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"Some men see things as they are and ask, 'Why?" I dream things that never were and ask, 'Why not?'"

Robert F. Kennedy

CHAPTER OUTLINE

• Introduction

• Definition of Planning.

• Nature of Planning

• Objectives of Planning

• Steps involved in planning process

• Importance of Planning

• Kinds of Plans

INTRODUCATIONPlanning is a basic function of management. The effective performance of other managerial functions (organizing, staffing, directing and controlling) depends upon the effectiveness of planning. Planning establishes the objectives for the group and lays down steps to accomplish them.

•DEFINITION OF PLANNING A few definitions by some of the prominent writers on

the subject are given below:

(1) “Planning means the determination of what is to be done, how and where is to be done, who is to do it, when and how the results are to be evaluated”.

James L. Landy

(2) “Planning is deciding in advance what is to be done. It involves the selection of objectives, polices, procedures and programmes from among alternatives”.

M.E. Hurley

OBJECTIVES OF PLANNING Objectives of planning in business may be

underlined :1. Helpful in Forecasting Forecasting is the essence of planning . Really

speaking ,planning is to prepare the plans for the organization on the basis of forecasting. Planning helps in effective forecasting.

2. Helpful in Facing the Competition Planning helps in forecasting the competition which

will have to be faced by the organization.3. Helpful in Accomplishment of BudgetsPlanning helps the management in accomplishing the pre-determined budgets of the enterprise in a planned

way.

4. To Forecast the RisksPlanning helps in forecasting the risk that may be appear in the future . By forecasting the risks ,the strategies may be designed to treat with them effectively and successfully.

5. To Give Specific Direction.Planning gives specific direction to all the activities of an organization by preparing the outlines of these activities well in advance.

IMPORTANCE OF PLANNING Planning is vital importance in the managerial process.

It results in the following advantages:

1. Emphasis on ObjectivesPlanning is directed towards enterprise objectives. If

the objectives are clearly laid down, all the business activities directed towards these objectives.

2. Minimizes UncertaintyIt gives an opportunity to a manager to foresee various

uncertainties which may be caused by changes in technology, fashion and taste sufficient provision can be made in the plans to meet these uncertainties

3. Facilitates Decision-MakingEffective planning helps in taking decisions about type

of organization, supervision and communication etc.

4. Improves CoordinationPlanning helps in coordinating the activities of the department of the enterprise.5. Facilitates ControlPlanning facilitates control. It is also true that corrective action under the control process may lead to modification of plans.6. Economical OperationsEfficient planning secures economy. Planning avoids wastage of resources by eliminating unnecessary activities in the enterprise.7. Greater EfficiencyPlanning determines as to when and how various tasks to be performed by the different departments. This enhances the efficiency of various departments.

8. Encourages InnovationPlanning helps innovative and creative thinking. Many

new ideas come to the mind of a manager when he is planning.

9. Improves Competitive StrengthEffective planning gives a competitive edge to the

enterprise over other enterprises that do not plan properly.

•KINDS OF PLANSKinds of Plans may be described as follows:

1- Short-rang and Long-rang PlansPlans can be classified with respect to time. On this

basis, planning can be classified into three categories, namely, short-term, medium-term and long-term.

Short term planning relates to a period of less than one year.

Medium-term planning covers a period of over one year, but less than five years. The length of period should not be taken to be rigid or inflexible. It may vary from one business to another depending upon the nature of business, risks and uncertainties, government control, etc.

Long-rang planning sets long term goals for the enterprise and formulates specific plans for maintaining these goals.

2- Corporate and Functional PlansCorporate planning is done by the top management. It

covers the entire corporation.Functional planning covers a particular functional area

of business. For instance, if planning pertains to finances of the enterprise, it is known as ‘Financial Planning’.

3- Standing and Single-Use PlansStanding plans are also known as repeated use plans

since they are designed to be used over and over again. They are formulated to guide managerial decisions and action on recurring problem.

Single-use plans are made for handling non-repetitive, new or unique problem. They are tailored to fit specific situations and they become obsolete after their use.

•STEPS INVOLVED IN PLANNING PROCESSIn brief, the steps in planning process may be

summarized as follows:-1. Determination of ObjectivesThe first step of the planning process is the

determination of objectives. One cannot make plans and programmes unless and until he knows where he is and where he wants to go. Objectives must be clear and specific.

2. Establishment of Planning PremisesThis includes forecasting, collection and analysis of

data. It also includes the identification of key factors and key problems.

3. Determining Alternative Course of ActionOn the basis of forecasting, various alternatives open

for an action is identified.4. Evaluating Various AlternativesAll the alternatives are studied and evaluated. A careful

comparison of all the alternatives is made in the light of the objectives expected from planning.

5. Making a ChoiceOn the basis of comparative study of all the

alternatives, the best course of action is chosen.

6. Preparation of PlanOnce a basic plan is decided, sub plans are prepared

for the implementation of this basic plan.7. Timing and Sequence of OperationThe schedule is determined for the execution of plans.

Along with this sequence of operations is also carefully decided.

8. Follow-up ActionFollow-up actions are required to see whether the

activities are being carried out in accordance with the plans and programmes. Follow up action is also required to see that the plans are being implemented in the time schedule fixed for them.