Concept of Planning
Planning is the basic function of management. It is outlining the future course of actions and deciding in advance the most appropriate course for the achievement of organizational goals. In other words, planning is deciding in advance - what to do, when to do and how to do it. It bridges the gap between the present state and desired future state. It is systematic thinking about ways and means for the accomplishment of organizational goals.
Characteristics/Features of Planning
The following are some of the notable characteristics of planning.
1. Future-oriented:
A plan is always future-oriented. It bridges the gap between the present state and the desired future state.
2. Intellectual activity:
Planning involves setting vision and foresightedness to decide future activities. Hence, it is an intellectual activity.
3. Pervasive:
Planning includes the participation of all levels and units of an organization. Hence, it is pervasive.
4. Continuous activity:
Planning is a never-ending process. The plan should be reviewed, revised, and amended as and when required.
5. Time frame:
A plan is prepared for a certain period of time. It may be prepared for one year or more than this. The former is a short-term plan whereas the latter is called a long-term plan.
6. Based on environmental analysis:
A plan is prepared based on both internal and external environmental analyses.
7. Goal-oriented:
The organizational plan is prepared and implemented effectively so that they lead the organization toward goal achievement.
8. Involvement of top management:
A plan is related to the long-term growth and development of an organization. hence, the involvement of top-level management is a must. Top-level management has to play a dominant role in the formulation and implementation of the plan.
9. Set of priority:
A plan sets the priority of an organization in terms of the product and market. However, the priority may change with the change in the organizational conditions.
10. A means only:
A plan is a means of achieving an organizational goal. However, it is not an end itself.
Types of Plan
Based on Levels
An organization has different levels and plans are formulated for each level. Based on the level of organization, the plan may be classified into the following.
1. Strategic plans:
Strategic plans are the long-range plan developed to achieve strategic goals. Strategic goals are the target outcomes of an organization in the long-range normally above five years. They are related to strengthening market power, competitiveness, and future business prospects. Strategic plans are related to resource allocation, organizational priorities, and actions required for the achievement of strategic goals. They are set by the top-level management, broad in nature, and support the strategic vision.
2,Tactical plans:
Tactical plans are formulated for achieving tactical goals. They are developed to implement a particular part of a strategic goal. They are normally developed by the middle and upper-level management for a relatively shorter period of time. They are more specific and focused. They are concerned with getting things done.
3. Operational plans:
Operational plans are formulated for achieving the operational goals. They support the tactical plans. They are prepared by middle and lower-level managers and have a relatively narrow scope. Each plan deals with a small set of activities.
Based on Time based on time,
a plan can be classified as a long-term plan, intermediate plan, and short-term plan.
1. Long-term plans:
Long-term plans cover a long period of time normally over five years. The organizations operating in a volatile environment prepare long-term plans. Long-term plans are the roadmaps of the organization over a long period of time.
2. Intermediate/mid-term plans:
Intermediate plans normally cover a period between one to five years. They are less tentative and subject to change. They mainly focus on middle and first-line managers. Thus, they are parallel to tactical plans.
3. Short-term plans:
Short-term plans cover the period of less than one year. It affects the day-to-day activities of the organization. They mainly focus on operations like production, marketing, and human resource management. They are mainly formulated for achieving short-term financial goals.
Process of Planning
The process of planning may differ according to organization and situation. Following are the widely used process of planning in most organizations.
1. Establishing goals:
Plans are prepared to achieve certain goals. Establishing the goals is the first step in planning. The goals are established for the whole organization as well as individual departments. They may also be formulated for the short and long-term. Goals provide a general direction to the organization. Goals should be specific, measurable, achievable, realistic, and time-bound.
2. Determining planning premises:
Planning is always done for the future which is always uncertain. Hence, it is based on certain assumptions called the premises. Assumptions are normally based on internal and external environmental factors. Internal assumptions deal with organizational policies and structure, and the availability of resources. External assumptions are based on external factors such as the political environment, economic environment, the technological environment, competition, and government policies. Assumptions should be uniform across the organization and the managers should be aware of these.
3. Identifying alternatives:
There is no always one way to achieve the organizational goals. Hence, alternative courses of planning should be identified. They should be identified based on planning premises.
4. Examining the alternative course of action:
After identifying the alternative courses of plans, the next step of the planning process is to evaluate each of them. They are evaluated on grounds of suitability, acceptability, and feasibility. Suitability assesses whether the plan is suitable according to organizational environment. Acceptability assesses whether the plan is acceptable to the shareholders and employees. Feasibility assesses whether the organization has the necessary resources and capabilities to implement the plan.
5. Selecting the best course:
After evaluating the alternatives, the most suitable alternative is selected. As discussed above, the best course should be selected on grounds of suitability, acceptability, and feasibility.
6. Formulating supporting plan:
Once the best course has been selected, the supporting plans should be formulated. They are secondary plans and formulated to support the main plan. Within the framework of a basic plan, supporting plans are formulated in each functional area such as production, marketing, and human resources. The main aim of supporting plan is to support the implementation of the main plan.
7. Implementation of the plan:
This is the last step of the planning process. It involves the translation of the plan into action. Policies, resource management, work processes and systems, and leadership are very important for the successful implementation of a plan.
8. Review the plan:
After implementation of the plan, it should be reviewed so that corrective actions may be taken for making it more effective in the time to come.
Importance of Planning
Planning is a means not an end. Hence, it alone does not guarantee the success of the organization. However, it is found that organizations that engaged in formal planning performed better than those with no formal planning. Some of the reasons as to why planning is considered important in organizations are discussed below
1, Deals with complexities:
The present world is highly complex mainly due to globalization, liberalization, growth of technology and rapid environmental changes. An effective plan prepares the organization to face the above challenges as it directs the organization toward goal achievement.
2. Provides direction:
Planning provides direction as to how organizational activities are conducted. It clarifies the activities to be performed. It also dictates how and when they are to be performed. Hence, planning provides direction for actions. It also shows where the organization is heading toward and how does it do so. Employees know in advance in which direction they have to work. Without clear directions, it is difficult for organizations to achieve the desired goal.
3. Reduces risk:
Organizations face unexpected situations every day. Planning helps the manager to face the uncertainty since they are formulated considering such uncertainties.
4. Promotes innovative ideas:
Planning is an intellectual process. Hence, it provides scope for finding better ideas, better methods, and procedures to perform a particular job. The planning process forces managers to think differently and assume the future conditions. So, it makes the managers innovative and creative.
5. Facilitates decision making:
Planning helps the managers to take various decisions. It involves the goals or targets, activities to be performed to achieve them, policies to be followed, and resources to be used based on which decisions are made. Hence, planning facilitates decision-making.
6. Facilitates effective control:
Planning involves determination of standards of work to be performed. The actual performance is compared with the predetermined standard and deviation is ascertained. Finally, corrective actions are taken if required. Hence, planning facilitates effective control.
7. Promotes efficiency:
Planning is helpful to utilize organizational resources in the best possible way. It enhances productivity by reducing wastages, controlling costs, and increasing the speed of the work process. In this way, organizational activities can be carried effectively.
8. Facilitates coordination:
Planning is a pervasive function. It involves all the units or departments of the organization. It clearly defines the objectives to be achieved and ways to achieve them. It also defines the activities to be performed by each department as well as their authority and responsibility. All of these help to facilitate coordination in an organization.
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