Planning

Planning involves selecting missions and objectives and the

actions to achieve them it requires decision making that is,
choosing from among alternative future courses of action.
Planning bridges the gap from where we are to where we
want to go.

Four major aspects:

The contribution planning to purpose and
objectives
Every plan and all its supporting plans should contribute to
the accomplishment of enterprise purpose and objective.

The primacy of planning

Planning logically precedes the execution of all other
managerial function. Although in practice all the functions
mesh as a system of action planning is unique in that it
involves establishing the objectives necessary for all group
effort.

The pervasiveness of planning

Planning is a function of all managers, although the
character and breadth of planning will vary with each
manager’s authority and with the nature of policies and plans
outlined by superiors, if managers are not allowed a certain
degree of discretion and planning responsibility, they are not
truly managers.
One manager, because of his or her authority or position in
the organization, may do more – or more important –
planning than another or the planning of one may be more
basic and applicable to a larger portion of the enterprise than
that of another.

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While top executives plan the general direction of the firm,
managers at all levels must prepare their plans so that they
contribute to the overall aims of the organization.

The efficiency of plans

We measure the efficiency of a plan by its contribution to our
purpose and objectives.
Plans are efficient if they achieve their purpose at a
reasonable cost when cost is measured not only in terms of
time or production but also in the degree of individual and
group satisfaction.

Types of Plans
We can see that plans are varied. There are classified here
as

1. Purposes or missions:
Every kind of organized operation has or at least should
have if to be missions’. People sometimes that the mission
of business as well as its objective is to make a profit. It is
true that every kind of enterprise must have, as we pointed
out, a “surplus” – in business, a “profit” – goal or objective if
it is to survive and do the task society has enter. But this
basic objective is accomplished by undertaking activities
going in clearly defined directions, achieving goals, and
accomplishing a mission.

2. Objectives:
Objective or goal – terms we use interchangeably in this
book, are the ends to ward which activity is aimed they
represent not only the end point of planning but the end
toward which organizing, staffing, leading, and controlling
are aimed. While enterprise objective but the tow sets of
goals may be entirely different.

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3. Policies:
Policies define an area within which a decision is to be made
and ensure that the decision will be consistent with, and
contribute to, an objective policies help decide issues before
they become problems, make it unnecessary to analyze the
same situation every time it comes up, and unify other plans,
thus permitting managers to delegate authority and still
maintain control over what their subordinates do. For
example, a certain railroad has the policy of acquiring
industrial land to replace all company acreage sold along its
right – of – way. This policy permits the manager of the land
department to develop acquisition plans without continual
reference to top management, while at the same time
furnishing a standard of control. Policies ordinarily exist on
all levels of the organization and range from major company
policies through major department policies to minor policies
applicable to the smallest segment of the organization. They
may be related to functions such as sales and finance, or
merely to a project such as the design of a new product to
meet a specified competition. There are many types of
policies. Example includes policies to hire only university –
trained engineers. Since policies are guides to decision
making, it follows that they must allow for some discretion.
Otherwise, they would be rules. For examples, a policy to
buy from the lowest of three qualified bidders leaves to
discretion only the question of which bidders are qualified; a
requirement to buy from a certain supplier, regardless of
price or services, would, however, be a rule. Policy is a main
of encouraging discretion and initiative, but within limits. The
amount of freedom will naturally depend upon the policy and
in turn will reflect position and authority in the organization.
Making policies consistent and integrated enough to realize
enterprise objectives is difficult for many reasons first
policies are too seldom in writing and their exact
interpretations are too little know. Second the every

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 delegation of authority that policies are intended to
implement leads through its decentralizing influence. Third it
is not always easy to control policy because actual policy
may be difficult to ascertain and intended policy may not
always be clear.
4. Procedures:
Procedures are plans that establish a required method of
handling future activities they are guides to action, rather
than to thinking, and they detail the exact manner in which
certain activities must be accomplished. They are
chronological sequences of required actions. Procedures are
found in every part of an organization. The board of directors
follows many procedures quite different from those of the
supervisor the expense account of the vice–president may
go through quite different approval procedures than that of
the salesperson. But the important fact is that procedures
exist throughout an organization, even through, as we might
expect, they become more exacting and more numerous at
the lower levels, largely because of the necessity for more
careful control. Many routine jobs can be performed most
efficiently when management prescribes the best way to
carry them out. Like other types of plans, procedures exist in
a hierarchy. Procedures often cut across department lines.
For example, in a manufacturing company, the procedure for
handling orders will almost certainly involves
----------------------- acknowledgment of receipt of funds and
for customer credit approval) the accounting department (for
recording the transaction) the production department (for
the order to produce goods or authority to release them from
stock ), and the traffic department (for determination of
shipping means and route ). Let us look at a few examples of
the relationship between procedures and policies. Company
policy may grant employees vacations to avoid disruption of
work. Company policy may require the public relations
department to clear its employee’s public utterances; to

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implement this policy; managers must establish procedures
for obtaining clearance with minimum inconvenience and
delay.
5. Rules:
Rules spell out specific required action or non action,
allowing no discretion. They are usually the simplest types of
plan. People frequently confuse rules with policies or
procedures. Rules are unlike procedures in that they (guide
action without specifying a time sequence). In fact, a
procedure might be looked upon as a sequence of rule. A
rule, however, may or may not be part of a procedure. The
essence of a rule is that it reflects a managerial decision that
some certain action must – or must not – be taken. Be sure
you can distinguish rules from policies. The purpose of
policies is to guide decision making by marking off areas in
which managers can use their discretion. Although rules also
serve as guides, they allow no discretion in their application.
Rules and Procedures, by their very nature, are designed to
repress thinking; we should use them only when we do not
want people in an organization to use their discretion.

6. Programs:
Programs are a complex of goals, policies procedures, rules,
task assignments, steps to be taken, resources to be
employed, and other elements necessary to carry out a
given course of action; they are ordinarily supported by
budgets. They may be as major as an airlines program to
acquire an s 400 million fleet of jets. Or they may be as
minor as a program formulated by a single supervisor to
improve the morale of workers in parts-manufacturing
department of a farm machinery company. A primary
program may call for many supporting programs. All these
programs call for coordination and timing, since the failure of
any part of this net work of supporting plans means delay for

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the major program as well as unnecessary costs and loss of
profits. Some programs, particularly those involving hiring
and training of personnel, can be accomplished too soon as
well as too late and needless expense results from
employees being available and trained before their services
are required.
7. Budgets:
A budget is a statement of expected results expressed in
numerical terms. It may be referred to as a (numbered)
program. In fact, the financial operating budget is often
called a (profit plan) It may be expressed either in financial
terms or in terms of labor – hours, units of product, machine
– hours , or any other numerically measurable term. It may
deal with operations as the expense budget does; it may
reflect capital outlays, as the capital expenditures budget
does; or it may show cash flow, as the cash budget does.
However, making a budget is clearly planning. The budget is
the fundamental planning instrument in many companies.
The budget is necessary for control, but it cannot serve as a
sensible standard of control unless it reflects plans. Although
a budget usually implements a program, it may in itself be a
program. In fact, one of the major advantages of budgeting
is that it makes people plan; because a budget is in the form
of numbers, it forces precision in planning. Moreover, since
budgets are usually developed for an entire company,
budgeting is an important device for consolidating plans of
an enterprise. Budgets vary considerably in accuracy, detail,
and purpose. Some budgets vary according to the
organizations level of output.

Steps in planning:
Although we present the steps in planning here in
connection with major programs such as the acquisition of a
plant or a fleet of jets or the development of a product,

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 managers would follow essentially the same steps in any
thorough planning. Since minor plans are usually simpler,
certain of the steps are more easily accomplished, but the
practical steps which we list below, and which are
diagrammed in figure 3-5 (page 70) are of general
application. In practice, however, we must study the
feasibility of possible courses of action at each stage.
In formulating supportive plans we may have to reevaluate
and change the overall objectives set earlier.
1- Being Aware of Opportunities: an awareness of
opportunities in the external environment as well as within
the organization is the real starting points for planning. Our
setting of realistic objectives depends on this awareness.
Planning requires realistic diagnosis of the opportunity
situation.
2- Establishing objectives: In planning a major
program, the second step is to establish objectives for the
entire enterprise and then for each subordinate work unit for
the long term as well as for the short range. Objectives
specify the expected result and indicate the end points of
what is to be done, and what is to be accomplished by the
network of strategies, policies, procedures, rules, budget,
and programs.
3- Developing premises: A third logical step in
planning is to establish, circulate, and obtain agreement to
utilize critical planning premises such as forecast, applicable
basic policies, and existing company plans . In fact, the
major principle of planning premises is this: the more
thoroughly individuals charged with planning
understand and agree to utilize consistent planning
premises, the more coordinated enterprise planning will
be. Forecasting is important in premising: what kind of
markets will there be? What volume of sales? What prices?
What technical developments? What costs? What wage

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 rates? What tax rates and policies? What new plants? What
policies with respect to dividends? What political or social
environments? How will expansion be financed? What are
the long-term trends? Therefore, premises are, as a practical
matter, limited to assumptions that are critical, or strategic, to
a plan, that is, those which most influence its operation.
4- Determining Alternative courses: The fourth step
in planning is to search for and examine alternative courses
of action, especially those not immediately apparent. There
is seldom a plan for which reasonable alternatives do not
exist, and quite often an alternative that is not obvious
proves to be the best. The planner must usually make a
preliminary examination to discover the most fruitful
possibilities.
5- Evaluating alternative courses: Having sought
out alternative courses and examined their strong and weak
points, points we must next evaluate them by weighing them
in the light of premises and goals. One course may appear
to be the most profitable but require a large cash outlay with
a slow payback; another may look less profitable but in valve
less risk; still another may better sot the company's long-
range objective. Because there are so many alternative
courses in most situations and the are numerous variables
and limitations to be considered evaluation can be
exceedingly difficult because of these complexities.
6- Selecting a course: This is the point at which the
plan is adopted-the real point of decision making.
Occasionally are advisable and evaluation of alternative
courses will disclose that tow or more are advisable, and the
manager may decide to follow several courses rather than
the one best course.
7- Formulating derivative plans: At the point when
a decision is made, and a seventh step is indicated.

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 Derivative plans are almost invariably required to
support the basic plan.
8- Numberizing plans by budgeting: after decisions
are made and plans are set, the final step to give them
meaning as was indicated in the discussion of types of
plans, is to numberize them by converting them to
budgets. The overall budgets of an enterprise represent
the sum total of income and expenses, with resultant
profit or surplus, and budgets of major balance sheet
items such as cash and capital expenditures.

The planning process:

As we saw in the planning steps above, planning is a rational
approach to accomplishing objectives. The process can be
illustrated as shown in figure3-6 (page 74) in this diagram
progress (toward more sales, more profits, lower costs and
so forth ) is on the vertical axis, and time is on the horizontal
axis.
The essential logic of planning applies regardless the time
interval between t0 and tm whether it is minutes or 20 years.
However, the clarity of premises, the attainability of goals,
and the simplification of planning are almost certain to be
inversely to the time span. That is, if the time span long,
premises may be unclear, goals may be more difficult to set,
and other planning complexities may be great.
Decision making may be the easiest part of planning,
although it involves techniques of evaluation and
considerable skill in applying them. The real difficulties arise
primary in sharpening and given meaning to objective and
critical premises, seeing the nature and relationships of the
strengths and weak nesses of alternatives, and
communicating goals and premises to those through-out the
enterprise who must plan.