planning process in POM TU - Principle Of Management - TU Notes

 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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