Planning - VirtuosoCoder

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Planning

Planning is the primary function of management. It focuses on the future course of action.

It specifies the objectives to be achieved in future and selects the alternative course of action to reach defined objectives.

It also involves many activities like analyzing and decision making about technical, personnel, financial, and other elements essential to implement predetermined course of action. Thus, planning is mental and paper activities which look ahead for drawing the future course of action.

In other words, planning is intellectual process which is concerned with deciding in advance what, when, why, how, and who shall do the work.

Manager defines goals and takes necessary steps to ensure that these goals can be achieved in efficient manner.

Planning reflects vision, foresight and wisdom. Thus, it is the blue print of action and operation .

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Following are the important definition of planning: o “Generally speaking, planning is deciding in advance what is to be done” W H Newman o According to Hayness and Massie “Planning is that function of manner in which he decides in advance what he will do. It is a decision making process of a special kind, its essence is futurity.” o According to Harold Koontz and O’Donnel, “Planning is deciding in advance what to do, how to do, when to do and who is to do it. Planning bridges a gap between from where we are to where we want to go.” o According to George R Terry,“ Planning is the selecting and relating of facts and the making and using of assumption regarding the future in the visualization and formulation of proposed activities believed necessary to achieve desired results.

Planning involves the following elements:o Establishment of organizational objectives and policies.

o Identification of alternative courses of action and programs o Selecting the best course of action and programme.

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Advantages (Benefits/Importance) of Planning : Planning is the foundation of the organization. It is the primary function of management which clearly defines the organizational objectives and line of action. The quality of planning is important for successful operation of the organization. The following points clarify the importance of planning in the organization:

Goal Focus: Planning helps to focus the attention of the managers and subordinates towards organizational objectives. It predetermines the objectives and defines line of action to complete the work. It serves as the blue print of the course of action and eliminates the unnecessary and useless activities. It focuses to priorities and facilitates to take right decision at the right time.

Minimize uncertainties: Planning is one of the important tools to forecast and anticipate future uncertainties and risks. The management has to work in an environment which is uncertain and ever changing. The change in environment may occur due to economic, social, political and technological changes. Planning helps an enterprise to make study about future challenges and uncertainties which may arise in the future course of action. Thus, it helps management to face future which greater strength and confidence. The systematic and practical planning provides guidelines to the management to complete the work in efficient manner.

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• Improve efficiency: One of the parts of planning is to select a best course of action by evaluating many alternatives. While selecting a course of action, the benefit of the organization is taken into consideration. It also provides guidelines and procedures to complete the work. It also helps for the optimum utilization of resources, avoiding wasteful efforts and money and minimizing wastage. Besides, it also avoids the concept of trial and error or hit and misses and defines a clear line of action. The selection of best cause of action, definition of clear line of action and optimum utilization of resources contribute to improve overall working efficiency of the organization.

Facilitates to control: Planning is the basis of control. It defines the minimum standard of work to be achieved and time to complete the job. It is helpful to compare the actual performance achieved with that of predetermined or standard fixed. The manager evaluates the actual achievement of work interval of time. This is helpful to identify the deviation, if any, between actual and planned performances. In case any deviation is there, the management can take necessary steps so that defined work can be completed in given time.

Thus, planning makes control meaningful and effective.

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• Innovation and creativity: Planning encourages innovative thought and creative action among the managers. An effective planning encourages managers to think about new knowledge, idea, procedures, technique and strategy for the completion of work. It also helps to create new modified course of action. This is essential for the growth and expansion of working areas of the business. It contributes to motivate and develop moral among the employees. It is also helpful to maintain up-to-date position in business operation and face business complexity. Thus, planning is the base of management. The managers innovate and create new strategy to complete the predetermined work in this ever-changing environment.

Better Coordination : Planning plays an important role to facilitate better coordination among all the authorities and units of the organization. It clearly defines in advance what, when, and by whom the work should be done. For this purpose, it clarifies the authority and responsibility of each and every employee from top level of the organization.

This is helpful to harmonize the relationship between all employees and develop feeling of team spirit or group work among them. In absence of proper planning of interrelated units, it is difficult to accomplish goal and there is possibility of wastage of resources. Thus, planning

Ensure Commitment: Planning ensures commitment of the management towards organizational goal. It set the feelings of responsibility of managers. It facilitates to convert individual goals to organizational objectives. It clearly defines authority and responsibility of each and every authority. No one can avoid or divert his responsibility to others. Planning also develops the sense of team spirit and group work.

Aid to Business System : Planning is the initial tool to business success. It plays a key role for the successful operation of the business. It helps to select the best course of action among many alternatives and defines clear line of action. Besides, it brings unity in action, minimizes cost and effort and coordinates among all the members of the organization. Ultimately, it helps to develop working efficiency and to achieve predetermined goals in an effective way. Thus, planning is the best for the successful operation of business activities. It is known as the key to business activities.

Brings Systemization : Planning contributes to develop a system and uniformity in organizational performance. It clearly defines authority and responsibility of each and every employee from upper to subordinate levels. It integrates and unites all the possible efforts of the organization. It avoids random activity and the concept of trial and error. It provides order rationality to the organization. It brings maturity in decision and makes simplification on its implementation. It brings coordination to complete the work in systematic and efficient manner and ultimately helps to minimize

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time and cost.

Nature of Planning

Goal Oriented

Continuous

Process

Primary

Function

Forward Looking

Pervasive

Function

Involve Choice

Intellectual or Rational

Process

Integrated

Process

Directed Towards

Efficiency

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Lack of

Reliable /

Accurate Data

Problems / Limitations of

Planning

Time and Cost

Resistance to change

Lack of Ability to Plans

Environmental

Constraints

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Making Planning Effective

Integration

Of Plans

Climate for

Planning

Clear-cut

Objectives

Top

Management

Support

Open System

Approach

Management

Information

System

Careful

Premising

Participating in Planning

Sound

Communication

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Organizational Level

Corporate

Planning

Divisional Planning

Sectional

Planning (Lower

Level)

Kinds of

Planning

Focus

Strategic

Planning

Operational

Planning

Tactical Planning

Time Period

Long-Range

Planning

Intermediate or

Medium-Range

Planning

Short-Range

Planning

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 Levels of planning :

Corporate planning (Top Level) : It is strategic in nature and covers the entire spectrum of organisational activities.

o It lays down the basic objectives, polices and strategies for the organisation as a whole.

o It usually covers a long period of five years or even more than this.

o It provides for future contingencies and attempts to match the organisational resources with the O. and T. in the external environment.

o Corporate level plans are formulated by the top level managers and they integrate varius divisional and functional plans to the enterprise.

Divisional planning (Middle level) : It relates to a particular division or department. I o t sets the objectives, policies and programmes of a particular department or division in tune with the corporate plans of the enterprise.

o The divisional head and middle level managers are responsible for divisional plans.

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 Sectional planning (Lower Level) : It is highly specific as it is done to achieve the divisional objectives.

o Its focus is to lay down detailed plans for a particular unit for the day-to-day guidance of personnel working there.

o The first line managers are responsible for developing plans for their units in the light of the divisional plans.

o Such plans are more specific and detailed as compared to divisional and corporate plans.

Focus of Planning :

Strategic planning : It represents the general direction of the organisational efforts.

o It is the way in which the management choose to utilize the organisation resources to reach its objectives.

o They are made by the top management of the firm after taking into account the firm’s strengths and weaknesses in the light of internal and external environment.

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 Operational planning : It lays down programmes, budgets, projects, polices, procedures, rules, etc. to implement the strategic plan.

o It involves laying down how the firm’s resources of the organisation will be used to help the firm achieve its objectives.

o It provide the details of how the strategic plans will be accomplished.

Tactical planning : They are made for short term moves and necessary for supporting the strategic plans and achieving firm’s objectives.

o They are required to meet the challenges of sudden changes in the environmental forces.

Range or time span of planning :

Long-range planning : It is the process of establishing long-term goals, working out strategies, policies and programmes to achieve these goals.

o It generally covers a period ranging from 5 years to 20 years or even more. The period will vary from organisation to organisation.

o The purpose of long-range planning may include technological leadership, increase in market

o It may involve capital budgeting, product planning, project planning, etc.

o Its suc.cess will be determined by the ability of the organisation to predict and deal with the environment.

Intermediate or medium-range planning : The plans are made to support the long term plans.

o They may relate to development of new products and markets, product publicity, increasing return on investment from the existing products and markets, etc.

o It usually covers a period of more than one year but less than five years.

Short range planning : It relates to a period of upto one year.

o Such plans are made to achieve short term goals.

o It is concerned more with the current or near future operations of the enterprise.

o It may be considered as a step by step approach to medium and long range planning.

o They are quiet specific in nature such as change of product design, training of work force, reduction of inventory levels, preparation of production budget and so on.

o It is generally action-oriented and is the responsibility of lower level managers

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 Types of Planning Premises :

• Internal and External Premises o Internal Premises come from the business itself. It includes skills of the workers, capital investment policies, philosophy of management, sales forecast, etc.

o External Premises come from the external environment. That is, economic, social, political, cultural and technological environment. External premises cannot be controlled by the business.

• Controllable, Semi-controllable and Uncontrollable Premises : o Controllable Premises are those which are fully controlled by the management. They include factors like materials, machines and money.

o Semi-controllable Premises are partly controllable. They include marketing strategy.

o Uncontrollable Premises are those over which the management has absolutely no control.

They include weather conditions, consumers' behaviour, government policy, natural calamities, wars, etc.

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Tangible and Intangible Premises : o Tangible Premises can be measured in quantitative terms. They include units of production and sale, money, time, hours of work, etc.

o Intangible Premises cannot be measured in quantitative terms. They include goodwill of the business, employee's morale, employee's attitude and public relations.

Constant and Variable Premises : o Constant Premises do not change. They remain the same, even if there is a change in the course of action. They include men, money and machines.

o Variable Premises are subject to change. They change according to the course of action.

They include union-management relations

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Determination of the objectives

Collection and forecasting of

Information

Development of

Planning

Premises

Discovering alternative course of action

Follow up measures

Communicating the plan

Formulation of derivative plans

Selection of the best alternative

Steps in Planning Process

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Steps in Planning Process

Determination of the objectives : The first step in planning is to identify certain objectives.

The objectives set must clearly indicate what is to be achieved, where action should take place, who should perform it and when it is to be accomplished. The objectives should be established for the entire organisation and for each and every department. Planning has no utility if it is not related to certain objectives.

Collection and forecasting of Information : Sufficient information must be collected in order to make plans and sub plans. Necessary information includes the critical assessment of current status of the organisation together with a forward look at the environment that is anticipated. The collection and forecasting of the information must be done in terms of external and internal environment. The considerations of the external environments must the competitions now and in the future. The assessment of internal environment may consist of the strong and weak point of the organisation. This is an important step of planning process.

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• Development of planning premises : The next step is the establishment of planning premises.

Planning premises are the assumptions and predictions about the future. The assumptions are the basis of planning. Forecasting is important in premising. It helps in making realistic assumptions about sales, costs, prices, products etc in future. This requires a collection of data on present trends and future possibilities.

Discovering alternative courses of action : Usually, there are several alternatives for any plan. The manager should try to find out all the possible alternatives. At the time of developing alternatives he should screen out most viable alternatives. So he has to analyse in detail a limited number of alternatives.

Selection of best alternative : The various alternatives identified are evaluated and compared in terms of their expected costs and benefits. Many quantitative techniques are available to evaluate alternatives. after evaluating the various alternatives the best alternative should be selected for implementation.

Formulation of derivative plans : The next step is to develop detailed sub plans for its implementation. Derivative plans are required to support the overall plans. The derivative plans are developed in the frame work of overall plans. These are drawn up with respect to different areas of

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activity.

Communicating the plan : It is very important to get the co operation of the subordinates at every stage of its implementation. For this purpose the plans should be communicated and explained to them so that they can get the clear picture of what to be done. An organisation is not benefited from planning process until they are put into action.

Follow up measures : To ensure the plans are proceeding along the right lines, the actual performance is compared with the planned performance. In this way, any short coming can be noted and suitable remedial action can be taken.

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 Components of planning / classification of plans / types of plan : In the process of planning several specific plans are prepared which may broadly be classified into two categories :

Standing

Single-Use Plans

Standing Plans : They are Mission, Objectives, Policies, Procedures, Rules, Strategies etc.

The Standing or Repeated-Use Plans are formulated by the Managers at different levels and are meant for repeated use as and when the occasion demands.

Mission : Every organisation must have a mission ; then only it becomes meaningful or purposive. The ‘mission’ of a business organisation may be two-fold : o production and distribution of goods and services in order to satisfy the basic needs of the consumers.

o provision of employment and a source of income to the people whereby they might be in a position to purchase their desired goods and services.

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o The mission is the central guiding concept describing the fundamental reason for the existence of an organisation.

o It indicates the line of business and reflects upon philosophy of management.

o ln short, the mission gives a clear-cut idea about basic long-run commitment of an organization.

Objectives : Objectives may be defined as the goals which an organisation tries to achieve.

o Objectives are also described as the end-points of planning.

o According to Dalton E, McFarland, “Objectives are the goals, aims or purposes that organisations wish to achieve over varying periods of times.” o ‘Objectives’ is a wider term and ‘Mission’ is a part.

o Objectives decide where we want to go, what we want to achieve and next what is our destination.

o Objectives constitute the purpose of the enterprise and without them no intelligent planning can take place.

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 Characteristics of objectives : Important characteristics or features of objectives are as below

:o The objectives must be pre-determined.

o The objectives must be reduced to black and white A clearly defined objective provides the clear direction for managerial efforts.

o Objectives must be realistic, i.e., they must be within the reach of the organisation.

o Objectives must be measurable.

o Objectives must have social sanction. Restrictions on organisational objectives are put through social rules, norms or customs.

o Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business.

o Peter Drucker has recommended eight key areas in which business firms have to set their objectives Market standing, innovation, physical and financial resources, manager performance and development, worker performance and attitude, productivity, profitability and public accountability.

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o All objectives are interconnected and mutually supportive.

o Objectives may be short-range, medium-range and long- range.

o Objectives may be constructed into a hierarchy, e.g., overall, major, divisional, departmental, etc.

 Advantages of objectives : o Clear definition of objectives encourages unified planning. The unifying effect arises when the plans prepared by different departmental heads are adjusted to a common objective.

o Objectives provide motivation to people in the organisation. Objectives help in providing the sense of unity, harmony and accomplishment to cooperative efforts.

o When the work is goal-oriented, unproductive tasks can be avoided.

o Objectives provide standards which aid in the control of human efforts in an organisation.

o Objectives serve to identify the organisation and link it to the groups upon which its existence depends.

o Objectives act as a sound basis for the developing administrative controls.

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o Objectives contribute to the management and process ; they influence the purpose of the organisation, policies, personnel, and leadership as well as managerial control.

o Objectives indicate, the contribution to be made by each unit and thus it is the basis for decentralisation.

o MBO (Management by Objectives) programme cent per cent depends upon clear cut objectives.

Policies : Policy-making is another most important component of business planning.

o Policies are guides to action.

o They provide abroad guideline as to how the objectives of an organisation are to be achieved.

o According to Koontz and O’ Donnell, “Policies are general statements or understandings which guide or channel thinking in decision-making of subordinates.”

Features of policies : o The policy tries to contribute to the organisational objectives.

o Policy is formulated through the various steps in the decision-making process.

o Policy can be interpreted from the behaviour of the top management.

o Policy provides guidelines to the members of the organisation for choosing a particular course of action.

o Policy-making is the task of all managers ; however, the higher manager is in the organisation, the more important is his role in policy-making.

o A sound policy must be flexible in its implementation.

o A policy should be uniform in its application ; it must be fair to all, offering equity and just ice to those who are affected by it.

Importance of policies : o Policies lead to a uniform pattern of action in respect of various matters relating to an organisation.

o Policies speed up decision-making since they provide a framework within which the decisions can be taken.

o Policies help both men and boss to work for a better performance.

o Policies help in securing effective co ordination of efforts and activities in the organisation.

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 Essentials of the Policy Formation : According to Alford and Beatty, the essentials of policy formation may be listed as below:o A policy should be definite, positive and clear. It should be understood by everyone in the organisation.

o A policy should be translatable into the practices and peculiarities of every department and division of the organisation.

o A policy should be flexible and at the same time have a high degree of permanency.

o A policy should be formulated to cover all reasonably anticipatable conditions.

o A policy should be founded upon facts and sound judgment.

o A policy should conform to economic principles, statutes and regulations and should be compatible with the public interest.

o A policy should be a general statement of the established rule to follow in recurring situations; rather than one prescribing detailed procedure.

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 Procedure : A ‘Procedure’ is a standing plan describing a customary method of handling a future activity.

o The term ‘Procedure’ refers to a specific administrative directive prescribing the sequential manner in which a repetitive activity is to be initiated, carried forward and completed in a goal-oriented manner.

o Procedures are meant to standardize and routine the pattern and pace of work flow at the operational level.

o They provide the framework for doing routine things in a rational ways, so that there is little duplication of effort, waste motion and confusion.

o They help the process of streamlining and simplifying administrative activity.

o In the words of George R. Terry, “A Procedure is a series of related tasks that make up the chronological sequence and the established way of performing the work to be accomplished.” o For example, the procedure of scientific selection of employees may have the following steps

: (i) Preliminary interview, (ii) Application blank, (iii) Reference check, (iv) Employment tests, (v) Final interview, (vi) Supervisor’s approval, (vii) Medical checkup, (viii)

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Appointment and (ix) Induction or Orientation.

 Rules and methods : They are meant for repeated reference, ready guidance and strict adherence by people in work situations.

o The term ‘RULE’ is defined as a prescriptive directive to people on their conduct and action.

o Rules are almost in the nature of ‘commandments’ seeking to discipline, structure and restrain behaviour and task performance of people in formal organisational settings.

o A rule is in the nature of a decision made by the management regarding what is to be done and what is not to be done in a given situation.

o A rule is definite and rigid ; it allows no deviation or discretion to subordinates. Generally the breach of rules carries a penalty. Examples of rules are : (i) Employees are to retire once they attain the age of 58 years ; (ii) Smoking is prohibited inside the factory; (iii) Officers are not entitled for over-allowance ; (iv) All purchases are to be made only through calling tenders.

o A Method is a prescribed process in which a particular operation of a task is to be performed.

o It specifies the ‘one best way’ of performing each step in a task.

o It defines the technology of individual operations in a work situation.

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o As compared to procedure, ‘Method’ describes how one particular step of a procedure is to be performed.

o Method involved only one department and one person, while a procedure may involve many departments and many persons in an organisation.

o A method is meant to be a complete guidance to individuals in their performance of tasks.

Strategies : The term Strategy’ stands for the war-art of the military general, compelling the enemy to fight as per our chosen terms and conditions.

o A strategy is a special kind of plan formulated in order to meet the challenge of the policies of the competitors.

o Edmund P. Learned has defined ‘strategy’ as “the pattern of objectives, purposes or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be and the kind of company it is or is to be.” o According to C. T. Hardwick and B.F. Landuyt, “The word strategy is used to signify the general concept and salient aspect of gamesmanship as an administrative course designed to bring success.”

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o Strategy may also be designed by the general forces operating in an industry and the economy.

o For example, if the management anticipates an economic recession, it may decide upon a strategy of reduced stocks, fewer staff, reduced expenses, etc.

o It is a policy that has been formulated by the top management for the purpose of interpreting and shaping the meaning of other policies.

Characteristics of strategy : o It is the right combination of different factors.

o It relates the business organisation to its environment.

o It is an action to meet a particular challenge, to solve particular problems or to attain a desired objective.

o Strategy may need contradictory action. For example, today a manager may adopt a particular course of action but tomorrow he may revise the same due to changes in situations.

o Strategy is forward looking.

o It is a means to an end and not an end in itself.

o It is a means of coping with or managing the events and changes in the external environment.

o It is formulated at the top management level.

o It is generally long-range in nature but short-range moves are also specified in it.

o It is flexible and dynamic.

o It involves assumption of certain calculated risks.

o It is action-oriented and more specific than objective.

o It is generally meant to cope with a competitive setting, in which the behaviour of competitors and other adversaries of the enterprise affects its own functioning and performance.

 Strategy formulation : A perfect strategy can be built only on perfect knowledge of the plans of others in the industry.

o This may be done by the management putting itself in the position of a rival and then trying to estimate their plans.

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o There are three phases in strategy formation, viz. (1) Determination of objectives, (‘2)

Ascertaining the specific areas of strengths and weaknesses in the total environment, and (3)

Preparing the Action Plan to achieve the objectives in the light of environmental forces.

Advantages of standing plan : The advantages of standing plans may briefly be summarised as below: o Managerial effort and time can be minimised.

o It facilitates the delegation of authority.

o Effective control can be enforced.

o Standard operating procedures and methods evolve considerable use of the ‘one best way’ under scientific management.

o It helps in co-ordinating the different activities of an organisation.

o Standing plans enable the performance of work by persons with less experience and ability.

o It is easy to train people under recognised policies and procedures.

o Job rotation is also feasible.

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 Single-use plan : They are Programmes, budgets, schedules, projects , standards, etc.

Single-use plans are devised to meet the demands of a particular situation and are not meant to serve as standing guides to thinking and action.

Programmes : A ‘Programme’ may be defined as single-use comprehensive plan designed to implement the policies and accomplish the objectives.

o It gives a step by- step approach to guide the action necessary to reach a pre-determined goal.

o It is really a combination of programmes, budgets, schedules, projects etc. for the specific purpose of carrying out a particular course of action.

o It is designated as ‘single-use plan’ because a programme cannot be used in the same form again, once its objective is achieved.

o The expansion programme of a cotton mill is a case in point. A programme may be a major or a minor one ; along-term, medium-term or a short- term one. Generally, a programme is supported by the required capital and operating budgets.

o In business, programmes are used in various areas, e.g., developing a new product, training programme, advertising programme, expansion programme, etc.

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 Essential features of a programme : o It is a single-use but comprehensive plan.

o It lays down the principal steps for accomplishing a mission.

o It gives a step-by-step approach to guide the action plan.

o It is guided by the objectives and strategies and covers many other types of plans.

o It is a time-table of the future action.

o It ensures smooth, efficient and integrated functioning of an organisation.

o Programmes involve an integrated and coordinated planning approach.

Steps in programme : o The various activities needed to achieve the objective are first to be divided into clear-cut steps.

o The steps are then to be arranged in a proper sequence.

o Then the programme team should be decided, i.e., who will do what, where, when and how?

o Determine the various resources required for each step.

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o The time required for each step should also be ascertained.

o Assign definite dates for each part of a programme.

o Overall or Master Schedule for the Programme should also be prepared.

Projects : It may be defined as any scheme or a part of a scheme for investing resources, which can be analysed and evaluated as an independent unit.

• It is actually a proposal of investment which can be separately appraised through cost-benefit analysis.

Essential features : o It is a non-recurring plan.

o The activity is definable in terms of specific objective.

o It involves time-bound activities.

o Project approach is needed when (a) the work to be done is special requiring expertise from different departments; (b) the work is very complex ; (c) high cost is involved ; (d) errors and omissions are to be minimized ; and (e) ‘one-shot’ and time-bound activities are needed.

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 Schedules : Scheduling is a process of establishing a time sequence for the work to be done.

It is an essential part of an action plan. It prescribes the exact time when each step would begin and when it would terminate.

When the tasks to be done and the persons who must do them are ascertained, the only important thing attracting the attention of the management is ‘scheduling’.

Three main elements are involved in planning schedule : o Identify activities or tasks o Determine their sequence o Specify starting and finishing dates of each activity as well as for the sequence as a whole

 Budgets : A budget is a single-use plan expressed in quantitative terms.

o It is always expressed in numerical terms ; hence it is also known as ‘Numerised Plan’.

o According to Koontz and O’Donnell, “A budget as a plan is a statement of expected results expressed in numerical terms.” o Budgets may be prepared in terms of time, money, materials or other units required to

o It expresses organisational objectives in financial and physical units.

Essential features of a Budget : o Budget plays a dual role ; it is a planning instrument on the one hand and a control device on the other. Budgeting actually provides a means for controlling operations.

o Usually there is a separate budget for each unit and a master budget for the entire organisation.

o Usually budgets are prepared for the financial year, but there may be monthly or quarterly budgets also.

o Budgets can set standards of performance so very necessary for the control process.

 The budgets may be prepared for various groups of activities. Examples of certain important budgets are : (i) Materials budget, (ii) Production budget, (iii) Personnel budget, (iv) Sales budget, (v) Cash flow budget, and (v) Profit budget.

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 Standards : o All plans are considered as standards.

o A ‘Standard’ is a norm or criteria against which performance is compared and evaluated. In short, a ‘Standard’ is a guide for performance evaluation.

o A company may set up a variety of standards expressing the anticipated results of the plans.

o Qualitative and quantitative standards are established in each area of business, e.g., physical standards, quality standards, personnel standards, performance standards, standards of service and conduct, etc.

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