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CHAPTER 4

PLANNING

Planning is deciding in advance what to do? how to do ? & who will do it?. Planning
bridges the gap between where we are today and where we want to go. It makes it
possible for things to happen, which not otherwise happen

It involves

Setting objectives
Bridging the gap between where we are & where we want go.
Prepare an idea to how to work to achieve predetermined objectives.
Analyze number of courses of actions from which the most suitable is to be
chosen to achieve these objectives in most effective and efficient way.

NATURE/CHARACTERISTICS/FEATURES OF PLANNING
Planning Contributes To Objectives

First Setting or determine general & specific objective for organization, then any
other business activity is executed
Changes can be brought in the plan for achieving objectives effectively and
efficiently.

Planning Is Primary Function Of Management

Planning gives direction for managerial action and lay down the framework
regarding how work is to be performed.
All other functions, i.e. organizing, staffing , directing , and controlling are
dependent upon planning and even all the activities performed according to plans.

Planning Is Pervasive

Planning is required at every level of organization, top level form major plans,
middle level need to plan their activities of their department &lower level make
plans to carry on day to day activities.
Planning is required for each and every activity which is going to be performed in
an organization.

Planning Is Futuristic.

Planning has a necessary feature of looking into future, analyzing & predicting the
future requirements of a business.
Plans were made according to future predictions which are based on assumptions
and past experiences and intelligent scanning of business environment.

Planning is continuous

A plan is formed then it is implemented and after that again a new plan is formed
on the basis of success of previous plan .
Planning is to be performed again to be in touch with the changes of dynamic
environment and in choosing one best way according to requirement of plan
formed.

Involves Decision making


It involves analyzing and evaluating various alternatives to select the most
effective and efficient course of action.

Mental Exercise (Intellectual Process)

In planning assumptions & predictions regarding are made by scanning the


environment properly. Which require a high level of intelligence.
Even one has to select the best alternative among various alternatives by
evaluating them, which requires a high thinking skill.

IMPORTANCE/ SIGNIFICANCE OF PLANNING


Providing Direction

Defining clearly the organization goal and objectives


Stating in advance how the work is to done
Making employee aware of what they must to do to achieve objectives
Facilitating (simplifying) coordination among all individual in the organization.

Reduces The Risk Of Uncertainties

Enabling the manager to look ahead and anticipate (make a prediction)


Stating in advance how work is to be done and helping the managers to prepare
themselves to deal with changes and uncertain events.
Developing managerial responses to anticipated (predicted) change.

Reduces Overlapping And Wasteful Activities

Coordinate the activities & efforts of different department, division and individuals.
Reduces the confusion and misunderstanding by stating in advance how to work
Eliminate the repeated activities, detects & inefficiencies & take measures to correct them

Promotes innovative ideas

News ideas are developed while developing various plans.


Future course of action is well thought with better ideas and better methods and
procedure to achieve objectives.

Facilitates (Simple) Decision Making

Set targets & predict future changes


Evaluate various course of action to select the best one.
Take intellectual & practicable decisions after comparing & evaluating various choices

Establish Standards For Controlling

Predetermining goals which are considered as standard to compare employee


actual performance
Helping managers to take corrective measures in case of a deviation (conflict) of
plan.

Focuses attention on objectives of organization

Plans were made to achieve the predetermined objectives of organization.


Through planning, all efforts of all individual are directed towards the of
organizational goals.

LIMITATION OF PLANNING

Planning Leads To Rigidity


Pre decided plans decide the future course of actions , which provide less flexibility
to make changes according to dynamic circumstances which will not bring positive
results for organization.
Planning may not work in dynamic environment
It difficult for managers to scan business environment accurately because of
continuously changing environment, which make managers unable to forecast the
change and prepare plan.

It Reduces Creativity

Middle and supervisory level managers are not consulted by top level while making
the plans. The manager blindly follow the plans framed.
Just because all the guidelines to execute a task are given in the plans , employee
make no efforts to find better way to perform same function.

Involves huge cost

Planning is an intellectual process (using mind with creativeness) , for which


professional experts are hired and their salaries cost huge.
Even it involves an accurate environmental scanning, which involve money in
terms of legal and incidental charges.
Sometimes cost to frame plans is higher than benefits from plans

It is a time consuming process.


To frame plans, individual need to evaluate many alternatives, have to discuss with
many professionals and scan the environment affecting it business. Which
consume a lot of time
Sometimes we have avoided planning for taking immediate decisions.

Planning Does Not Guarantee Success


Due To dynamic changes in environment, a plan which tested and works
successfully in past, may not give effects in future.
Planning provide a base for analyzing future , not a solution for for future course of
actions.

Lack Of Accuracy
We generally assume everything or think in advance what to do? How to do? And
Who Will do it?, but future is uncertain i.e. keep changes continuously . plans can be fail
anytime when the circumstances doesnt met with the assume condition in future.

EXTERNAL LIMITATIONS OF PLANNING

Natural calamity
Change in competitors policies
Change in taste /fashion and in trend I market
Change in technologies
Change in government/ economic policy

PLANNING PROCESS
Setting Up Of The Objectives

Setting up organizational objectives is the first step of planning


General & specific objectives, goals, short term and long term targets for every
department are established.
Objectives were set up by keeping in mind the physical and financial resources of
company.

Developing premises

The assumption, which provide basic material or act as a starting point for
preparing plans are called premises.
Premises include forecast ( a technique to gather information , predict in advance )
,existing plans, policies or practices followed in past etc.
The managers have to understand and agree with the premises.

Listing The Various Alternatives For Achieving The Objectives


In this step the manager tries to find out various course of actions (alternatives) ,
through which the objectives of organization framed can be achieved.

Evaluation Of Different Alternatives

Manager starts evaluating( estimate the nature & quality) every alternative or
course of action
Alternatives are evaluate on the basis of the positive and negative effects,
contribution towards objectives , feasibility ( the quality of being possible to be
true) and viability (Capable of development).

Selecting An alternative

The best course of action or alternative , with more feasible ( the quality of being
done with circumstances) , profitable and has least negative quality .
A combination of different alternatives can also be selected , when it is not
possible to achieve desired objective with one single plan

Implement The Plan

It is the step where directions are provided through planning converted into
actions.
Manager communicate the plans to individual of organization , then all resource
are allocate according to the specification of plans
This step involves all the functions of management as well.

Follow Up
The managerial function of controlling compares the result of actual activities with the
planned ones and takes corrective measures and preventive actions to ensure that the
desired objective are achieved.

PLAN
It is a written document which consists of all the specific information about all the action
which should be taken to achieve the goal of organization.

SINGLE USE PLAN


Single use plans are one time used plans which were designed to achieve a particular
objective or framed to meet the needs of a particular situation generally formulated by
middle and top level management.

Features

Duration of these plans depend upon the activity for which they designed.
Are flexible can be changed as per according to the condition of organization
Generally applied to non-repetitive activities
These plans were formulated within the framework of standing plans.
Prepared to meet the demand of specific situation.

STANDING PLANS (Plan Of Repeated Use)


Standing plans, mainly focuses on organizational situations occurring repeatedly. They are
made once but retain their value over a period of years. Some update were made in these plans
time to time. Generally formulated by top level management to achieve primary objectives.

Features

They are stable in nature & cannot be changed


These plans act as a guideline for smooth functioning of organization, e.g.policy & rules,
procedure etc
Applicable to such situations which repeat themselves.

TYPES OF PLANS
The plans formulated by top level management may differ for plans framed by middle level ad
lower level management. The common plans which were formulated at different levels are :1)
2)
3)
4)
5)
6)
7)
8)

Objectives
Method
Programmes
Rules
Procedures
Budgets
Strategy
Policy

Objectives
Objectives are the goals of an organization which were di=sired to achieve by direction actionss
and activities of an individual of firm. Generally formed by top level management .

Features

Serves as guide for all the business planning


Have a time limit for achieve an objective
Describe the future situation h=which the organization want to achieve.
All activities guided towards achievement of objective
It State the desired result in quantative term

Strategy
Strategy is a board or comprehensive plan to achieve organizational objective. it is intellectual as
an individual must have to scan business environment carefully while achieving it objectives.

It has 3 dimensions
Determine Long term Objectives
Adopting a particular course of action
Allocation necessary resources for accomplishing objectives
Features

Directs future decisions making and scope in long run.


Influenced by business environment
A Strategy is the guideline of business
Help business to create its identity in the business environment

Policies
Policies are the organizations ways of handling the diverse circumstances. They are
predetermined statement which guide the managers to take decisions in unexpected situations.
They are formulated at all levels, brings uniformity in decision making in the departments.
Examples .. sales policy, no credit sale policy , requirement policy etc.

Features

Based on objectives
Guides managers to implement strategy
Policy provide board parameter withing which a manager take decisions.

Procedures
Procedures are predetermined steps to be followed while working, their sequence must be
established in advance so that everyone can follow them. They are common for all departments.

Features

Mostly in chronological order


Generally developed for internals only.
The sequence of steps to be followed to enforce ( put in influence) the policy determined .

Methods
Methods are a part of procedures. They are the established ways to perform a task which are
repetitive in manner. After deciding the method in advance ,
There will be no confusion and chaos
There is uniformity in actions of individual of organization
Helps in apply the scientific techniques of standardization and simplification.

Features

Standardized way in which a task is to be performed.


Selection of right method increase inefficiency
Different methods for different types of repetitive jobs.

Rules
Rules are those statements which inform the employee to what to do ? And what not to do? .
They are followed strictly and on violation of these rules , strict actions were to be taken against
the individual, they are framed to create discipline in the organization.
Feature

Are rigid & demand strict attention


Usually the simplest type of plans
Code of conduct in a organization.

Programmes
Programmes are the detailed information about Objectives, policies, procedures and rules , even
a combination of these all. It create relations between procedure, policies and objectives, for a
systematic working.
Primary programs
are prepared by the top level management & Supportive programs to support the primary
programs, generally prepared by lower and middle level.

Features

Detailed statement about a project


Ensure systematic working in organization.
Include all the range of activities
Programmes are created at different levels

Budgets
Budgets are the e statement which shows the quantative value of expected result in future facts
and figures. They always measurable and prove standards to make easier the comparison with
actual result , even provide corrective actions.
Some Types of Budgets are:1) Capital budget - Prepared to find out expected capital requirement.
2) Cash Budget - Prepared to analyses the cash outflow ( expenditure on expenses0 and
cash inflow from sales over a time period.
3) Operational budget - Finance hourly units are used to measure the employee working
hour. Genrallly prepared by lower level management.

Features

Prepared by managers at every level


Is a controlling device from which changes can be taken care of.

Prove numerical value for expected results.

To frame plans,

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