Planning
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Software Engineer at PadandasPlanning is the process of deciding when, what, where and how to do a certain activity before starting to work. Various types of plans are- Operational, tactical and strategic plan, formal and informal plan, proactive and reactive plan and functional and Corporative plan. The planning process comprises- Analysis of the environment, Setting the objectives, Develop premises, Determine and evaluate alternatives, Selection of the Best alternative, Formulation of the derivative plan, Budget formulation, Implementation of the plan and Follow up action.
Concept of Planning
Planning is based on the theory of “thinking before acting”. Planning is an integral part of our life. We make plans in each and every step of life whether it be to go to school or to buy household goods during shopping. We make plans according to the limitations of our budget and resources to get maximum satisfaction and to fulfill goals from our activities.
Planning is the most basic and primary function of management. It is the pre-decided outline of the activities to be conducted in the organization. Planning is the process of deciding when, what, when where and how to do a certain activity before starting to work.
It is an intellectual process that needs a lot of thinking before the formation of plans. Planning is to set goals and to make certain guidelines achieve the goals. Also, planning means to formulate policies, segregation of budget, future programs, etc. These are all done to make the activity successful.
All other function of management is useless if there is not a proper planning system in an organization. So, planning is the basis of all other functions. Thus, planning is the map or a blueprint for the organization.
According to Theo Haimann, “Planning is deciding in advance, what is to be done. When a manager plans, he projects a course of action for the future, attempting to achieve a consistent, coordinated structure of operations aimed at the desired results.”
According to Alford and Beaty, “Planning is the thinking process, the organized foresight, the vision based on fact and experience that is required for intelligent action.”
According to ME. Hurley, “Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures, and programs from among alternatives.”
Types of Planning
Any organization can have different plans. We can classify the types of plans in the following ways:
On the basis of Nature
- Operational Plan:
Operational plans are the plans which are formulated by the lower level management for a short term period of up to one year. It is concerned with the day to day operations of the organization. It is detailed and specific. It is usually based on past experiences. It usually covers functional aspects such as production, finance, human resources, etc. - Tactical Plan:
The tactical plan is the plan which is concerned with the integration of various organizational units and ensures implementation of strategic plans on day to day basis. It involves how the resources of an organization should be used in order to achieve strategic goals. The tactical plan is also known as a coordinative or functional plan. - Strategic Plan:
A strategic plan is a plan which is formulated by top-level management for a long period of time of five years or more. They decide the major goals and policies to achieve their goals. It takes in a note of all the external factors and risks involved and makes a long-term policy of the organization. It involves the determination of strengths and weaknesses, external risks, missions, and control systems to implement plans.
On the basis of the Managerial Level
- Top-level Plans:
Plans which are formulated by general managers and directors are called top-level plans. Under these plans, the objectives, budget, policies, etc. for the whole organization are laid down. These plans are mostly long term plans. - Middle-level Plans:
The managerial hierarchy at the middle level includes the departmental managers. A corporation has many departments like the purchasing department, sales department, finance department, personnel department, etc. The plans formulated by the departmental managers are called middle-level plans. - Lower level Plans:
These plans are prepared by the foreman or the supervisors. They take the existence of the actual work and the problems connected with it. They are formulated for a short period of time and called short term plans.
On the basis of Time
- Long Term Plan:
The long-term plan is the long-term process that business owners use to reach their business mission and vision. It determines the path for business owners to reach their goals. It also reinforces and makes corrections to the goals as the plan progresses. - Intermediate Plan:
Intermediate planning covers 6 months to 2 years. It outlines how the strategic plan will be pursued. In business, intermediate plans are most often used for campaigns. - Short-term Plan:
The short-term plan involves pans for a few weeks or at most a year. It allocates resources for day-to-day business development and management within the strategic plan. Short-term plans outline objectives necessary to meet intermediate plans and the strategic planning process.
On the basis of Use
- Single Plan:
These plans are connected with some special problems. These plans end the moment of the problems to be solved. They are not used, once after their use. They are further re-created whenever required. - Standing Plan:
These plans are formulated once and they are repeatedly used. These plans continuously guide managers. That is why it is said that a standing plan is a standing guide to solving the problems. These plans include mission, policies, objectives, rules, and strategy.
Hence these are the basic types of plans in any organization. (Shrestha: pg 58-65)
Planning Process
Planning is a complex process that requires a high level of studies and analysis. To create a plan there must be a determination of objectives and outlining of the course of action to achieve the goals. There is no set formula for planning. A planning process that is suitable for one kind of organization may not be suitable for another type of organization. However, we can take the following steps as the guideline to draw a plan:
- Analysis of the Environment
Planning begins with the awareness of the opportunities in the external environment and within the organization. For this, SWOT analysis is most suitable. Strength and weaknesses are the internal factors whereas opportunities and threats are the environmental factors which are to be analyzed. - Setting the Objectives
The second step of planning is to set objectives and goals for the organization as a whole and for each department. Long term, as well as short-term plans, are to be created. Objectives are specified to each and every manager and department head. Objectives give direction to the major plans. So managers should have an opportunity to contribute their ideas for setting their own objectives and of the organization. - Develop Premises
Planning premises are the assumptions about the future on the basis of which the plans will be ultimately formulated. Planning premises are the key to the success of planning as they supply pertinent facts and information regarding the future such as general economic conditions, production cost, and prices, probable competitive behavior, governmental control, etc. Forecasting is an essential part of the premises. - Determine and Evaluate Alternatives
The fourth step is to search and identify the alternative course of action. It suggests that a particular objective can be achieved in numerous ways. But the most relevant alternatives must be listed down so that selection is made easier. Once various alternatives are identified, they must be well analyzed with their strong and weak points. - Setting the Objectives
The second step of planning is to set objectives and goals for the organization as a whole and for each department. Long term, as well as short-term plans, are to be created. Objectives are specified to each and every manager and department head. Objectives give direction to the major plans. So managers should have an opportunity to contribute their ideas for setting their own objectives and of the organization. - Develop Premises
Planning premises are the assumptions about the future on the basis of which the plans will be ultimately formulated. Planning premises are the key to the success of planning as they supply pertinent facts and information regarding the future such as general economic conditions, production cost, and prices, probable competitive behavior, governmental control, etc. Forecasting is an essential part of the premises. - Determine and Evaluate Alternatives
The fourth step is to search and identify the alternative course of action. It suggests that a particular objective can be achieved in numerous ways. But the most relevant alternatives must be listed down so that selection is made easier. Once various alternatives are identified, they must be well analyzed with their strong and weak points.
Hence these are the nine steps to formulate a proper plan.
Planning is the primary function of management, which predetermines the future course of action. It provides the foundation for effective management of the organization. It is an important management function. The position of any business organization depends upon planning.
Needs for Planning
Earning fame and fortune is the dream of every organization. To make this dream come true, measurable goals with achievable deadlines have to be set. This is what planning does. In the absence of planning, organizational activities become mealy random activities producing nothing but chaos.
Planning is the primary function of management, which predetermines the future course of action. It provides the foundation for effective management of the organization.
According to George R. Terry, “Planning is basic to other managerial functions. Without the lining, there would be nothing to organize, no one to actuate and no need to control.”
In the words of Peter F. Drucker, “ A management has no choice but to anticipate the future and attempt to mold it.”
It is a fact that planning does not guarantee success. It does not substitute facts for judgment. The necessity for planning arises because of the fact that business organizations have to operate, survive and progress in a highly dynamic economy where change is the rule, not the exception. Change may be sudden or slow. Such changes often give rise to deal with foreseen problems and unsuccessful struggles with unforeseen problems. The following points emphasize the needs of planning for organizations:
- Best Utilization of Resources
Planning is a must for efficient and effective utilization of scarce resources. Such use of resources can be identified while preparing the plan and selecting the best course of action. - Promotes Creativity
An effective plan encourages managers and subordinates to determine new ways of doing things. The creative actions of managers require an organizational goal. Planning is a useful technique for helping managers cope with uncertainty and change by promoting creativity. - Help to Tackle Business Complexity
Running a business in today’s competitive environments, not an easy task. Proper planning is essential to run it successfully. Planning gives proper direction as to how, what, when and by whom the works are to be done. It makes the job of the manager easy and helps to tackle business complexities. - Achieve Objective
The plan focuses on activities in the light of objectives. Planning serves as a blueprint for the course of action to be taken. It avoids confusion and misunderstanding and ensures the unity of action with the assignment of responsibilities and authority at all levels. - Basis of Effective Control
Planning establishes the standards used in controlling. When managers control, they see whether the plans have been carried out and the goals met. Without effective planning, there would be no way to control. - Minimize the Chance of Business Failure
Planning provides confidence to face uncertainty and challenges. The risk of business failure can be minimized as planning considers the probably unfavorable situations by foreseeing the future. - Basis for Management Functions
All other managerial activities have no direction in the absence of planning. It is planning which sets all management functions towards a move for successfully completing the organizational activities.
Benefits of Planning
Though planning is not a sure bet, in today’s competitive world, those who foresee the future only attain success, earn name, fame. The condition of an organization without a planning function can be well compared with a ship without radar. So there are so many points in favor of planning which are listed below:
- Better Coordination
The accomplishment of goals in the absence of coordination is really a difficult task. Well prepared plans unify interdepartmental activities. Each department knows what it must do to contribute to the objectives of the organization. Without planning such coordination would be a dream, with planning a reality. - Provides Basis for Team Work
The plan defines the goals. On its basis, works assignments can be fixed. Once a member knows what is expected of them, they can contribute better. Further, planning permits employees to participate in the ‘thinking’ process. This helps them to develop a broad mentality which leads to their wholehearted effort. - Economical Operation
Planning focuses on efficiency and economy in operation. Guesswork is banished, facilities used to the best advantage which minimizes costs of performance. It saves time, effort and money. - Reduces Uncertainties
The future is uncertain and it is a big challenge for the present-day managers. Planning helps managers anticipate problems before they arise and deal with them before they turn into emergencies. It also helps in crisis management. - Facilitates Control
Planning and control functions are said to be the inseparable twins of management. There is nothing to control without planning and without control, planning becomes a futile exercise. Against the backdrop of planning, standards are set, which help in channeling behavior in the right direction. - Improves Competitive Strength
Planned activities are definitely systematic. Hence, they are expected to produce better results in comparison to the non-planned as they are prepared with great exercise based on facts and figures. The result increases efficiency. It makes the organization strong and capable enough to face competition. - Systematize and Smoothens Flow of Work
Planning develops a system of working. There exists no place for trial and error. The result is a smooth flow of work as an everyday activity is set, controlled and coordinated as well.
To sum up, planning in an indispensable activity for every organization so as to take the advantages as mentioned above. In its absence, business activities become random. Planning works for the organization in the same manner as radar does on a ship.
Limitation/ Constraints of Planning
Despite the essential need for and the unquestioned value of planning, it must be noted that planning is not all on the credit side of the ledger. It will not solve all the problems and guarantee business success. It has some serious limitations. They may be analyzed under the following two categories:
- Fundamental Limitation
A fundamental limitation of planning lies in forecasting. Planning, as we know, is concerned with the future, which is uncertain and unpredictable. Assumptions regarding the future are forecasting which the essence of planning is. The fate of planning depends on the accuracy of the forecast. It is true that no forecast can be unreliable and lacks information. There is some element of truth in the statement ‘the only certain thing about a forecast is that it will be wrong.’ After all, forecasting is not an exact science. This is the biggest hindrance to drafting a sound plan. - Other Limitations
Other limitations are as follow:
- Rapid Change in Environment: Premises are the assumptions about the future. Planning basically depends on a whole set of assumed conditions. In spite of the introduction of modern techniques in this direction, the future is which cannot be anticipated accurately. It has to be based on assumptions. Planning produces fruitful results only when assumptions are substantially correct. In the face of a highly volatile and turbulent political, technological, economic, social environment, even the best-prepared plans with the investment of heavy doses of capital get space in the dustbin.
- Attitudes of Management: Lower level managers not involved in a preparing plan may ignore the need for planning and exert minimal effort to make it a success. Plans imposed offer lead to resentment and resistance among those forced to execute. Managers prefer to sit through immediate problems because they offer instant feedback. Although there are many exceptions, it is the most common human nature to prefer rewards immediately rather than wait for the future.
- Costly and Time-Consuming: Planning is expensive in terms of time spent to formulate, manpower used and different resources needed for execution. Considerable time, money and effort are required for collecting information, evaluating alternatives, selecting the course of action. Such a time and money consuming exercise may not always be desirable.
- Rigidity: Another serious limitation of planning is its rigidity. Planning sets the limit which may curb the initiative of managers. It may sometimes mean foregoing new opportunities and better options. It is not at all exciting for creative managers to work under plans. That is why they do not wholeheartedly support the implementation of the plan.
- Lack of action-orientation and Training for Managers: Rapid-fire decision making without having to think is more fun. Managers are strongly oriented towards short-term results having a high regard for the present rather than for the future. They would prefer to fight fires, meet crises than plan. It is not at all exciting to them. That is why most other well-prepared plans are never implemented.