of choice because in planning
function managers evaluate various alternatives and select the most appropriate.
But if there is one alternative available then there is no requirement of planning.

For example, to import the technology if the license is only with STC (State
Trading Co-operation) then companies have no choice but to import the
technology through STC only. But if there is 4-5 import agencies included in this
task then the planners have to evaluate terms and conditions of all the agencies
and select the most suitable from the company’s point of view.

7. Planning is a mental exercise:

It is mental exercise. Planning is a mental
process which requires higher thinking that is why it is kept separate from
operational activities by Taylor. In planning assumptions and predictions
regarding future are made by scanning the environment properly. This activity
requires higher level of intelligence. Secondly, in planning various alternatives are
evaluated and the most suitable is selected which again requires higher level of
intelligence. So, it is right to call planning an intellectual process.

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 Importance of Planning
1. Increases efficiency:
Planning makes optimum utilization of all
available resources. It helps to reduce the wastage of valuable resources and
avoids their duplication. It aims to give the highest returns at the lowest possible
cost. It thus increases the overall efficiency.

2. Reduces business-related risks:

There are many risks involved in any modern
business. Planning helps to forecast these business-related risks. It also helps to
take the necessary precautions to avoid these risks and prepare for future
uncertainties in advance. Thus, it reduces business risks.

3. Facilitates proper coordination:

Often, the plans of all departments of

an organization are well coordinated with each other. Similarly, the short-term,
medium-term and long-term plans of an organization are also coordinated with
each other. Such proper coordination is possible only because of efficient
planning.

4. Aids in Organizing:
Organizing means to bring together all
available resources, i.e. 6 Ms. Organizing is not possible without planning. It is so,
since, planning tells us the number of resources required and when are they
needed. It means that planning aids in organizing in an efficient way.

5. Gives right direction:

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 Direction means to give proper information,
accurate instructions and useful guidance to the subordinates. It is impossible
without planning. It is because planning tells us what to do, how to do it and
when to do it. Therefore, planning helps to give the right direction.

6. Keeps good control:

With control, the actual performance of an

employee is compared with the plans, and deviations (if any) are found out and
corrected. It is impossible to achieve such control without the right planning.
Therefore, planning becomes necessary to keep good control.

7. Helps to achieve objectives:

Every organization has certain objectives or
targets. It keeps working hard to fulfill these goals. Planning helps an organization
to achieve these aims, but with some ease and promptness. Planning also helps
an organization to avoid doing some random (done by chance) activities.

8. Motivates personnel:

A good plan provides various financial and non-

financial incentives to both managers and employees. These incentives motivate
them to work hard and achieve the objectives of the organization. Thus, planning
through various incentives helps to motivate the personnel of an organization.

9. Encourages creativity and innovation:

Planning helps managers to express their

creativity and innovation. It brings satisfaction to the managers and eventually a
success to the organization.

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 10. Helps in decision-making:
A manager makes many different plans. Then the
manager selects or chooses the best of all available strategies. Making a selection
or choosing something means to take a decision. So, decision-making is facilitated
by planning.

Therefore, planning is necessary for effective and efficient functioning of every

organization irrespective of its size, type and objectives.

Limitations of Planning
1. Time Consuming
Planning involves the collection of data, analysis of
data, forecasting, etc. All this consumes a lot of precious time. Therefore,
planning is a time-consuming activity.

2. Costly
Planning is the work of experts. They get paid very
high salaries to make good plans. Companies spend an enormous amount of
money in collecting and analyzing data. Therefore, planning is a costly affair.

3. Rigid

Most plans are very rigid. They don't change as per

the changing environment. They neither get revised nor modified. The non-
flexibility of plans creates many problems for the organization.

4. Gap between Plans and Achievement

The workers do not make any
plans. The managers make plans. The workers only execute these plans. So the

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workers are not entirely interested in achieving these plans. Therefore, there is a
gap between plans and achievement

5. Problem for Technical Staff

The technical or creative staff does not
like planning. They feel it is only paperwork. It is so, since, it limits their creativity.

6. Resistance to Change
Planning brings many changes in the
organization. However, people do not like changes. So, they do not give full
cooperation. Without their cooperation, the plans cannot succeed.

7. Paperwork
Planning requires a lot of paperwork. The
plans are made and again remade. Copies of finalized plans are given to the top
management and subordinates. There is also a need to prepare many reports.

8. Causes Frustration
Sometimes managers fail to achieve the
planned targets despite putting their best efforts. This failure can frustrate them
and lower their level of motivation. It can cause the managers to lose their
initiative.

9. Dangers of Over-Targeting
Some managers do over-targeting. That is,
they fix very high targets that are almost impossible to achieve. Such over
expectations cause many problems.

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 10. Dangers of Under-Targeting
Some managers do under-targeting.
That is, they fix lower targets that are easy to achieve. Such under expectations
hinders the growth and performance of the organization. The under targeting
happens in the government institutions.

11.Danger of Human Error

Plans depend on forecasts. Forecasting

requires a lot of experience and judgment. If the manager has less experience and
is poor in judgment, then the predictions will be wrong. If the forecasts are
wrong, it is obvious that the plans will fail. Even experienced managers make
errors while forecasting and planning. So, there is a danger of human error.

Steps in Planning Process

Planning is a lengthy process which moves gradually and step by step approach is
usually adopted. These steps are like stations in the journey of planning process.
Usual steps in the planning process are as briefly explained below:

1. Classifying the problems:

The planning process starts with
clear understanding and classifying business problems faced by a business
unit. Identification of problems or opportunities by managers justifies the
need for action. It is like the diagnosis of the health problem of a patient by
his doctor. Planners have to understand the problems of the Organization
first and, then, prepare a plan to deal with the problems in the light of the
prevailing business environment.

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 2. Determining the objectives:
In this second stage in the
planning process, the planners decide the overall objectives to be achieved.
Planning is always for achieving certain well defined objectives and
naturally objectives must be spelt out precisely. Objectives act as pillars of
the entire planning process. Business objectives may be decided in terms of
profit, sales, production or market reputation. Objectives may be defined in
quantitative or qualitative terms.

3. Collecting complete information and data:

The planners have to
collect information relating to problems facing the business unit. Such
information is necessary and useful for analyzing the problems in depth and
also for accuracy in planning. Information can be collected from internal
and external sources. Reliable, updated and adequate data make planning
process result-oriented.
4. Analyzing and classifying the information:
At this stage, the
information collected is analyzed and interpreted systematically for
drawing specific conclusions. This facilitates purposeful use of information,
while preparing alternative plans. Irrelevant information can be discarded
through such analysis.

5. Establishing planning premises:

Planning premises are various
assumptions and predictions about the future business situation. Such
premises act as background for planning activities. The planning premises
are expected to supply relevant facts, information and data on the basis of
which forecasts are prepared and future trends are indicated. Planning
premises reduce uncertainties in the planning process. Planning premises

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 are three in number viz., (a) Controllable permises, (b) Semi-controllable
permises, and (c) Uncontrollable premises.

6. Determining alternative plans:

Here, the planners prepare and
keep ready alternative plans suitable for use under different situations. The
best among the available alternative plans is used for actual execution. The
preparation of alternative plans is essential as one plan is normally not
adequate under all types of situations. It is a type of stand-by arrangement
useful for meeting any emergency situation.

7. Selecting operating plan and preparing derivative plans:

After study of
the business environment and the alternative plans available, the planners
select the best plan for actual execution. This decision is a delicate one and
must be made with proper care. After the selection of operating plan, the
planners have to prepare derivative plans. Such plans are related to
different departments/activities and constitute sub-sections of the
operating plan. The division of overall plan into derivative plans is necessary
for effective execution.

8. Arranging timing and sequence of operations:

Timing involves fixation
of starting and finishing time for each job or piece of work. Sequence of
operations ensures proper flow of work. This step in planning process is
important as it brings coordination in the activities of different
departments. The timings and sequence of operations must be
communicated to concerned departments, managers and staff for
implementation of the plan.

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 9. Securing participation of employees:
Planning needs willing participation
of all employees and departments. For this, information regarding the
operative plan should be given to employees well in advance. Here, the
internal communication system should be used extensively. For such
participation, employees should be associated with the planning process.

10.Follow-up of the proposed plan:

The purpose of follow-up is to
make periodical review of the execution process. It is useful for
understanding actual progress and deficiencies in the process of execution
of the plan. This also facilitates adoption of suitable remedial measures as
and when required.

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