PLANNING
Samir K Mahajan, M.Sc, Ph.D.,UGC-NET
Assistant Professor (Economics)
Department of Mathematics & Humanities
Institute of Technology
Nirma University
Email: samir.mahajan@nirmauni.ac.in
https://sites.google.com/a/nirmauni.ac.in/2hm203_-eebm_even_2014/
PLANNING
MEANING
Planning is the act of determining the organization’s objectives/goals and the
means for achieving them.
Planning entails/implies setting of organisations objectives and goals, and
choosing future courses of action/strategies and developing policies, rules. procedures,
and forecasting future outcomes.
ELEMENTS OF PLANNING
Objectives
Objectives are the ends /the specific targets /planned output to be reached by an
organisation. Objectives specify future conditions that a manger hopes to achieve. Eg.
market share,
Goals
Goals are derived form objectives, and are work-oriented time-bound targets measured
in quantitative or qualitative terms.
Strategies
Strategies / courses of action are the means (specific planned activities) through which
an organization tries to relate itself with its environment in order to develop certain
advantages which help in achieving its objectives. Strategy gives the direction in which
human and physical resources will be deployed and applied in order to realise the
organisation objective.
Forecasts
Forecasts are predictions or estimates of the changes in the environment which may
affect the business plans. Such forecasts may be economic, technological, political, social
and so on. However, demand/sales forecast is the basis of most planning. Planning
without forecasting is not possible.
PLANNING AS A PROCESS/STEPS INVOLVED IN PLANNING
Planning is the process of setting organisation’s goals and courses of
action, developing rules and procedures, and forecasting future outcomes.
The major steps involved in the planning process of an organisation or enterprise are as
follows:
STEPS INVOLVED IN PLANNING contd.
 Establishing Objectives
Establishment of organizational or overall objectives is the first and most crucial step in
planning. Objectives are the planed output/ends of an organisation - specified in clear
and measurable terms.
The objectives are set in the light of the opportunities perceived by managers, and are
influenced by the values and beliefs of executives, mission of the organization,
organizational resources, etc. One cannot make plans unless one knows what is to be
accomplished.
Objectives provide the guidelines (what to do) for the preparation of strategic/future
course of action(how to do).
Major/Organizaitonal objectives should be broken into departmental, sectional and
individual objectives and goals.
STEPS INVOLVED IN PLANNING contd.
 Establishment of Planning Premises
Planning premises are assumptions about future events/ conditions which are likely to
happen within and outside the organisation.
Since the future events are not known accurately at the time of planning, managers have
to make certain assumptions , either based on their intuitions or analysis or forecasting
of the factors responsible for such events.
Internal premises include organizational polices, various resources and the ability of the
organisation to withstand the external pressure. Internal premises create strength or
weakness for organisation.
External premises include all factors in external environment like political, social
technological, competitors' plans and actions, government policies, market conditions.
External premise create threat or opportunity to the organization.
STEPS INVOLVED IN PLANNING contd.
 Determining Alternative Course of action
After setting the premises, the next logical step in planning is to determine the list of
possible courses of action that will lead to objectives or goals. This is necessary to ensure
success of the objectives and to reduce cost.
 Evaluating Alternative Courses
After deciding alternatives course of action, planners are required to evaluate the strong
and weak points of each course of action. Evaluation of alternative is a must to arrive at a
decision, and choose the best course of action.
 Selecting the best course of action
Selecting best course of action is the point of decision making. Best course of action is
the one which has the most advantages/strong points, and the fewest
serious
disadvantages/weak points in the perspective of enterprise needs, resources and
objectives laid down.
STEPS INVOLVED IN PLANNING contd.
 Formulating derivative plans
Formulating derivative plans is intended to give effect and support to the
basic/organisation plan. This is done by breaking down the basic or major plan into
supporting plans for each department or branch, for each product, for each month or
quarter such as: staffing plan, operating plan, financial plan, maintenance, stores,
purchase, etc.
Supporting/derivative plans set specific targets for each manager and department of
the organisation
 Establishing Sequence of Activities
Timing and sequence of activities are determined after formulating basic and derivative
plans, so that plans may be put into action. Timing gives practical shape and concrete
form to the plans. The starting and finishing times are fixed for each piece of work, so as
to indicate when, within what time that work is to be commenced and completed.
STEPS INVOLVED IN PLANNING contd.
 Follow up and review
Formulating plans and chalking out of programmes are not sufficient unless follow-up
action is provided to see that plans so prepared and programmes chalked out are being
carried out in accordingly, and to see whether these are not kept in cold storage.
It is also required to see whether the plan is working well in the present situation. If
conditions have changed or the current plan has become out-dated and inoperative, it
should be modified or replaced by another plan.
The plan should be communicated to all persons concerned. Planning is effective only
when the persons involved work in a team spirit and all are committed to the objectives,
policies, programmes, strategies envisaged in the plan.
PLAN
Meaning of Plan
Plan is a blueprint for action. It specifies :
o resource allocations
o schedules
o actions necessary for attaining goals and objectives
CLASSIFICATION OF PLAN
CLASSIFICATION
OF PLAN
Time
organisation level
Strategic
Plans
Tactical
Plan
Frame
Operational
Longterm
Plan
frequency of use
Standing
Single-use
Plan
Plan
Medium
-term
Shortterm
PLANS BASED ON ORGANISATION LEVEL
On the basis of organisation level, plans can be strategic, tactical or operational. These
plan relate to different levels of management.
 Strategic Plans
Strategic plans establish strategic /over all objectives for the organisations.
Strategic plans are general plan applicable to the entire organisation, and are usually
developed by the top management in consultation with board of directors and the
middle management. They or are usually prepared for five years or more.
Managers developing strategic plans work in an environment of uncertainty,
and are required to make assumptions about future threats and opportunities.
The major areas for strategic goals are
o
o
o
o
o
o
o
o
Market Standing
Human Resources
Financial Resources
Physical Resources
Productivity
Profit requirements
Social Responsibility
Innovation
PLANS BASED ON ORGANISATION LEVEL contd.
 Tactical Plans
Tactical plans are prepared for implementation of strategic plans, and essentially
indicate the actions that major departments and sub-units should take to execute
strategic plans.
Tactical plans are developed by the middle-level managers, who may consult lower-level
managers before finalizing the plans
and communicating it to the top-level
management.
Compared to the strategic, tactical plans cover a shorter time-frame usually one or five
years.
PLANS BASED ON ORGANISATION LEVEL contd.
 Operational Plans
Operational plans are developed to determine the steps necessary for achieving tactical
goals. These are stated in specific & quantitative terms, and serves as the department
manager’s guide to day-to-day operations.
Operations plans are developed by lower-level managers in an environment of relative
certainty. Hence, the amount of risk involved in making operation plan is less than that
of tactical plans.
These plans generally consider time-frame of less than a year, such as: a few months,
weeks, or even a few days. These plans spell out specifically what must be accomplished
over short time periods in order to achieve operational goals.
Unless operational goals are achieved, tactical and strategic goals will not be achieved.
Therefore, operational plans are necessary for the success of tactical and strategic plans.
Plans Based on Frequency of Use
Based on frequency and extent of use, plans can be of two types: standing and single-use
plans.
 Standing Plan
Standing Plans are developed in dealing with recurring situations, are used over and over
again during a long period of time. E.g. long term objectives, strategies, policies,
procedures and rules, schedules
 Single-use Plan
A single-use plan is a one-time plan aimed at specific goals, and is designed to deal with
unique, non-recurring situations. Once the goal has been achieved, the plan ceases to
exist. Generally, these plans are derived from the standing plans. E.g. programme,
projects, budgets, targets.
PLANS BASED ON TIME FRAME
Organisational plans based on time can be classified into long-term, intermediate and
short-term plans.
Long-Term Plans
Long-Term Plans are the strategic plans of an organisation having time frame exceeding five
years. These are developed the top management and involves setting up of board
objectives, policies and procedures for achieving these objectives. Long-term plans provide
a direction to the organisation.
Intermediate plans
Intermediate plans generally cover time periods ranging from one to five years and specify
the organisation’s activities to be carried out to achieve the desired objectives. These plans
provide direction to medium level management. Outcomes of intermediate plans are
certain and predictable.
Short-term plans
Short-term plans generally cover time period up to one year and provide first-level
managers with guidelines (what he has to do; how, where and when he has to do it)
for carrying out the day-to-day activities of an organisation. These plan take care of the
individual activities needed to achieve the overall activities outlined in the long-term plan.