Planning
Points to Remember
1. PlanningPlanning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done.”
According to Fayol, “Planning is chalking out plan of action, i.e., the result envisaged in the line of action to be followed, the stages to go through the methods to use.”
2. Importance of Planning
(i) Planning Provides Directions Planning provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do etc.
(ii) Planning Reduces the Risk Uncertainty Planning helps the manager to face the uncertainty because planners try to force the future by making some assumptions. The plans are made to over come uncertainties.
(iii) Planning Reduces Over Lapping and Wasteful Activities Planning evaluates the alternatives uses of the available and prospective resources of the business and makes their must appropriate use.
(iv) Planning Promotes Innovative Ideas Planning requires high thinking and it is an intellectual process. So it makes the managers innovative and creative.
(v) Planning Facilitates Decision Making Planning helps the managers to look in to the future and make a choice from amongst various alternative courses of action.
(vi) Planning Establishes Standards for Controlling It has predetermined goal with which the actual performances are compared to find out deviation and suggest remedial measures.
3. Features of Planning
(i) Planning Focuses on Achieving Objective Planning is purposeful. It has no meaning unless it contributes to the achievement of predetermined organisational goals.
(ii) Planning is a Primary Function of Management Planning is the primary or first function to be performed by every manager. No other function can be executed by the manager without performing planning function.
(iii) Planning is Pervasive Planning is essential for every sort of business activities. Every department whether, purchase, sales accounts, auditing, marketing etc needs systematic planning.
(iv) Planning is Continuous Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes in changing environment and in the selection of one best way.
(v) Planning is Futuristic Planning always means looking ahead, it is never for the past. All the managers try to make predictions and assumptions for future. ,
(vi) Planning Involves Decision Making Planning choice making of the best possible alternative out of various alternatives.
4. Limitations of Planning
(i) Planning Leads to Rigidity Once plans are made to decide the future course of action the manager may not be in a position to change them.
(ii) Planning May Not Work in a Dynamic Environment Business environment is very dynamic as there are continuously changes. It becomes very difficult to forecast these future changes. Plans may fail if the changes are very frequent.
(iii) Planning Reduces Creativity With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan only.
(iv) Planning Involves Huge Costs Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional experts to carry on
this process.
(v) Planning is a Time Consuming Success Lot of time is needed in developing planning premises.
(vi) Planning does not Guarantee Success Planning only provides a base for analysing future. It is not a solution for future course of action.
5. Planning Process
(i) Setting Objectives In planning function manager begin with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only.
(ii) Developing Premises Premises refers to making assumptions regarding future. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information.
(iii) Identifying Alternative Courses of Action After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives.
(iv) Evaluating Alternative Courses After making the list of various alternatives along with the assumptions supporting them the manager starts evaluating each and every alternative.
(v) Selecting an Alternative The best alternative is selected but as such there is no mathematical formula to select the best alternative. Some times instead of selecting one alternative a combination of different alternatives can also be selected.
(vi) Implementing the Plan This is the step where other managerial functions also come in to the picture. The step is concerned with putting the plan into action i.e., doing what is required.
(vii) Follow-up Action Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The manager monitor the plan carefully while it is implemented.
6. Types of Plans
(i) Objectives Objectives are the ends towards which the activities are directed. They are the end result of every activity, e.g., increase in sale by 10%.
(ii) Strategy A strategy is a comprehensive plan to achieve the organisational objectives.
(iii) Policies Policies are general statements that guide thinking or channelise energies towards a particular direction.
(iv) Procedures Procedures are required steps established in advance to handle future conditions. The procedure can be defined as the exact manner in which an activity has to be accomplished.
(v) Method Methods provide the prescribed ways or manner in which a task has to be performed considering the objective.
(vi) Rule Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discreation.
(vii) Programme Programme are detailed statements about a project which outlines the objectives, policies, procedures, rules.
(viii) Budget A budget is a statement of expected results expressed in numerical terms.
NCERT Solutions
Short Answer Type Questions
1. What are the main points in the definition of planning?Ans: The main points in the definition of planning are as follows
(i) Planning is deciding in advance what to do and how to do.
(ii) It is one of the basic managerial function.
(iii) Planning involves setting objectives and developing an appropriate course of action to achieve these objectives.
(iv) It bridges the gap between where we are and where we want to reach.
2. How does planning provide direction?
Ans: Planning provides direction for action by deciding in advance what has to be done, how to do, when to do and who will do. When we try to seek answers to the above questions, which are well planned then directions are automatically highlighted.
3. Do you think planning can work in a changing environment?
Ans: Planning may not work in a changing environment. The environment consists of a number of dimensions, economic, political, social, legal and technological dimensions. The organisation has to constantly adapt itself to changes. It becomes difficult to accurately assess future trends in the environment. Planning cannot foresee everything and thus, there may be obstacles to effective planning.
4. If planning involves working out details for the future, why does it not ensure success?
Ans: Planning does not guarantee success. The success of an enterprise is possible only when plans are properly drawn up and implemented. Any plan needs to be translated into action or it becomes meaningless. Managers have a tendency to rely on previously tried and tested successful plans. It is not always true that just because a plan has worked before it will work again. This kind of false sense of security may actually lead to failure instead of success.
5. Why are rules considered to be plans?
Ans: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. They are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.
Ans: Major strategic decisions include whether the organisation will continue to be in the same line of business or combine new lines of activity with the existing business or seek to acquire a dominant position in the same market.
Long Answer Type Questions
1. Why is it that organisations are not always able to accomplish all their objectives?Ans: Organisations are not always able to accomplish all their objectives due to the following reasons
(i) Planning Leads to Rigidity In an organisation a well defined plan is drawn up with specific goals to be achieved, with in a specific time frame. These plans then decide how the work will progress in the future and managers may not be in a position to change it. This creates a problem as flexibility is very important. Always adhering to the plan may not give us the desired results always.
(ii)Planning May not Work in a Dynamic Environment The business environment is dynamic, nothing is constant. The business environment is a totality of external forces, where in some changes or the other keep on taking place. Plans decide in advance what has to be done in future. Planning cannot foresee everything and thus there may be obstacles to effective planning.
(iii) Planning Reduces Creativity Planning is generally done by the top management. Usually the rest of the members just implements these plans. As a consequence, middle management and other decisions makers are neither allowed to deviate from plans nor are they permitted to act on their own, thus planning in a way reduces creativity since people tend to think along the same lines as others, there is nothing new or innovative.
(iv) Planning Involves Huge Cost Planning involves huge cost in their formulation. These may be in terms of time and money. The costs incurred sometimes may not justify the benefits derived from the plans.
(v) Planning is a Time Consuming Process Sometimes plans to be drawn take up so much of time that there is not much time left for their implementation and the objectives to be achieved.
(iv) Planning does not Guarantee Success Any plans needs to be translated into action or it becomes meaningless. Managers have a tendency to rely on previously tried and tested successful plans. It is not always true that just because a plan has worked before it will work again.
2. What are the main features to be considered by the management while planning?
Ans: The main features to be considered by the management while planning are
(i) It Focuses on Achieving Objectives Planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.
(ii) It is the Primary Function Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other function.
(iii) Planning is Pervasive Planning is required at all levels of management as well as in all departments of the organisations. The top management undertakes planning for the organisation as a whole. Middle management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervisors.
(iv) Planning is Continuous Plans are prepared for a specific period of time, may be for a month, a quarter or a year. At the end of that period, there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process.
(v) Planning is Futuristic The purpose of planning is to meet future events effectively to the best advantage of an organisation. It implies peeping into the future, analysing it and predicting it.
(vi) Planning Involves Decision Making Planning essentially involves choice from among various alternatives and activities. If there is only one possible goal then there is no need for planning. The need only arises when alternatives are available. Planning thus, involves thorough examination and evaluation of each alternative and choosing the most appropriate one.
(vii) Planning is a Mental Exercise Planning is basically an intellectual activity of thinking rather than doing, because planning determines the action to be taken. Planning requires logical and systematic thinking rather than guesswork or wishful thinking.
3. What are the steps taken by management in the planning process?
Ans: The planning process involves the following steps
(i) Establishing Objectives The first step in planning is to determine objectives which must be realistic, specific and clear so as to specify what is to be accomplished by the network of policies, procedures, strategies etc.
(ii) Developing Premises They include assumptions or forecasts of the future and unknown conditions that will affect the operations of the plans. They provide an idea about the future which facilitates the work of planning.
(iii) Identifying the Alternative Courses of Action The next step in planning is to identify the various alternatives available to achieve the objectives.
(iv) Evaluating Alternative Courses The merits and demerits of different courses of actions are evaluated in the light of objectives to be achieved and their feasibility is judged i.e., how far they will be successful in helping to achieve the objective.
(v) Selecting an Alternative The next step is to find out the most suitable course to be followed. The efforts are directed towards selecting that course. Which increases efficiency in the organisation by maximising output and profits at the minimum costs.
(vi) Implement the Plan At this step the best alternative chosen is put to use.
(vii) Follow Up Only putting the best alternative to action is not enough. The future is uncertain and dynamic. Therefore, it becomes important to check back whether the plan is giving results or not
4. Is planning actually worth the huge costs involved? Explain.
Ans: Planning involves huge cost, when plans are drawn up huge costs are involved in their formulation. These are in terms of time, money, effort etc. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans. There are a number of incidental costs as well (which are indirect) like expenditures on organising a meeting, consultation fees given to professional experts, market survey etc. But despite the high cost no firm can work without proper planning if used properly.
Case Problem
Art auto company C Ltd is facing a problem of declining market share due to increased competition from other new and existing players in the maket. Its competitiors are introducing lower priced models for mass consumers who are price sensitive. For quality conscious consumers, the company is introducing new models with added features and new technological advancements.1. Prepare a model business plan for C Ltd to meet the existing challenge. You need to be very specific about quantitative parameters. You may specify which type of plan you are preparing.
Ans: In such a situation, formulating a strategy would be advisable.
A strategy is a single use plan. It is normally made to fight competition in the market.
The model business plan, i.e., strategy will be
(i) It is objective and its purpose is that how much sales it wants to increase over a specified time.
(ii) The company should then list down its strengths and weakness. This brings in light as to what will be easy and what will be difficult.
(iii) Aggressive, advertising and sales promotion techniques to be adopted.
2. Identify the limitations of such plans.
Ans: Limitations of the above strategy can be
(i) Shortage of funds.
(ii) Shortage of technical professionals.
(iii) Top level may not be competent enough to develop a suitable strategy.
(iv) The company may not be successful in assessing the future plans of the competitors as compared to its own strategy.
3. How will you seek to remove these limitations?
Ans: The above limitations can be overcome by
(i) Arranging funds in advance.
(ii) Effective methods of recruitment should be adopted to ensure availability of effective staff in all departments.
(iii) Middle level should be encouraged to propose plans in the form of suggestions. After considering all these, a strategy should be planned.
(iv) The company should be able to assess the moves of the competitors.
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