Hamro Library
Hamro Library



Meaning and concept of planning: 

 Every organization is established in order to achieve certain goals and planning is a process of defining objectives and taking future course of action to achieve those objectives. In other words planning is the process by which managers defines goals and takes necessary steps to ensure that those goals are achieved. Thus planning is always related with future.

According to Stephen Robbins, “planning is deciding in advance about what is to be done, how, when and where it is to be done, who is to do it and how results are to be evaluated”.

According to Robbins and Coulter, “planning involves defining the organizational goal, establishing overall strategy for achieving these goals and developing a comprehensive set of plans to integrate and coordinate organizational activities."
Planning is the most initial function of management which requires reliable accurate and up-to-date information along with the quality of foresightedness. Planning not only develops various alternatives to achieve the goal but it also selects the most suitable alternatives through which goal can be achieved. Thus planning should neither be too traditional nor be highly ambitious. It should be on the basis of ground reality. The difference between the present state and the desired state is called strategic gap and planning helps to bridge this gap by developing various strategy through which goals can be achieved. As a function of management planning has various features which are as follows:

a.) Planning is a systematic process of creative thinking and imagination.
b.) Planning is always related with future so it is always future oriented.
C.) Planning is linked with achievement of goal thus it is goal oriented.
D.) planning is pervasive in nature which means it is needed at every level of management in the organization.
e.) planning helps in selecting the best course of action to which goals can be achieved.
F.) the nature and scope of planning differs from level to level depending upon its objective.
g.) planning is a continuous process which never ends.
h.) planning is always directed towards achieving efficiency.

Types of Planning 

While running an organization a manager has to prepare different types of plans on the basis of the nature of the work they perform. Thus the various types of plans prepared by the organization can be classified into following types:

a.) On the basis of hierarchy: 
Hierarchy refers to the various levels which create organizational structure. The hierarchy of the organization can be classified into three levels i.e. top, middle and lower level. Thus on the basis of hierarchy plans also can be classified into following three types:

1. Corporate plan:  A plan which is formulated by top level management is corporate plan. It is also called as strategic plan. Such plan which is formed for the entire organization and thus influences each and every activity of the organization is called corporate plan. Mission, organizational goals,

2. Tactical plan: The plan which is formulated by the middle level management is tactical plan. It is also called departmental or divisional plan. Such types of plan are only related with a particular activity of the organization. Production plan, sales plan, human resource plan etc are its examples.

3. Operational plan: These plans are formulated by the lower level management and thus they are concerned with day to day activities of the organization. They are short term plans which includes preparing work schedules, daily targets etc.

b.) On the basis of flexibility: 
Flexibility is the ability to change or adjust according to situation and need. When plans are classified on the basis of flexibility, it can be specific plan or flexible plan. 

1. Specific plans:  Those types of plan which is prepared for a specific activity or by a specific department is specific plan. Since they are prepared for a specific purpose, it has to be implemented immediately therefore such plans are generally not changed. Thus they are rigid in nature.

2. Flexible plan:  Those types of plans which are not rigid and thus necessary changes in them can be done easily is flexible plan. Generally long term plans are flexible plans.

c.) On the basis of use: 
On the basis of frequency of use of plans can be classified into the following two types:

1. Single use plan: A plan which can only be used once and after that it is of no use is a single use plan. Short term plans are single use plans. Preparation of budget for a fiscal year can be taken as an example of single use plans.

2. Standing plan: A plan is said to be standing plan when it can be used for a long period of time and again. Long term plans like organization missions and vision can be taken as an example of standing plan.

Importance of Planning 

 Planning is the most fundamental functions of management thus it is known to be the basis for other managerial functions. However the importance of planning has much more wider scope and dimension which can be presented through the following:

a.) Focus on objective: Determining the goal of organization is the most sensitive task as objective influences all other activities. It is under the banner of planning that the objectives of the organization is determined and along with its strategies are developed to achieve the objective. However the objective of the organization should be “SMART” i.e. specific, measurable, acceptable, realistic and time bounded.

b.) Uncertainty reduction: Planning helps to minimize risk and uncertainties. Through the help of planning, future course of action is anticipated and thus by doing so necessary preparation can be done earlier. But for a rational plan it should be on the basis of appropriate correct and up-to-date information.

c.) Enhances coordination: There are various approaches of planning out of which the participatory approach is known to be the best approach for planning. Under this approach both the management as well as the employees collectively carries out the work of plan. This helps to enhance cooperation and coordination among them. As a result its formulation as well as implementation becomes easier.

d.) Basis of control:  Planning provides a basis for controlling. Controlling involves taking corrective actions in order to minimize deviation. Planning sets the standards and provides the ceiteria against which the performance is evaluated and deviations are identified. Thus in the absence of planning there is no any criteria to evaluate performance, identify deviation and take corrective actions.

e.) Adapting to changes:
The planning process is influenced by the change in the environment. In response to the change to the environment necessary changes is done in planning so that the environmental adjustment is achieved. Adapting to changes is also necessary to meet challenges and to utilize the opportunities.

f.) Economy in operation: Planning helps to achieve economy in operation I.e. cost minimization. Through the help of planning the best alternative is selected and implemented. Selection of the best alternative is done on the basis of cost benefit analysis. When the best alternative is implemented goals can be achieved in the most cost effective manner.

g.) Facilitates decision making: The function of decision making is related with solving of problem by identifying the best alternatives. Planning not only develops alternatives but also selects the best alternatives from various alternatives through evaluation. Thus the selected alternative is then implemented for solving problem.

h.) Achieve organizational effectiveness: Planning helps to achieve the organizational effectiveness of the organization. It helps in minimizing risk and uncertainties, achieve economy in operation, maximum utilization of resources and minimization of wastage. All of these collectively increases the productivity and their by achieve organizational effectiveness.

Procedures of planning 

 A rational planning procedure involves a series of multiple steps. Rational planning is done on the basis of appropriate, adequate and accurate information. A rational planning procedure includes the following process:

a.) Opportunity analysis: The planning process starts with analyzing the environment through environmental scanning. While scanning the environment both internal and external environment must be analyzed. Analysis of environment results into the identification of SWOT factors i.e. strength, weakness, opportunities and threads. Strength and weakness is the outcome of internal environment whereas opportunities and threads are the result of external environment.

b.) Set the goal: After analyzing the environment and through the assessment of SWOT factors based on it, goal of the organization is determined. The goal of the organization should be realistic which can be achieved practically. While determining the goal ground reality should be considered and it must not be highly ambitious.

c.) Determine planning: Premises the third step in the planning process is related with the estimation of planning premises. Premises are anticipated future environments. It is necessary for the planner to evaluate the future environment where plans are to be implemented. Premises are also of two types i.e. visible and invisible. Production to be done, sales target to be achieved, profit to be earned etc are visible premises but employees motivation, satisfaction, morale etc are examples of invisible premises.

d.) Identification and evaluation of alternatives: After estimating the planning premises this step involves the identification of various alternatives through which the goal can be achieved. As far as possible all alternatives has to be developed. In fact alternatives are those means and ways through which the goal can be achieved. Similarly when the alternatives are identified they must be evaluated in order to know about their strength and weakness. This evaluation is the basis for the selection of the most suitable alternative.

e.) Selecting the best course of action: When all the alternatives are evaluated based on the result of evaluation the most suitable alternative is selected. Evaluation is done in terms of risk involved, time needed, cost and above all its ability to achieve the goal. That alternative which has minimum risk, which involves least cost and requires minimum time, is selected as the best alternative to achieve the goal.

f.) Developing derivative plans: When the main plan of the organization is prepared the lower level needs to prepare supportive plans which are called derivative plans. These plans are prepared by the departmental level according to the main plan. Derivative plans provide supports and thus the execution of the organizational plan becomes easier.

g.) Estimation of budget: The last step in the planning process is related with the estimation of budget. Budget itself is a type of financial plan which tries to forecast the income and expenditure. Through the help of budget, the cost of planning is calculated which helps in the evaluation of effectiveness of plan. If the benefit of planning exceeds its cost planning is taken to be effective and vice versa.

Limitations OR Constraints of planning: 

Planning is one of the most important functions of management without which other functions cannot be performed. Despite having such importance, it also has certain weakness and dark aspects which are its limitations. Some of those limitations of planning are:

a.) Time consuming process: Planning is a very lengthy and time consuming function. Preparing a rational plan involves collection of data, its analysis and interpretation and deriving a conclusion based on which the future is anticipated. It is due to this reason it requires a lot of time and thus during emergency situation where there is lack of time, preparing plans becomes difficult.

b.) Costly process: Planning is not only time consuming, it is costly as well. It is taken as an intellectual function which requires expertise knowledge. Some organization even uses the service of external experts while formulating the plans of the organization. Use of the experts involves cost and the implementation of plans requires availability of resources. Therefore it is taken as a costly function.

c.) Lack of reliable data: A rational plan largely depends upon the data and information collected and analyzed. Future cannot be predicted exactly as it is uncertain. If the data collected is not reliable then it affects the quality of planning. Therefore lack of appropriate data is a major constrain which affects determination of planning premises as well as the whole process of planning.

d.) Lack of flexibility: Planning actually lacks flexibility. This means required changes cannot be done due to various factors. If there is sudden and unexpected change in the environment then planning cannot be changed immediately. This is because planning requires proper evaluation thus requires time. As a result of this planning tends to be inflexible.

e.) Limitation due to internal and external factors: The process of planning is affected by both internal and external factors. Change in these factors increases the complexity of planning. Internal factors like employees behavior, their way of thinking, policies and procedures etc influences planning. Similarly the factors in the external environment i.e. PEST factors which includes political and legal, economic, socio cultural and technological environment may create problem in planning as they are completely uncontrollable factors.

f.) Lack of initiative: The work of planning is generally carried out by the management and its implementation is done by the employees. Planning determines the framework and decides what work is to be done and how it is to be done. When this is determined in advance employees cannot perform work on their own way. This restricts freedom, creativity and imaginative power of the employees. As a result employees knowledge and experience remains unutilized.


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