A Goal Without A Plan Is Just A Wish!!

2021
Chapter Three
3. MANAGERIAL PLANNING

3.1. DEFINING PLANNING

The management functions are planning, organizing, staffing, direction and
controlling. These functions are essential to achieve organizational objectives. If
objectives are not set then there is nothing to organize, direct and control. An
organization has to specify what it has to achieve. Planning is related with this
aspect.
Every person whether in business or not has framed a number of plans during his
life. The plan period may be short or long. One of the characteristic of human
being is that he plans. Planning is the first and foremost function of management.
According to Koontz and O’Donnel “Planning is deciding in advance what to
do, how to do it, when to do it and who is to do it. It bridges the gap
from where we are and to where we want to go. It is in essence the
exercise of foresight”. According to M.S. Hardly “Planning is deciding in
advance what is to be done. It involves the selection of objectives, policies,
procedures and programmes from among alternatives.
Planning- is the process of determining how the organization can get where it
wants to go, and what it will do to accomplish its objectives. In more formal terms,
planning is “the systematic development of action programs aimed at reaching
agreed-upon business objectives by the process of analyzing, evaluating, and
selecting among the opportunities which are foreseen.”
Planning- is a critical management activity regardless of the type of organization
being managed. Modern managers face the challenge of sound planning in small
and relatively simple organizations as well as in large, more complex ones, and in
nonprofit organizations
Heying and Massie define “Planning is that function of the manager in which he
decides in advance what he will do. It is a decision making process of a special
kind. It is an intellectual process in which creative mind and imagination are
essential”. Planning is an attempt to anticipate the future in order to achieve
better performance.

In the business world, organizations should achieve their objectives. In order to

achieve objectives, the organizations should plan. Planning process produces the
plan.

Plan is a blueprint for action & prescribes activities necessary for an organization
to realize its goals. Understanding of planning process requires knowing the
relationship between goals, plans & controls as shown below.

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Goals Plans Controls

Goals represent the designed position of an organization that is sought to be

achieved; Plans establish the means for achieving the organization goals; and
through planning managers outline the activities necessary to insure that the
goals of the organization are achieved; and Controls monitor the extent to which
goals have been achieved and ensure that the organization is moving in the
direction suggested by its plans.

Goals are the outcomes of planning and benchmarks for controls. They are taken
from the plan. Goals, plans & controls are inextricably intertwined & must be well
integrated so as to make the planning process successful. Planning answers six
basic questions in regard to any intended activity.

 The ‘what’ or what to do: is the goal that we want to achieve. It may be
long term or short term.
 The ‘when’ or when to do: is the question of timing. Each long term goal
may have a series of short term goals that must be achieved before the long
term can be achieved.
 The ‘where’ or where to do: is the place at which the plan is put into
practice.
 The ‘who’ or who does it: is the individual/ unit supposed to undertake
specific tasks. It asks which specific people will perform specific tasks.
 The ‘how’ or how it is done or by whom it is done: is the strategy/
method for achieving the goal. It describes what specific steps are to be
taken and in what kind of sequence.
 The ‘how much’ or how much is required to do: concerns with the
expenditure of resources that are determined to be essential to reach goals.

3.2. NATURE/FEATURE/CHARACTERISTICS OF PLANNING

 Planning is goal-oriented;
 Planning is primary function and all-pervasive;
 Planning is mental exercise;
 Planning is continuous-process;
 Planning involves decision making;
 Planning is forward looking;
 Planning is flexible;
 Planning is an integrated process; &
 Planning includes efficiency and effectiveness dimension.

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3.3. IMPORTANCE OF PLANNING
Planning is of great importance in all types of organization whether business or
non-business, private or public, small or large. The organization which thinks
much ahead about what it can do in future is likely to succeed as compared to one
which fails to do so. Without planning, business decisions would become random,
ad hoc choices.
Planning is important because of the following reasons.
 Primacy of planning: Planning is the first and foremost function of
management, other functions follow planning. What is not planned cannot be
organized and controlled. Planning establishes the objectives and all other
functions are performed to achieve the objectives set by the planning process
as shown in the figure below.

 To minimize risk and uncertainty: The organization continuously

interacts with the external dynamic environment where there is great amount
of risk and uncertainty. In this changing dynamic environment where social
and economic conditions alter rapidly, planning helps the manager to cope up
with and prepare for changing environment. By using rational and fact based
procedure for making decisions, manager can reduce the risk and
uncertainty.
 To focus attention on objectives: Planning focuses on organizational
objectives and direction of action for achieving these objectives. It helps
managers to apply and coordinate all resources of the organization effectively
in achieving the objectives. The whole organization is forced to embrace
identical goals and collaborate in achieving them.
 To facilitate control: Planning sets the goals and develops plans to achieve
them. These goals and plans become the standards or benchmarks against
which the actual performance can be measured. Control involves the
measurement of actual performance, comparing it with the standards and

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initiating corrective action if there is deviation. Control ensures that the
activity confirm to plans. Hence control can be exercised if there are plans.
 To increase organizational effectiveness: Effectiveness implies that the
organization is able to achieve its objectives within the given resources. The
resources are put in a way which ensures maximum contribution to the
organizational objectives. Effectiveness leads to success.

3.4. BARRIERS TO EFFECTIVE PLANNING

A. Influence of external factors: the effectiveness of planning is sometimes
limited because of the external social, political, economical and
technological factors which are beyond the control of the planners.
B. Non-availability of data: planning needs reliable facts and figures.
Planning loses its value unless reliable information is available.
C. People’s resistance: resistance to change hinders planning. Planners
often feel frustrated in instituting new plans, because of the inability of
people to accept them.
D. Time and Cost: collection of data and revision of plans involves
considerable time, effort and money.
E. Inflexibility: Formal planning efforts can lock an organization into specific
goals to be achieved within specific timetables. When these objectives were
set, the assumption may have been made that the environment wouldn’t
change during the time period the objectives cover. If that assumption is
faulty, managers who follow a plan may have trouble. Rather than
remaining flexible and possibly scrapping the plan-managers who continue
to do what is required to achieve the original objectives may not be able to
cope with the changed environment. Forcing a course of action when the
environment is fluid can be a recipe for disaster.

3.5. REQUIREMENTS OF A GOOD PLAN

 An effective and sound plan should have the following features:
(a) Clear objective: the purpose of plans and their components is to
develop and facilitate the realization of organizational objectives. The
statement on objectives should be clear, concise, definite and accurate. It
should not be colored by bias resulting from emphasis on personal
objectives.
(b) Proper understanding: a good plan is one which is well understood by
those who have to execute it. It must be based on sound assumptions and
sound reasoning.
(c) Flexible: the principle of flexibility states that management should be
able to change an existing plan because of change in environment without
undue extra cost or delay so that activities keep moving towards the

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established goals. Thus, a good plan should be flexible to accommodate
future uncertainties.
(d) Stable: the principle of stability states that the basic feature of the
plan should not be discarded or modified because of changes in external
factors such as population trends, technological developments, or
unemployment.
(e) Comprehensive: a plan is said to be comprehensive when it covers
each and every aspect of business. It should integrate the various
administrative plans so that the whole organization operates at peak
efficiency.
(f) Economical: a plan is said to be good, if it is as economical as possible,
depending upon the resources available with the organization.

3.6. TYPES/ CLASSIFICATION OF PLANS

Plans can be classified on different bases or dimensions. The most important ones
are:
1. Retentiveness (frequency of use)
2. Time dimension/ horizon (duration) &
3. Scope/ breadth dimension.
4. Approach dimension
5. Formulation dimension
3.6.1. Classification of Plans Based on Repetitiveness
Based on repetitiveness, plans are classified into two, as Standing plans and
Single use plans.
1. STANDING PLANS
Standing plans are plans that are used again & again; followed each time; and
designed to deal with organizational issues or problems that recur frequently.
They can limit employees' flexibility & make it difficult to respond to the needs of
the customers. By using standing plans management handles repetitive problems.
Standing plans include mission or purpose; goals/ objectives, strategy; policy;
procedure; method and rule.
A. Purpose or Mission
Setting organizational objectives is the starting point of managerial actions.
Every organization is purposive creation, it has some objectives; the end results
for which the organization strive. These end results are referred to as mission,
‘purpose’, ‘goal’, ‘target’ etc. which are often used inter-changeably. However
there are differences in the contest in which these terms are used.
In every social system, enterprises have a basic function or task, which is
assigned to them by society. The mission or purpose identifies this basic function

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or task of the organization, for example the purpose of university is teaching &
research.
Mission and purpose are often used interchangeably though there is difference
between the two at least at theoretical level. Mission has external orientation and
relates the organization to the society in which it operates. A mission statement
links the organization activities to the needs of the society and legitimates its
existence. Purpose is also externally focused but is relates the organization to that
segment of the society to which it serves; it defines the business which the
company will undertake. The mission of the company says what it can be for the
country i.e., society in general and purpose suggest how this contribution can be
made. However in general practice mission and purpose are either used
interchangeably or jointly.

B. Goals or Objectives
Every organization is established for the purpose of achieving some
objectives. An individual who starts a business has the objective of earning profits.
A chartable institution which starts schools and colleges has the objectives of
rendering service to the public in the field of education. Though objectives may
differ from one organization to another, yet each organization has its own
objective. Objectives are the end towards which the activities of an organization
are directed. Objectives are known by different names, such as goals, aims,
purposes, targets etc. Setting up of objectives is the first step in planning.
According to Mc Farland, “Objectives are the goals, aims or purposes that
the organizations wish to achieve over varying periods of time”. George R
Terry defines “. A managerial objective is the intended goal which describes
definite scope and suggests direction to the efforts of a manager”. Objective is the
term used to indicate the end point of management programme, for which an
organization is established and tries to achieve.

Objectives have the following characteristics.

 Objectives are multiple in numbers: Every business enterprise has a
package of objectives set in various key areas. Peter Drucker has
emphasized setting objectives in eight key areas namely market standing,
innovation, productivity, physical and financial resources, profitability,
manager performance and development, worker performance and attitude,
and public responsibility.
 Objectives are tangible or intangible: Some of the objectives such as
productivity, physical and financial resources are tangible; whereas
objectives in the areas of manager’s performance, workers morale is
completely intangible.

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 Objectives have a priority: At a given point of time one objective may be
important than another. For example maintaining minimum cash balance is
important than due date of payment.
 Objectives are generally arranged in hierarchy: It implies that
organization has corporate objectives at the top and divisional, departmental
and sectional objectives at the lower level of organization.
 Objectives some time clash with each other: An objective of one
department may clash with the objectives of other department. For example
the objectives of production of low unit cost achievement through mass
production of low quality products may conflict with goal of sales department
selling high quality products.

Requirements of Sound Objectives

 Objectives must be clear: There should not be ambiguity in objectives. The
framed objectives should be achievable and are to be set considering
various factors affecting their achievements.
 Objectives must support one another.
 Objectives must be consistent with organizations mission.
 Objectives should be consistent over period of time.
 Objectives should be rational, realistic and not idealistic.
 Objectives should start with word ‘to’ and be followed by an action verb.
 Objectives should be periodically reviewed.

Advantages of Objectives
The following are some of the advantages of objectives.
 Unified planning: Various plans are prepared at various level in the
organization. These plans are consistent with the objectives and hence
objectives encourage unified planning.
 Individual motivation: Objectives act as motivators for individual and
departments imbuing their activity with a sense of purpose.
 Coordination: Objectives facilitate coordinated behavior of various groups
which otherwise may pull in different directions.
 Control: Objectives provide yardstick for performance. The actual
performance is compared with standard performance and hence objectives
facilitate control.
 Basis for decentralization: Department-wise or section wise objectives
are set in order to achieve common objectives of the organization. These
objectives provide basis for decentralization.

C.Strategies

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A strategy may be defined as relationship or an administrative course of action
designed to achieve success in the face of difficulties. Strategy is the basic plan
chosen to achieve objectives. ‘Every organization has to develop plans logically
from goals considering the environmental opportunities and threats and the
organizational strengths and weakness. A strategy is a plan which takes into these
factors and provides an optimal match between the firm and external
environment. Two activities are involved in strategy formulation namely
environmental appraisal and corporate appraisal. Environmental appraisal
involves identifying and analysis of the following factors:
 Political and legal factors: Stability of government, taxation and licensing
laws, fiscal policies, restrictions on capital etc.
 Economic factors: Economic development, distribution of personal income,
trend in prices, exchange rates etc.
 Competitive factors: Identifying principal competitors and analysis of their
performance, anti-monopoly laws, protection of patents, brand names etc.
Corporate analysis involves identifying and analyzing company’s strength
and weakness. For example a company’s strength may be low cost
manufacturing skill, excellent product design, efficient distribution etc. Its
weakness may be lack of physical and financial resources. A company must
plan to exploit these strengths to maximum and circumvent its weakness.
The formulation of strategy is like preparing for beauty contest in which a lady
tries to highlight her strong points and hide her weak points. The process of
matching company’s strength and weakness with environmental opportunities
and threats is known as SWOT analysis.

D. Policies
A policy is a general guide to thinking and action rather than a specific course of
action. It defines the area or limits within which decisions can be made to achieve
organizational objectives. It sets up boundaries around decisions. According to
Koontz and O’ Donnell policies are general statements of understanding which
guide or channel thinking in decision making of subordinates. Policies channelize
the thinking of the organization members so that it is consistent with the
organizational objectives. According to George R Terry “ Policy is a verbal, written
or implied overall guide, setting up boundaries that supply the general limits and
directions in which managerial action will take place”. Although policies deal with
“how to do” the work, but do not dictate terms to subordinates. They only provide
framework within which decisions are to be made by the management in various
areas. Hence an organization may have recruitment policy, price policy,
advertisement policy etc.
Types of policies: Policies may be classified on the basis of sources, functions or
organizational levels as shown

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Originated policies are policies which are established formally. These policies are
established by top managers for guiding the decisions of their subordinates and
also their own and are made available in the form of manuals. Appealed policies
are those which arise from the appeal made by a subordinate to his superior
regarding the manner of handling a given situation. When decisions are made by
the supervisor on appeals made by the subordinates, they become precedents for
further action. For example a books dealer offers a discount of 10% on all text
books. Suppose if an institution requests for a discount of 15% and prepared to
pay full amount in advance, the sales manager not knowing what to do may
approach his superior for his advice. If the superior accepts the proposal for 15%
discount, the decision of the superior become a guideline for the sales manager in
future. This policy is an appealed policy because it comes into existence from the
appeal made by the subordinate to the superior. The policies which are stated
neither in writing nor verbally are known as implied policies. The presence of
implied policies can be ascertained by watching the actual behavior of various
superiors in specific situations. For example if company’s residential quarters are
repeatedly allotted to individuals on the basis of seniority, this may become
implied policy.
On the basis of business function policies may be classified into production, sales,
finance, personnel policies etc. Every one of these function may have a number of
policies. For example the personnel function may have recruitment policy,
promotion policy and finance function may have policies related to capital
structure, dividend payment etc.,
On the basis of organizational level policies may range from major company
policies through major departmental policy to minor or derivative policies
applicable to smallest segment of the organization.
Advantages of Policies
The advantages of policies are as follows:

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 Policies ensure uniformity of action at various organization points which
make actions more predictable.
 Since the subordinates need not consult superiors, it speeds up decision.
 Policies make easier for the superior to delegate more and more authority to
his subordinates because, he knows that whatever decision the
subordinates make will be within the boundaries of the policies.
 Policies give a practical shape to the objectives by directing the way in
which predetermined objectives are to be attained.

E. Procedures
A procedure is a chronological sequence of steps to be undertaken to enforce a
policy and to attain an objective. It lays down the specific manner in which a
particular activity is to be performed. It is a planned sequence of operations for
performing repetitive activities uniformly and consistently.
Policies are carried out by means of more detailed guidelines called
procedures. A procedure provides a detailed set of instructions for performing a
sequence of actions involved in doing a certain piece of work. A procedure is a list
of systematic steps for handling activities that occur regularly. The same steps are
followed each time that activity is performed. A streamlined, simplified and sound
procedure helps to accelerate clerical work without duplication and waste of
efforts and other resources. Difference between policies and procedures can be
explained by means of an example. A company may adopt a policy of centralized
recruitment and selection through labor department.
The labor department may chalk out the procedure of recruitment and
selection. The procedure may consist of several steps like inviting application,
preliminary interview aptitude and other tests, final interview, medical
examination and issue of appointment orders. The following are advantages of
procedures.
 They indicate a standard way of performing a task.
 They result in simplification and elimination of waste.
 Procedure improves the efficiency of employees.
 Procedure serves as a tool of control by enabling managers to evaluate the
performance of their subordinates.

F. Methods
A method is a prescribed way in which one step of procedure is to be
performed. A method is thus a component part of procedure. It means an
established manner of doing an operation. Medical examination is a part of
recruitment and selection procedure, method indicate the manner of conducting
medical examination. Methods help in increasing the effectiveness and usefulness
of procedures. By improving methods, reduced fatigue, better productivity and

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lower costs can be achieved. Methods can be improved by eliminating wastes by
conducting “motion study”.
Methods are more detailed than procedures. Procedure shows a series of steps
to be taken where as a method is only concerned with a single operation, with one
particular step, and tells exactly how this particular step is to be performed.

G. Rules:
Rules are the simplest and strictest type of standing plan found in
organizations. They provide detail & specific regulations for action, and reflect
managerial decisions that certain actions must or must not be done. Rules are
different from policies & procedures. Rules also serve as guidelines, but allow no
discretion in their application; allow no deviation from the stated course of action.
A procedure might be looked upon as of rules but a rule may or may not be a part
of procedure. e.g. “No smoking” is a rule unrelated to any procedure. Rules are
already decided measures that are applied in response to a certain action. And
they are pre-decided actions by top level managers. Employees don't have right
to modify or change rules by themselves.
Rules, procedures & methods, by their nature, are designed to repress
thinking; we should use them only when we don’t want people in an organization
to use their discretion.

2. SINGLE – USE PLANS

They are developed to address a specific organizational situation. They are used
up only once but not over & over again as the standing plans. They are not used
up again once the objective is accomplished. Single – use plans are commonly
three types, namely programs; projects and budgets.
A. Programs
They are a relatively broad set of activities designed to accomplish a particular set
of goals. They are complex and encompass goals, policies, procedures, rules, task
assignments, steps to be taken, resources to be employed, and other elements
necessary to carry out a given course of action; they are supported by budgets.
Programs may be of various size & duration. A program is a sequence of activities
directed towards the achievement of certain objectives. A programme is action
based and result oriented. A program lays down the definite steps which will be
taken to accomplish a given task. It also lays down the time to be taken for
completion of each step. The essential ingredients of every program are time
phasing and budgeting. This means that specific dates should be laid down for the
completion of each successive stage of programme. In addition a provision should
be made in the budget for financing the programme. A program might include
such general activity as purchasing new machines or introducing new product in
the market. Thus a program is a complex of objective, policies, procedures, task

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assignments, steps to be taken, resources to be employed and other elements to
carry out a given course of action.

B. Projects
Projects are parts of a general program and direct the efforts of individuals or
work groups towards the achievement of well defined goals. They are typically
less comprehensive & narrower in focus than programs; and usually have
predetermined target dates for completion. Project is a subset of a specific
program. It is a smaller portion of a program. Projects are connected with a major
program but a project can be handled by itself.

C. Budgets
Budget is the resources required in numerical terms. It is referred as a numerated/
numberized program. it is a fundamental planning instrument in companies that
deals with the future allocation and utilization of various resources to different
organizational activities over a given time period. Budget can be expressed in
financial terms; labor units; products/ unit of product; machine hours or in any
other numerically measured term. It is necessary for control; and serves as a
benchmark for controlling. Budgets are 3 types.
Variable or flexible budget: budgets that vary according to the
organization’s level of output.
Program budget: when an organization & its departments identify goals,
develop detailed programs to meet the goals estimate the cost of each
program. To prepare effective program budget, a manager must do some
fairly detailed & through planning.
Zero – base budget: the programs started from the scratch or “base zero.

N.B. Programs are the most comprehensive, projects have the narrower scope
and often undertaken as a part of a program. Budgets are developed to support
programs & projects.

3.6.2. Classification of Plans Based on Time

All planning deals with the future; and the future are measured in time. All the
kinds of plans are interrelated and one is the derivative of the other. Plans in
terms of time periods are classified into three as long term/ range; intermediate
range and short range.
1. Long – range planning: has longer time horizon; and usually concerned with
the future direction of the organization but not concerned with the immediate
future but with distant future. The time usually ranges from 5-10 years, but the
time length is a relative term that depends on the size & the nature of the
organization.

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2. Intermediate – range planning: ranges between long & sort range planning;
and they are usually developed for 1-5 years, but the time dimension can also
vary depending on the size & nature of the organization.
3. Short – range planning: are not developed separately. They are also taken
as operational plans derived from the long ranging or intermediate plans. The
time length is commonly taken as less than 1 year. What is long or short range
in most cases depends on the size of the organization & the type of business of
the organizations.

3.6.3. Classification Based on Scope/Breadth

Planning that is strategic in nature; focuses on changing the competitive position
and the overall performance of the organization is the long term. Based on scope,
plans are classified into 3 categories as Strategic plan; Tactical plan & Operational
plan.
1. Strategic planning
Strategic plan is a general plan outlining decisions of resources allocation,
priorities, and action/ steps necessary to reach strategic goals. It is a process of
analyzing & deciding the organs mission; objective; strategy (major courses of
action) and the major resource allocations. It is also developed by top level
managers; mostly long –range in its time horizon; expressed in relatively general,
non-specific terms & a type of planning that provides a general direction to the
organization. Strategic planning is the process by which the organization's
strategies are determined. In the process, three basic questions are answered:
 Where are we now?
 Where do we want to be?
 How do we get there?
The "where are we now?" question is answered through the first three steps of the
strategy formulation process:
 Perform internal and external environmental analyses,
 Review vision, mission and objectives, and
 Determine SWOT: Strengths, Weaknesses, Opportunities and Threats.
SWOT analysis is very crucial. Going on to strategy choices without a
comprehensive SWOT analysis is risky. Strengths and weaknesses come from the
internal environment of the firm. Strengths can be exploited, built upon and made
key to accomplishment of mission and objectives. Strengths reflect past
accomplishments in production, financial, marketing and human resource
management. Weaknesses are internal characteristics that have the potential to
limit accomplishment of mission and objectives. Weaknesses may be so important
that they need to be addressed before any further strategic planning steps are
taken. Opportunities and threats are uncontrollable by management because they
are external to the firm. Opportunities provide the firm the possibility of a major

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improvement. Threats may stand in the way of a firm reaching its mission and
objectives.

2. Tactical planning:
Tactical plan is a plan aimed at achieving tactical goals and developed to
implement specific parts of strategic plan. It refers to the process of developing
action plans through which strategies are executed. It is concerned with shorter
time frame & narrower scopes than strategic planning. Departmental managers in
organizations are often involved in tactical planning. The strategic planning &
tactical plan are highly interrelated.
3. Operational planning:
Operational plans focuses on carrying out technical plans to achieve
operational goals. Operational planning is mainly short range; more specific &
detailed. It is made at operational level & concerned with day- today; week – to -
week activities of the organizations.
4. Contingency planning:
Contingency planning is an approach that has become very popular in today's
rapidly changing business envelopment. It is the determination of alternative
courses of action to be taken if the original plans are/or become inappropriate due
to the changing circumstances. It is proactive in nature & the management tries
to anticipate changes in the environment and prepares to cope with the future
events. It is necessary at each level of management and for strategic, tactical,
and operational plantings. It is the development of two or more plans based on
different conditions. The plan to be implemented is determined by the specific
prevailing situation.
3.6.4. Classification of Plans Based on Approach
 Classification of planning into proactive and reactive is based on the
organizations response to environmental dynamics.
A. Proactive planning: involves designing suitable courses of action in
anticipation of likely changes in the relevant environment. In this approach,
org do not wait for the environment to change but take action in advance.
B. Reactive planning: occurs when organizations responses come after the
environmental changes have taken place. In such situation the org lose
opportunities to those org which adopt proactive approach.

3.6.5. Classification of Plans Based on Formulation

I. Formal planning: is in the form of well-structured process involving
different steps. In large organizations they undertake planning in formal way
in which they create corporate planning cell placed at sufficiently high level
in the organizations.

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II. Informal planning: is undertaken by the smaller organizations, the
planning process is based on manager’s memory of events, intuitions and
gut-feeling, rather than based on systematic evaluation of the environment.

3.7. PLANNING PROCESS

The planning process indicates the major steps taken in planning. And generally
there are 10 steps in planning process.
Step 1: Understanding the existing situation
Awareness to the external environment to the organization is great important in
planning to identify opportunities (O) & Threats (T) and identify Strength (S) &
Weaknesses (W) of an organization. To understand external environment
organizations should analyze economic situations (competition, prices, demand,
supply, etc.); Political situations (government policies, taxation, peace & stability,
etc.); Socio – cultural situations: (culture of the society, direction in change of the
culture, attitude of the society towards different products, etc.); Environmental
situations and Technological situations. In addition to external environment,
understanding the internal environment is also essential, i.e. different types of
resources an organization possesses. Therefore managers must look at O and T
as well as S &Ws, and understand what problems they wish to solved & why, and
know what they expect to gain. Setting realistic objectives depends on this
awareness. Planning requires a realistic diagnosis of the opportunity situation.
Step 2: Forecasting
Forecasting is assumption what the future looks like. To decide where one wants
to go, it is necessary to have information about what the future looks like.
Planning is deciding what is to be done in the future. The future is full of
uncertainties; the manager must make certain assumptions about it in order to
plan properly. These assumptions are based on forecasts of the future.
Step 3: Establishing objectives
Objectives established for the entire enterprise and then for each subordinate
work unit. They specify the expected results and indicate the end points what is to
be done, where the primary emphasis to be located, & what is to be accomplished
by the network of strategies, policies, procedures, rules, budgets, & programs.
Organizational objectives give direction to the major plans, by reflecting these
objectives departmental objectives defined, departmental objectives intern
control objectives of subordinate departments, etc. down the line. The objectives

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 A Goal Without A Plan Is Just A Wish!!
2021
of lesser departments will be more accurate if the subdivisions managers
understand the overall organizational objectives and the derivative goals.
Step 4: Determining the alternative courses of action
Determining the alternative courses of action is searching for & examining
alternative course of action (strategies), especially for those not immediately
apparent. The more common problem is not finding alternatives but reducing the
number of alternatives.
Step 5: Evaluating alternative courses of action
Evaluating alternative courses of action is assessing the alternatives by weighing
them in light of premises and goals. It is seeking out alternative courses and
examining their strong & weak points.
Step 6: Selecting a course of action
Selecting a course of action is the point at which the plan is adopted. It is the real
point of decision making.
Step 7: Formulating derivative plans
Derivative plans are those which support the basic or main plan.
Step 8: Numberizing plans by budgeting
After decisions are made & plans are set, the final step is giving them meaning.
Budgeting is to numberized plans by converting them into budgets. The
organization’s budget represents the sum total of income & expenses. If done
well, budgets become a means of adding together various plans & also set
important standards against which planning progress can be measures.
Step 9: Implementing the plan
After selecting optimum alternative, the manager has to develop an action plan to
implement it. The manager must decide these issues
o Who will do what
o By what date will the tasks be initiated & completed
o What resources will be available for the process (human & material)
o How will the plan be evaluated
o What reporting procedures are to be used
o What type & degree of authority will be granted to achieve these ends
Step 10: Controlling & evaluating the results
Once the plan is implemented, the manager must monitor the progress, i.e.
evaluate the reported results, and make any modifications necessary. Plans have
to be modified because the environment is constantly changing. Modification is
needed because plans are not quite perfect when they are implemented.

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