THE PLANNING PROCESS:
1. Set the objectives and goals .
2. Developing Premises .
3. Identifying and Evaluating alternative courses of action .
4. Formulation of Derivative Plans
5. Implement and Follow up the plan .
1. SET THE OBJECTIVES AND GOALS:
This is the first and crucial step of planning . Every organisation must have certain objectives and goals .
It determines what an organisation wants to achieve.
EXAMPLES-
1. Increase in sales by 20 % .
2. Profit Earning etc.
THE OBJECTIVES
-- Objectives are defined as the
achievements that mainly aim at in the broad terms to establish some of
the guidelines, in order to take the required action.
--It is very essential that these divisions are mutually consistent and also well coordinated in the nature.
--Setting up of the objectives is done at the higher levels of the organization.
--Objectives can be many in the number.
--It may consist of the hierarchy along with the network of the objectives
depending upon the divisions like the strategic business units, the
departments and the levels in the organization.
--The objectives must be able to help the subordinates in determining the goals in the concrete terms.
--The objectives must be clear, specific and informative.
-- Major
objectives should be broken into departmental, sectional and individual
objectives.
THE GOALS :
--Goals are actually in the terms of the performance.
--They are short term and are operational within a financial year as these are more tied up with the budgets.
-- Provide the much needed, practical orientation to the plans.
-- Goals are divided into people working, so that each one has a target to achieve.
2. DEVELOPING THE PREMISES
-- A premise or premiss is a statement that an argument claims will induce or justify a conclusion. It is an assumption that something is true.
-- Planning is concerned with future which is uncertain , thus premises are built in planning.
-- Forecasting is an important tool in making premises .
EXAMPLE -
1. Premises about the demand for a particular period .
2. Premises about the changes in tax rates and prices .
--Premises acts as a great tool for :
- Carrying out the planning of the business .
- The judgments about the future plans, depending on the type of the situation in which they will work.
- Deciding whether to proceed with the plan or not.
--The premises must be consistent to all the plans and the sub plans.
--A number of premises can be used to arrive at a certain plan.
--The premises can be the possible growth in the market, the
availability of the resources, the nature of the future competition, the
strategic considerations etc.
3.IDENTIFYING AND EVALUATING THE ALTERNATIVE COURSES OF ACTION
IDENTIFICATION -
When forecast are available and premises are established, a number of alternative course of actions have to be considered.
It can be done by routine or innovative courses .
EVALUATION -
For this purpose, each and every alternative will be evaluated
by weighing its pros and cons in the light of resources available and
requirements of the organization.
The merits, demerits as well as the consequences of each alternative must be examined before the choice is being made.
The planners should take help of various quantitative techniques to judge the stability of an alternative.
The planners should take help of various quantitative techniques to judge the stability of an alternative.
After objective and scientific evaluation, the best alternative is chosen.
4. FORMULATION OF DERIVATIVE PLANS
Derivative plans are the sub plans or secondary plans which help in the achievement of main plan.
Secondary plans will flow from the basic plan. These are meant to support and expediate the achievement of basic plans.
These detail plans include policies, procedures, rules,
programmes, budgets, schedules, etc.
For example, if profit maximization
is the main aim of the enterprise, derivative plans will include sales
maximization, production maximization, and cost minimization.
Derivative plans indicate time schedule and sequence of accomplishing various tasks.
After choosing a particular course of action, it is put into action i.e doing what is required .
5. IMPLEMENT AND FOLLOW UP OF PLANS
After choosing a particular course of action, it is put into action i.e doing what is required .
After the selected plan is implemented, it is important to appraise or follow up its effectiveness.
This is done on the basis of feedback or information received from departments or persons concerned.
This enables the management to correct deviations or modify the plan.
This step establishes a link between planning and controlling function.
The follow up must go side by side the implementation of plans
so that in the light of observations made, future plans can be made more
realistic.
PRINCIPLES OF PLANNING :
- Principle of Contribution to objectives .
- Principle of Sound and Consistent Premising .
- Principle of Limiting factors .
- Principle of Commitment.
- Principle of Coordinated Planning.
- Principle of Timing.
- Principle of Efficiency.
- Principle of Flexibility.
- Principle of Navigational Change.
- Principle of Acceptance.
1.PRINCIPLE OF CONTRIBUTION TO OBJECTIVES
The purpose of planning
is to ensure the effective and efficient achievement of corporate
objectives, in-fact, the basic criteria for the formulation of plans are
to achieve the ultimate Objectives of the company.
The accomplishment
of the objectives always depends on the soundness of plans and the
adequate amount of contribution of company towards the same.
2. PRINCIPLE OF SOUND AND CONSISTENT PREMISING:
Premises are the assumptions regarding the environmental forces like
economic and market conditions, social, political, legal and cultural
aspects, competitors actions, etc. These are prevalent during the period
of the implementation of plans. Hence, Plans are made on the basis of
premises accordingly, and the future of the company depends on the
soundness of plans they make so as to face the state of premises.
3.PRINCIPLE OF LIMITING FACTORS
The
limiting factors are the lack of motivated employees, shortage of
trained personnel, shortage of capital funds, government policy of price
regulation, etc. The company requires to monitor all these factors and
need to tackle the same in an efficient way so as to make a smooth way
for the achievement of its ultimate objectives.
4.PRINCIPLE OF COMMITMENT
A commitment is
required to carry-on the business that is established. The planning
shall has to be in such a way that the product diversification should
encompass the particular period during which entire investment on that
product is recovered.
5.PRINCIPLE OF COORDINATED PLANNING
Long
and short-range plans should be coordinated with one another to form an
integrated plan, this is possible only when latter are derived from the
former.
Implementation of the long-range plan is regarded as
contributing to the implementation of the short-range plan. functional
plans of the company too should contribute to all others plans i.e.
implementation of one plan should contribute to all the other plans,
this is possible only when all plans are consistent with one another and
are viewed as parts of an integrated corporate plan.
6.PRINCIPLE OF TIMING
Number of major and
minor plans of the organisation should be arranged in a systematic
manner. The plans should be arranged in a time hierarchy, initiation and
completion of those plans should be clearly determined.
7.PRINCIPLE OF EFFICIENCY
Cost of planning
constitute human, physical and financial resources for their
formulation and implementation as well.
Minimizing the cost and
achieving the efficient utilization of resources shall has to be the aim
of the plans.
Cost of plan formulation and implementation, in any case,
should not exceed the organisations output's monetary value.
Employee
satisfaction and development, and social standing of the organisation
are supposed to be considered while calculating the cost and benefits of
plan.
8.PRINCIPLE OF FLEXIBILITY
Plans are
supposed to be flexible to favour the organisation to cope-up with the
unexpected environments.
It is always required to keep in mind that
future will be different in actuality. Hence companies, therefore,
require to prepare contingency plans which may be put into operation in
response to the situations.
9.PRINCIPLE OF NAVIGATIONAL CHANGE
Since
the environment is always not the same as predicted, plans should be
reviewed periodically.
This may require changes in strategies,
objectives, policies and programmes of the organisation.
The management
should take all the necessary steps while reviewing the plans so that
they efficiently achieve the ultimate goals of the organisation.
10.PRINCIPLE OF ACCEPTANCE
Plans should be
understood and accepted by the employees, since the successful
implementation of plans requires the willingness and cooperative efforts
from them.
Communication also plays a crucial role in gaining the
employee understanding and acceptance of the plans by removing their
doubts and misunderstanding about the plans also their apprehensions and
anxieties about consequences of plans for achievement of their personal
goal.
TYPES OF PLANNING :
1. Short Term Planning
2. Medium Term Planning
3. Long Term Planning
4. Corporate Planning
5. Functional Planning
6. Proactive and Reactive Planning
7. Formal and Informal Planning .
8. Automated Planning
1.SHORT TERM PLANNING -
Short range planning also known as operational or tactical planning is the planning with the day to day functioning and their focus is on short run operating period, generally a year or season.
It is usually done at lower levels of management and involves gathering of information and selecting the most effective course of action after evaluating this information.
Short range plans are generally guided by standing plans and single use plans.
The policies procedures and rules followed in the organization come under standing plans and single use plans are use for a specific period and includes market plans financial plans and production plans.
Short-term planning looks at the characteristics of the company in the present and develops strategies for improving them.
Examples
1. The improvement in skills of the employees and their attitudes.
2. The condition of production equipment or product quality problems are also short-term concerns.
3. Employee training courses, equipment servicing and quality fixes.
2. MEDIUM TERM PLANNING :
Medium-term planning applies more permanent solutions to short-term problems.
If training courses for employees solved problems in the short term, companies schedule training programs for the medium term. If there are quality issues, the medium-term response is to revise and strengthen the company's quality control program.
Where a short-term response to equipment failure is to repair the machine, a medium-term solution is to arrange for a service contract. Medium-term planning implements policies and procedures to ensure that short-term problems don't recur.
If training courses for employees solved problems in the short term, companies schedule training programs for the medium term. If there are quality issues, the medium-term response is to revise and strengthen the company's quality control program.
Where a short-term response to equipment failure is to repair the machine, a medium-term solution is to arrange for a service contract. Medium-term planning implements policies and procedures to ensure that short-term problems don't recur.
3.LONG TERM PLANNING :
In the long term, companies solve problems permanently and to reach their overall targets.Long-term planning reacts to the competitive situation of the company in its social, economic and political environment and develops strategies for adapting and influencing its position to achieve long-term goals.
It examines major capital expenditures such as purchasing equipment and facilities, and implements policies and procedures that shape the company's profile to match top management's ideas.
When short-term and medium-term planning is successful, long-term planning builds on those achievements to preserve accomplishments and ensure continued progress.
4. CORPORATE PLANNING :
1. “Corporate planning includes the setting of objectives, organising the work, people and systems to enable those objectives to be attained, motivating through the planning process and through the plans, measuring performance and so controlling progress of the plan and developing people through better decision making, clearer objectives, more involvement and awareness of progress.”
—David Hussey
2. “Corporate Planning is the continuous process of making present risk taking decisions systematically and with the greatest knowledge of their futurity; organising systematically the efforts needed to carry out these decisions, and measuring expectations through organised, systematic feedback.”
—Peter Drucker
The term corporate planning denotes planning activities for the entire enterprise.
The basic focus of corporate planning is to determine the long-term objectives of the organisation as a whole and then to generate plans to achieve these objectives . (macro level).
Corporate planning is generally carried out at the top level of management.
5. FUNCTIONAL PLANNING -
The planning that is made to ensure smooth working of the organisation taking into account the needs of each and every department.The purpose of functional planning is to promote standardised management practices for corporate functions in the department’s decentralised corporate management structure.
The 3 basic activities to be carried out in functional planning:
(1) Functional Guidance:
Managers must be told and guided what they should be doing to properly manage corporate functions within the enterprise.(2) Goal Setting:
Certain quantifiable goals need to be set that would measure the effectiveness of the functional planning. Goals should be meaningful, achievable and measureable.(3) Functional Assessments:
Functional assessment wraps up the functional planning process. Here the Comparison is made between the goal setting and the goal achievement.6. PROACTIVE AND REACTIVE PLANNING:
Classification of planning into proactive and reactive is based on the organisation’s response to environmental dynamics.Planning is an open system approach and is affected by environmental factors which keep on changing continuously.
However, organisations response to these changes differs. Based on these responses, planning may be either proactive or reactive.
Proactive Planning:
It is based on the anticipation of the future outcomes and state of affairs that would affect the working of the organisation. Such a planning has to be broad based, highly flexible and creative by nature.This type of planning anticipates the future and takes necessary steps before the happening of the events.
In India, companies like Reliance Industries, Hindustan Lever etc., have adopted this approach and their growth rate has been much faster than others.
Reactive Planning:
This type pf planning becomes active only when the problem is confronted or has already occurred.This is merely the corrective action that is taken.
This approach of planning is useful in an environment which is fairly stable over a long period of time.
7. FORMAL AND INFORMAL PLANNING:
Formal Planning
It exists in the formal hierarchy of the organisation and is always carried out in the stepwise process.
It is according to the pre expressed policies and the rules of the organisation. This type of planning is done at a large scale and is based on the logical thinking.
The planning process that is adopted is documented, and regular.
Informal Planning
It is usually carried out in very small organisations where the formal organisation structure may or may not exist.
The planning is usually intuitive in nature and is short termed. Since the environment for smaller organisations is not complex, they do reasonably well with informal planning process.
8. AUTOMATED PLANNING :
Automated planning and scheduling is a branch of artificial intelligence that concerns the realisation of strategies or action sequences, typically for execution by intelligent agents, autonomous robots and unmanned vehicles.This type of planning is normally found in the technologically advanced organisations.
Unlike classical control and classifications problems, the solutions are complex, unknown and have to be discovered and optimized in multi-dimensional space.
