CH-4 Planning

Meaning of Planning: Planning can be defined as kMhinking in advance what is to be done,

what is to be done, when is to be done, how is to be donc and by whom it should be dont.
PRESENT POSITION FUTURE POSITION
PLANNING
to achieve
- Planning involves setting objectives and devcloping appropriate courscs of action
objectives.
Objectives provide direction so all members work to achieve these objectives.
It is concernedwith both ends (what is to be donc) and means (how is to be done)
where we want togo
Thus Planning seek to bridge the gap between where we are and

are always developed for a fixed time

The important ingredient of planning is time; plans
period as no business can goon planning endlessly.
advance what is tobe done, how to do ít, when to do it, and
- Definition: "Planning isdeciding in
who is to do it."

Features/Nature/Characteristics oa plannjng:
focuses on achieving objectives: We can thik gfplanning ihabsençe of
1Planning procedures and stepsto þe taken for achievement of
objectives, Planning decides the methods,
organizafíon h¡s the objeclive of pánufacturing 1500 washing
these objectives. For e.g if an changes are made in the
machines and in one month only 8P,màchiFesar mafhufacured then
plan to achieve the final objetive.
No other function of management can be
primaky funetion ofuanagement:
2Planning isthenanager withoutperfdaDing the planning function as planning lays down the
executed by other functions of management are performed
base fopother Kunctions of qanagement. All function, managers assign authority and
e.g in organizing
according othè plàns drawh. Forlevel of authority and responsibility depends upon
and
responsitbjlityto the employees
Similarly in staffing function the employees are appointed, the
objectives ofthe company. the objectives of the company.
number and typéof employees again dependsnoonone as compared to other functions.
remains at
So planning always proceeds and

Planning is Pervasive: Planning is required at all levelsof management and in all

3
of top management nor only any
departments of organization, It is not only the function managers at all the levels and
all the
particular department, rather it is performed by
different departments, however extent of planning may vary from level to level for e.g
among
ftmandeep malik
69
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PLANNING: IMPORTANCE
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Planning may not work
are continuous political, ceonomic, social,technological and very
in a indynamic
changes legaldynamic
cnvironment. Itis very difficult topredict these ehanges. not workinna
Plans may fail if changes are very Ircquent, thus planning docs dynamic
environnment. economic conditions,
For e.g it is very difticult to make accurate forecasts about
Porees, naturalcalamitics, humanbehavior and so
government
on. If manager ailis to accurately
torecast these changes, then planning does not provide positive resus
3 Planning reduces creativity: With planning the managers of the organization start working
rigidly and they become the blind followers of the plan oniy.
çhanges
Ihe managers do not take any initiative to make changes in the plan accordirgto thè
prevailing in the business environment. They stop giving suggestions and new idea to bring
improvement in working because the guidelines for working are giyen in planningÀ only.
For e.g a worker is given a target of assembling two computers per d¡y, utà his habit of
doing things differently an idea struck him whickwiN redyce the thhe of assmblihg as wellas
the cost of assembling, Worker shared this idea with hàyshpetyiaor ba iasteadof appreciating
the worker he ordered him to complete the work as pèrmetkods and techniques decided
earlier, as nothing could be changed at thisstage
4 Planning involves huge cost: Whenplans ar dh¡å up tge cost are involved in formulation
of plans like expense on board mçesing:, discusjons with experts(fees is paid to them)
expenses on preliminry tnyèstigatign tÍ Knd out feasibility of plans. If cost incurred is
greater than the bereis derived frorh the plgn then plan should not be carried out.
5 Planning isqtimeçoysuing process: Planning requires collection of infornation, its
analysis and jntèxprtationz thìs takes a lot of time and leads to delay in action. Sometimes
plan to be draptakessomuch of time that there is no time left for implementation, hence
planning vil be'wasteful
a, activity if not implemented on time.
6Planning does not guarantee success: Sometimes managers think that plan that have worked
earlier will work in future also. So managers rely upon old plans, and following old plans in
changed circumstances willnot ensure success. Planning fails due to external changes which
are beyond mangers control for e-g manger have no control over govt policies, change in
industrial policy, taxation policy bank rate, change in fashion, taste and preferences,
change in competitors strategy
72 Amandeep Malk
 PROCESS OF PLANNING:
1Setting organizational objectives: The first and
foremost step is setting organizational
objectives, which specify what organization wants to achicve, Managers
goals which can be achievedquickly and in specifie linit of time, afterprefer toset up te
^ thesegoals are communicated to all the eplovees, For c.g
setting up the goas
be the objective of a company increasing profits by 207o could
manufacturing garments.
2Developing premises: planning is concerned with the future, which is uncertain, therefore the
manager 1S required to make certain assumptions about the future, these assumptions are
called planning premises which are considered base material upon which plans are to be
drawn.

Assumptions are made in the form of forecast about the demand for the company's product, tax
rates, government policy, wage rates etc.to make planning more effective accurate forecasts
should be made about future environment.

3Identifying alternative course of action: Once objectives are set, assumptions are made then
next step is to identify the all possible alternative courses of action, for example in order to
increase organizational objective of increasing sales the alternative s may be:
(i) By adding more line of products
(ii) By offering discounts
(iii) By increasing expenditure on advertisements

4 Evaluating alternative courseof action :The positive and negative aspects of each
alternative need to be evaluated i.e its feasibility and consequences. The consequence of
each alternative must be examined before a choice is made.

most feasible, profitable and

5 Selecting the best alternative:The best plan is selected which is
manufacturing stuffed toys is
with least negative consequences. For e.g using waste material in
feasible, profitable and
the best solution for increasing profits. The ideal plan woild be more
with least negative consequences.
Implementing the plan: this is the step where other managerial function also comes into
6 is plan to
required for e.g if there
picture, this step is putting plan intoaction i.e. doing what is
This step requires
raise production then more labour, more machinery will be required.
organizing of labour and purchase of machinery.
implemented and activities are carried out as
7 Follow up action: To whether plans are being
as it helps in achieving
per plan is also important. Monitoring plans are also important
manager must ensure that at
objectives. For e.g if target is to produce 1200cars per year then
comings corrective action
least 1000 cars are manufactured every month, in case of short
must be taken. 13 Amandeep Malik
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PLAN:
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TYPES
(i)OBJECTIVE: to by on be
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(ii)STRATEGY:|tis a comprehensive plan for achicving an organizationalobjectives. It also
ars to future business decisions, It include threc
dimensions.
hDetermining term objectives of the organization.
long
(i)Adopting partieular course of action.
i )allocatingresources necessary to achicve the objcctives.
Changein political, social, economie, legalandltechnologicalenvironment affects an
organizationstrategy.
Therefore strategy is dynamie and formulated by top management.
Whenever strategy is formulated business environment is taken into consideration.
MAJOR STRATEGY DECISIONS:
Whether the organization willcontinue to do business in same line.
or combine new line of activities with existing ones.
.or expand by operating on a larger scale.
Acompany's marketing strategy may relate to the following decisions:
(i)choice of channel of distribution (i) Pricing strategy (ii) choice of advertising media
(iv)choice of sales promotion techniques.
(iv)PROCEDURE: Procedures are routine steps on how tocarry out activities .
They give the exact manner in which any task is to done.
They are specified in chronological order.
Procedures are generally meant for insiders to follow.
They should be known to everybody so that all follows the same steps.
and procedures are interlinked-.procedures are steps to be carried out with in broad
Policies
policy framework. conducting
material, procedure for
Examples of procedure: procedure for purchase of raw
for redressel of grievances.
meetings, procedure for selecting employees, procedure
done.
specifies what is to be done or not to be
(v)RULE:Rule is a specific statement that
It is a guide to behavior. flexibility/ discretion/ compromise.
simplest type of plan because it allows no
Rule is the
It prescribes fine or penalty for violation. can be maintained and to avoid chaos
follow these rules so that discipline
Employees have to
and disorder.
istaken.
They cannot be changed unless policy decision
to be maintained in library.
For e.g, no smoking in office premises. Silence
in which a task has
(vi)METHOD: Method is the standardized way or prescribed manner
tobe performed.
 It deals with each step of a to be common performed.
Selection of fproper method procedure
saves time money
and and
tell how effort and
cach step increase
is eficiency.
Ifthe
trainingcommon
method is not decide in advance the then there will be confusion. For e.g
method canbe o thejob training or on the job training, Imethod of valuation of stock
LIFO(Last in first ou) FlFOHrst in firstout)
Gt:Abudge is astatement of expected results expressed in numerical terms.
It quantifies future facts and figure.
AS it express allitems in numbers, it becomes easy to compare actual performance wih
standardperformance and accordingly corrective action can be taken.
Thusbudget is controldevice as deviations can be taken care of.
buagets are prepared for future and forccast are to be made therefore it comes under planning.
The most common budget prepared by managers are cash budget.
This budget estimates the expectedcash inflow and cash outflow over aperiod of time.
Cash inflow comes from sales and cash outflow is in the form of expenses.
Cash budget =cash inflow-cash outflow=surplusor deficiency.
Management should have sufficient cash, it should avoid surplus cash as it willnot give any
returns.
Similarly sales budget may forecast the sale of different products in each area for particular
month. And how many workers are required in peak production times?.

(vii)PROGRAMME: Program me is a detailed statement about a project which outlines

the objectives, policies, procedures, rules, task, resources required to implement ant course of
action. The minute details areworked out within broad policy framework. Program me
ensures systematic working in the organization.
For e.g construction of a shopping mall,development of a new project etc.

76 Amandep Malik