Planning

Meaning : 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 . In simple words we can say,
planning bridges the gap between where we are standing today and where we want to reach.
( BLUEPRINT )

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Features/ Nature 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,

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planning decides the methods, procedures and steps to be taken for achievement of set
objectives.
2 Planning is Primary function of management : Planning is the primary or first function to be

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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.
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3 Pervasive : Planning is required at all levels of the management. It is not a function
restricted to
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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
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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
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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 environment.
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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
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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.
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.
7 Planning is a mental exercise : Planning is a mental process which requires higher thinking.
In planning assumptions and predictions regarding future are made by scanning the
environment properly. This activity requires higher level of intelligence. 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.

Types of Plans :
Objectives : Objectives are the ends towards which the activities are directed. They are the
end result of every activity. For example, Increase in sale by 10% , Earning 20% Return on
Investment. Objectives are usually set by top management of the organisation. They serve as

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a guide for overall business planning. Objectives need to be expressed in specific terms , i.e ,
they should be measurable in quantitative terms.

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Policy : Organisations general response to a particular problem or situation. In simple words,
it is the organisations own way of handling the problems. For example, a school may have
policy of issuing admission form only to students who secured more than 60% marks, No
credit sales, policy of a company may be not to employ any person who is less than 18 years

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of age, Hiring only university trained engineers, dealing with wholesalers only, insisting on
fixed pricing etc. Their purpose is to lay down a limit within which a particular work can be
done or a decision taken. Objectives decide what is to be achieved and the policies tell us
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how it can be achieved. Policies are made at every level because the managers at every level
need to decide the way of handling a situation.
Rules : Rules spell out special actions or non actions of the employees. It refers to the plan
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that tells us what is to be done and what is not to be done in a particular situation. Rules are
made to create the environment of discipline in the organisation. There is no discretion
allowed in rules, i.e , they must be followed strictly and if rules are not followed then strict
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action can be taken. Rules are Rigid. For example : No smoking, No parking, No interest will
be charged if the payment is received within ten days of the sale etc.
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Method : Method can be defined as formalised or systematic way or manner of doing a

routine or repetitive jobs. The managers decide in advance the common way of doing a job.
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So that there is no doubt in the minds of employees, there can be uniformity in actions of the
employees. For example : Labour Intensive Technology or Capital Intensive Technology,
LIFO or FIFO, Straight line method of calculating depreciation or Written down value
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method, On the job training or Off the job training etc. Selection of proper method saves
time, money and effort and increases efficiency.
Programme : A programme is a single use comprehensive plan laying down the what, how,
who and when of accomplishing a specific job. Through programme the managers are
informed in advance about various needs so that there is no problem in future. Programme is
a combination of objectives, policies, procedures, rules which are designed to get a
systematic working in the organisation. For example: Construction of a shopping mall,
Training programme etc.
Budget : A budget is a statement of expected results expressed in numerical terms. In budget
the results are always measurable and most of the time these are financial in nature. It
facilitates comparison of actual results with the planned ones as they are expressed in
numerical terms. Example: Sales budget, Cash budget, Revenue and Expense Budget etc.
Strategy : A strategy is a comprehensive ( which includes everything ) plan to achieve the
organisational objectives. It includes determining the long term objectives, adopting a
particular course of action and allocating resources necessary to achieve the objectives. For
example: Pricing strategy, Choice of advertising media, choice of sales promotion techniques
etc. It is made after considering both internal and external environment. It is formulated by
top management. It provides guidelines for thinking and action.
Procedure : A procedure is a chronological sequence of various steps to be taken in order to
perform an activity in an efficient manner. Procedure are very rigid. Procedure are guides to

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action. For example: the procedure for admission in a particular school, procedure for
purchase of goods etc. A procedure is generally established for repetitive activity, so that
same steps are followed, whenever that activity is performed.

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Standing Plans : A standing plan is one which is used again and again whenever a particular
situation arises. Standing plans help in decision making on problems which are of recurring

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nature. They are also know as Multi use plans or Repeated use plans . They are generally
prepared by Top Level. Example : Objectives, Policy, Strategy, Procedure, Rule etc. They
remain relatively stable.
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Single Use Plan : It is one time plan which is specifically designed to achieve a particular
goal. They are also known as Ad-hoc or Specific plans or Special plans. They are generally
prepared by middle and lower level. They are made for handling non recurring problems
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which means they be used again and again. For example: Method, Programme and Budget.
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Importance / Significance of Planning :

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1 Planning provides Direction : Planning is concerned with predetermined course of action. It

provides the directions to the efforts of employees. Planning makes clear what employees
have to do, how to do etc. By stating in advance how work has to be done, planning provides
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direction for action. Employees know in advance in which direction they have to work.
2 Planning reduces the risk of uncertainties : Organisation’s have to face many uncertainties
and unexpected situations every day . Planning helps the manager to face the uncertainty
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because planners try to foresee the future by making some assumptions regarding future
keeping in mind their past experiences and scanning of business environment.
3 Planning establishes standard for Controlling : Controlling means comparison between
planned and actual output and if there is variation between both then find out the reasons for
such deviations and taking measures to match the actual output with the planned. But in case
there is no planned output then Controlling manager will have no base to compare whether
the actual output is adequate or not.
4 Focuses attention on objectives of the company : Planning function begins with the setting
up of the objectives, policies, procedures , methods and rules etc. Which are made in
planning to achieve these objectives only. When employees follow the plan they are leading
towards the achievement of objectives. Through planning, efforts of all the employees are
directed towards the achievement of organisational goals.
5 Planning facilitates decision making : Planning helps the managers to take various
decisions. As in planning goals are set in advance andpredictions are made for future. These
predictions and goals help the manager to take fast decision. Decision making means the
process of taking decisions. Under it, a variety of alternatives are discovered and the best
alternative is chosen.
6 Planning promotes innovative ideas : Planning requires high thinking and it is an
intellectual process. So, there is a great scope of finding better ideas, better methods and
procedures to perform a particular job. Planning process forces managers to think differently

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and assume the future conditions. So, it makes the managers innovative and creative.
7 Planning reduces overlapping and wasteful activities : The overlapping and wasteful
activities are reduced because planning coordinates the activities and efforts of different

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departments, divisions and individuals. Reduces confusions and misunderstandings by stating
in advance how to work. Planning ensures that there is clarity in thoughts and actions for
smooth functioning of business activities.

Process of Planning : tn
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1 Setting Objectives : The first and foremost step in the process of planning is to set the
objectives which may be set for the whole organisation and for each individual department in
an organisation. These objectives clearly lay down what that organisation wants to achieve.
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They give direction to the functioning of all departments and the employees of the
organisation. Each department is then required to set it’s own objectives on the basis of
organisational objectives.
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2 Developing Premises : Planning is always done for the future which is very uncertain.
Thus, the managers have to make certain assumptions about the future. These assumptions
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are termed as Premises. Planning premises are assumptions relating to future conditions and
events which are likely to have an effect on achievement of goals. To make planning effective
, it is necessary that the premises should be based on accurate forecasts or any other relevant
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past information related to the organisation.

3 Identifying alternative courses of action : After the objectives have been established and
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premises have been made, the next step is to think of the actions to be taken to achieve these
objectives . It involves identifying the various alternative course of action . There are many
alternatives to achieve the objectives and the manager must know all the ways to reach the
objectives.
4 Evaluating Alternative Courses : This step involves deep evaluation of various alternative
courses of action in light of the various Objective to be achieved. The positive and negative
aspects of each alternative or proposal are Evaluated.
5 Selecting an Alternative : This step involves the selection and adoption of the best plan.
The best plan, should be the most profitable , realistic and with least negative aspects.
Sometimes instead of selecting one alternative , a combination of different alternatives can
also be selected.
6 Implementing the Plan : Under this step, the best selected plan is put into action. The plans
are communicated by managers to all the employees very clearly to motivate them.
7 Follow up Action : Planning is a continuous process so the managers job does not get over
simply by putting the plan into action. The managers monitor the plan carefully while it is
implemented. The monitoring of plan is very important because it helps to verify whether the
conditions and predictions assumed in plan are holding true in present situation or not. If
these are not coming true then immediately changes are made in the plan.

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Limitations of Planning :
1 Planning leads to rigidity : Once plans are made to decide the future course of action the

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manager may not be in a position to change them. Following pre-decided plan when
circumstances are changed may not bring positive results for organisation . This kind of
rigidity in plan may create difficulty.

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2 Planning may not work in dynamic environment : Planning is based on the anticipation of
future happenings. Since future is uncertain and dynamic , therefore the future anticipations
are not always true. Therefore, to consider planning as the basis of success is like a leap in the
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dark. Generally, a longer period of planning , makes it less effective. Therefore, it can be said
that planning does not work in dynamic environment.
3 Planning reduces creativity : Usually in an organisation, planning function is performed by
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the top management and the rest of the members are required to implement these plans. As a
result, middle management and other members are neither allowed to deviate from plans nor
are they granted authority to act on their own. Hence, most of the initiative and creativity in
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them gets reduced . They stop giving suggestions and new ideas to bring improvement in
working because the guidelines for working are given in planning only.
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4 Planning involves huge cost : Huge cost is involved in the formation of plans. This cost is
in terms of money, time and effort. A lot of Money and effort are spent on boardroom
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meetings, discussions with experts and preliminary Investigations to find out the
effectiveness of a plan.
5 Planning does not guarantee success : An organisation is successful only when plans are
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efficiently drawn and implemented. Managers have a tendency to rely on previously tried and
tested successful plans. However, it is not necessary that a plan , which has worked before,
will work again in the changed and competitive environment. This kind of false sense of
security may actually lead to failure instead of success.
6 Planning is a Time Consuming Process : Sometimes a lot of time is taken in formulating the
plans, as a result of which very less time is left to implement these plans. Planning is a
lengthy process and hence it could cause delay in action. Lot of time is consumed in
collection and analysis of data and choice of alternatives etc. Thus, planning is not useful
when on the spot decisions or faster decision making is required.