MANAGEMENT AND ENTREPRENEURSHIP Planning

Definition In simple sense whatever we decide in advance for doing any

future events, is termed as planning. Planning is deciding in advance what to do, how to do it, when

to do it and who to do it. Planning bridges gap from where we are to, to where we want

to be. According To Managerial Language Planning May Be Defined

As- A Forward Looking Process. Which Is Adopted by an Organization with View To Bring

Certainty in the Present Events or Activities So That, Organization May Have More Confidence Regarding

The accuracy of future events. Hence it is clarified that planning is directly concerned with the

forecasting of future events.

Features of planning On the basis of the definition of planning, the features of

planning can be identified as follows 1. Planning is a process rather than behaviour at a given point

of time. This process determines the future course of action. 2. Planning is future oriented It is primarily concerned with

looking into future. It requires forecasting of future situation in which the organization has to function. Therefore, correct forecasting of future situation leads to correct decisions about future course of actions.

3. Planning involves selection of suitable course of action. This means that there are several alternatives for achieving a particular objective or set of objectives. However, all of them are not equally feasible and suitable for the organization.

4. Planning is undertaken at all levels of the organization because all levels of management are concerned with the determination of future course of action. However, its role increases at successively higher levels of management. Moreover, planning at different levels may be different in the context that at the top management level, managers are concerned about the totality of the organization and tries to relate it with the environment white-managers at lower levels may be involved in internal planning.

5. Planning is flexible as commitment is based on future conditions, which are always dynamic. As such, an adjustment is needed between the various factors and planning.

6. Planning is a pervasive and continuous managerial function involving complex processes of perception, analysis, conceptual thought, communication, decision, and action. The very pervasiveness of these planning elements makes it difficult to identify and observe them in detail.

Features of planning Features of planning

Goal-Oriented Approach Forward Looking Process Choice Making Activity Primary Function Planning is a Continuous Process Pervasive Function Planning is a Dynamic process

Goal-Oriented Approach

The features of planning can put to be a goal oriented approach because it is directly related with goals of organization.

In the absence of goals or targets we can not assume about planning because within the organization all the various activities are done with a view to attain the primary goals of organization.

In fact in the lack of goals there is no need to do plan towards any activity.

On the whole we can say; planning is a goal oriented approach.

Forward Looking Process

It is a salient feature of planning. Planning is forward looking process because it is

directly concerned with forecasting of future events.

The purpose of every plan is to determine the future events with a view to bring certainty in the present activities of the organization.

Thus we can say that planning is forward looking process.

Choice Making Activity

Planning can set to be a choice making activity because planning provides a large number of alternative courses to an organization to do a various activities in the most appropriate manner.

It is matter of fact that an action may be performed by many ways but there is particular way to perform an action which is most appropriate to organization.

Planning provides these alternatives to organization to perform its various actions in the most proper way.

Thus, planning is a choice making activity.

Primary Function

The feature of planning refers to primary function because planning is the first task of business management.

All other functions of business management such as organizing, staffing, directing & controlling are done after completing the planning.

In fact, whenever we are going to do any event or activity at first we make plan & accordingly we will perform to attain result oriented work.

Thus we can say to plan as primary function.

Planning is a Continuous Process

Planning can put to be a continuous process because it is not an event which is concerned with the point of time.

It is needed every walk of life of an organization. In the absence of planning any organization

cannot able to take even one step properly. Thus, it is clear that planning is a continuous

process.

Pervasive Function

It is a unique feature of planning. Planning is a pervasive function because it can

universally applicable at all the levels of management either it may be like top level of management, middle level of management or lower level of management.

In fact planning is the function of all managers. So that, planning is a pervasive function.

Planning is a Dynamic process

Planning can be treated as a dynamic process because it is affected if any changes are made in the internal & external environment of organization.

Such as if the goals of organization will change then it also affects the plans of organization.

Similarly in external environment if any changes are made in the government policy, regarding business then it also affects the plans of organization.

Therefore, it is clear that planning can put to be as a dynamic process.

Significance of planning Efficient Use of Resources Establishing Goals Managing Risk And Uncertainty Team Building Creating Competitive Advantages

Efficient Use of Resources

All organizations, large and small, have limited resources.

The planning process provides the information top management needs to make effective decisions about how to allocate the resources in a way that will enable the organization to reach its objectives.

Productivity is maximized and resources are not wasted on projects with little chance of success.

Establishing Goals Setting goals that challenge everyone in the organization to

strive for better performance is one of the key aspects of the planning process.

Goals must be aggressive, but realistic. Organizations cannot allow themselves to become too

satisfied with how they are currently doing--or they are likely to lose ground to competitors.

The goal setting process can be a wake-up call for managers that have become complacent.

The other benefit of goal setting comes when forecast results are compared to actual results.

Organizations analyze significant variances from forecast and take action to remedy situations where revenues were lower than plan or expenses higher.

Managing Risk And Uncertainty

Managing risk is essential to an organization’s success. Even the largest corporations cannot control the

economic and competitive environment around them. Unforeseen events occur that must be dealt with quickly,

before negative financial consequences from these events become severe.

Planning encourages the development of “what-if” scenarios, where managers attempt to envision possible risk factors and develop contingency plans to deal with them.

The pace of change in business is rapid, and organizations must be able to rapidly adjust their strategies to these changing conditions.

Team Building Planning promotes team building and a spirit of

cooperation. When the plan is completed and communicated to

members of the organization, everyone knows what their responsibilities are, and how other areas of the organization need their assistance and expertise in order to complete assigned tasks.

They see how their work contributes to the success of the organization as a whole and can take pride in their contributions.

Potential conflict can be reduced when top management solicits department or division managers’ input during the goal setting process.

Creating Competitive Advantages

Planning helps organizations get a realistic view of their current strengths and weaknesses relative to major competitors.

The management team sees areas where competitors may be vulnerable and then crafts marketing strategies to take advantage of these weaknesses.

Observing competitors’ actions can also help organizations identify opportunities they may have overlooked, such as emerging international markets or opportunities to market products to completely different customer groups.

Types of Management Plans The prosperity of an organization depends upon

the preparation and execution of the management plans.

It is a well known fact that it is impossible for an organization to operate without outlining proper management plans.

Over the years through extensive study and management research, many scholars have divided management plans in two types, namely,

Strategic Management Plans and Operational Management Plans.

Classification of management plans

Strategic Management Plans It involves proper planning and far-sightedness for

conceptualizing the strengths and weaknesses of the organization, pertaining to the environment in which it exists.

Strategic Management Plans deals with the envisioning of at least three to five years in the future and deciding what are the pathways that the organization intends to take and create new opportunities.

It strongly involves the basic elements of market research and financial projections with detailed study of promotional planning and taking all the necessary steps to fulfill the operational requirements.

It is the best way to find out the amount of capital to be raised, expansion target and optimum use of the available resources.

Strategic managerial plans also deals with relationship managerial as in today's world, management and the correct use of contacts is very important.

Operational Management Plans It is the interim period which deals with Operational

Management Plans. This is also termed as Tactical Planning and it also deals

with the aspects that involve the concept of an annual budget.

Operational managerial Plans entirely focuses on making sure that a given task is completed.

It is irrespective of whether it is driven by the entire organization's budget, any personal budget or any functional area of responsibility.

It can also be said that operational managerial plans are indirectly derived from strategic managerial plans.

It is an outflow of a detailed strategic managerial plan and can be seen as a part of the initiating and implementation stage of a more comprehensive long term plan.

Standing & Single Use Management Plans

Standing Plans are further of three types, namely Policies, Procedures and Rules.

While Single Use Plans are further of two types, namely, Programs and Budgets.

Policies - It focuses on accomplishing the organization's objectives by furnishing the broad guidelines for the correct course of action.

Procedures -Procedures outline a more specific set of actions and deals with the implementation of a set of related actions in order to finish a particular task.

Rules - Rules are a set of guidelines that show the way and manner in which a task is to be accomplished. It lays down the do's and don'ts that are to be strictly followed by the members of the organization without any deviation.

Programs - Programs deal with the guidelines that are set for accomplishing a special project within the organization. The project may not be in existence for the entire tenure of the organization, but if the project is accomplished, it might result in short-term success of the organization which might ultimately prove to be extremely helpful.

Budget - A Budget represents a specific period of time which indicates it as a single user financial plan. It is a complete set up indicating the process of procuring the funds and channelizing the funds. It shows in details how funds are to be utilized on labour, raw materials, capital goods, marketing and information systems.

THE PLANNING HIERARCHY There are many types of planning; in

most organizations These plans form a hierarchy, with the

plans at the top influencing all the plans that follow.

The hierarchy broadens at lower levels, representing an increase in the number of planning components.

The planning hierarchyMission

Philosophy

Goals

Objectives

Policies

Procedures

Rules

VISION AND MISSION STATEMENTS

The purpose or mission statement is a brief statement identifying the reason that an organization exists, while its future aim or function is often written as a vision statement.

The mission statement is of highest priority in the planning hierarchy because it influences the development of an organization’s philosophy, goals, objectives, policies, procedures, and rules.

THE ORGANIZATION’S PHILOSOPHY STATEMENT

It is the basic foundation that directs all further planning toward that mission.

A statement of philosophy can usually be found in policy manuals at the institution or is available on request.

GOALS AND OBJECTIVES Goals and objectives are the ends

toward which the organization is working.

All philosophies must be translated into specific goals and objectives if they are to result in action.

Thus, goals and objectives “operationalize” the philosophy.

POLICIES AND PROCEDURES Policies are plans reduced to statements or

instructions that direct organizations in their decision making.

Procedures are plans that establish customary and acceptable ways of accomplishing a specific task and delineate a sequence of steps of required action.

Procedures may have some variation in the steps as long as the same outcome is obtained

RULES Rules and regulations are plans that define

specific action or nonaction. Generally included as part of policy and

procedure statements Rules describe situations that allow only

one choice of action. Because rules are the least flexible type of

planning in the planning hierarchy, there should be as few rules as possible in the organization.

The various stages in the process of planning

Analyzing Environment Establishing Objectives Or Goals Seeking Necessary Information Premising Or Establishing the Planning

Premises Identifying and Developing Alternative

Courses of Action Evaluating the Alternatives Choosing the Most Appropriate Alternative Or

Course of Action

Analyzing Environment At the outset, the internal and external

environment is analyzed in order to identify company’s strengths and weaknesses (in

internal environment) opportunities and threats (existing in the

external environment) This is also known as SWOT (strengths,

weaknesses, opportunities and threats) analysis.

Establishing Objectives Or Goals In the light of the environmental scanning

(study), clear or probable opportunities that can be availed are identified.

In order to avail them, objectives or goals are clearly defined in specific term along with priorities in all the key areas of operations.

Major problems associated with such objectives are also identified and defined, so that there may be special emphasis on their planned solutions

Seeking Necessary Information All relevant facts and data are collected from internal

and external sources. For example, availability of supplies, physical and human

resources of the company, finances at disposal, relevant government policy, general economic conditions and relevant specific market situation.

Then such investigated and collected information and factors are analyzed.

Such information analysis is used in two ways – first, to make necessary modifications in objectives or goals and secondly to take help from them in premising (considering) assumptions.

Premising Or Establishing the Planning Premises In order to develop consistent and

coordinated plans, it is necessary that planning is based upon carefully considered assumptions and predictions.

Such assumptions and predictions are known as planning premises.

The assumptions under which plans are supposed to operate should be clearly brought out.

Such presumptions and forecasts are prepared for various areas, such as sales, prices, wages, taxes, changes in fashions and habits, purchasing power, standards of living, population competitors and so on

Identifying and Developing Alternative

Courses of Action After establishing objectives or goals and taking other related steps,

Feasible alternative programmes or courses of action are searched out.

Impossible or highly difficult propositions are left out.

Evaluating the Alternatives Probable consequences of each alternative

course of action in terms of its pros and cons (e.g. costs, benefits, risks, etc) are assessed

Then relative importance of each of them is found out by looking at their overall individual strengths and limitations especially in the light of the present objectives and the environment of the company.

Choosing the Most Appropriate Alternative Or Course of Action

After weighing the pros and cons of each of the alternative courses of action and realizing their individual relative importance

The most appropriate alternative in the light of the overall consideration is selected to be followed.

In other words, the alternative which appears to be most feasible and conducive to the accomplishment of company’s predetermined objectives, is chosen as a final plan of action – as strategy.

Preparing the Derivative Plans Derivative plans involve short range, operating plans

that are useful in day-to-day operation and provide a working basis for such operations.

Such plans are developed in the form of schedules, budgets, programmes, procedures, methods, rules, policies etc.

The derivative plans are prepared in different departments and their timing and sequence are also specified.

Such plans are prepared in concrete terms showing specific results to be attained within specified time limit and by utilizing the allocated resources.

An integrative mechanism has also to be provided for effecting coordination between and among different derivative plans being executed by different departments.

DECISION MAKING A decision is a choice between alternatives and

decision making is the process of choosing one alternative over the others.

Making good decisions should be a process. It is a process of identifying problems and

resolving them, or of identifying opportunities and taking advantage of them.

The process is made up of two components: Judgment – a process of evaluating alternatives Choice – a process of selecting a specific

alternative to implement

Decision Making Steps Steps involved in decision making process

are: 1. Define the problem, 2. Analysing the problem, 3. Developing alternative solutions, 4. Selecting the best type of alternative, 5. Implementation of the decision, 6. Follow up, 7. Monitoring and feedback!

1. Define the problem: The first and the foremost step in the decision-

making process are to define the real problem. A problem can be explained as a question for

and appropriate solution. The manager should consider critical or

strategic factors in defining the problem. These factors are, in fact, obstacles in the way

of finding proper solution. These are also known as limiting factors.

For example, if a machine stops working due to non-availability of screw, screw is the limiting factor in this case. Similarly fuse is a limiting or critical factor in house lighting. While selecting alternative or probable solution to the problem, the more the decision-making takes into account those factors that are limiting or critical to the alternative solutions, the easier it becomes to take the best decision.

2. Analysing the problem: After defining the problem, the next

important step is a systematic analysis of the available data.

Sound decisions are based on proper collection, classification and analysis of facts and figures.

There are three principles relating to the analysis

(i) The futurity of the decision. This means to what length of time, the decision will be applicable to a course of action.

(ii) The impact of decision on other functions and areas of the business.

(iii) The qualitative considerations.

3. Developing alternative solutions: After defining and analysing the problem, the

next step is to develop alternative solutions. The main aim of developing alternative

solutions is to have the best possible decision out of the available alternative courses of action.

In developing alternative solutions the manager comes across creative or original solutions to the problems.

In modern times, the techniques of operations research and computer applications are immensely helpful in the development of alternative courses of action.

4. Selecting the best type of alternative:

(a) Risk element involved in each course of action against the expected gain.

(b) Economy of effort involved in each alternative, i.e. securing desired results with the least efforts.

(c) Proper timing of the decision and action.

(d) Final selection of decision is also affected by the limited resources available at our disposal. Human resources are always limited. We must have right type of people to carry out our decisions. Their calibre , understanding, intelligence and skill will finally determine what they can and cannot do.

5. Implementation of the decision: (a) Proper and effective communication of

decisions to the subordinates. Decisions should be communicated in clear, concise and understandable manner.

(b) Acceptance of decision by the subordinates is important. Group participation and involvement of the employees will facilitate the smooth execution of decisions.

(c) Correct timing in the execution of decision minimizes the resistance to change. Almost every decision introduces a change and people are hesitant to accept a change. Implementation of the decision at the proper time plays an important role in the execution of the decision.

6. Follow up: A follow up system ensures the

achievement of the objectives. It is exercised through control. Simply

stated it is concerned with the process of checking the proper implementation of decision.

Follow up is indispensable so as to modify and improve upon the decisions at the earliest opportunity.

7. Monitoring and feedback: Feedback provides the means of determining

the effectiveness of the implemented decision. If possible, a mechanism should be built which would give periodic reports on the success of the implementation. In addition, the mechanisms should also serve as an instrument of “preventive maintenance”, so that the problems can be prevented before they occur.