Planning and objectives of planning
Concept of Planning
The process of management consists of five managerial functions. Planning is the first and foremost function of the management. Other functions like organising, staffing, directing and controlling are all based on planning. In fact, all organisational activities must begin with planning. The objectives of an organisation cannot be achieved effectively unless the future course of action is planned. Unplanned actions are likely to lead to undesirable consequences. Therefore, planning is essential for effective management of an organisation. 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, co-ordinated structure of operations aimed at the desired results. According to L. F. Urwick planning is fundamentally a mental predisposition to do things in an orderly way, to think before acting and to act in the light of the facts rather than of guesses.
Importance / Objecting of Planning
Planning is of vital importance because it is pervasive and precedes all other functions of management. Sound planning is an essential condition for effective management. Poor planning has often been a cause of failure in business. Sound planning offers the following advantages:
1. Focuses Attention on Objectives: Planning makes the goals clear and specific. This is because the objectives or goals to be achieved are decided before plans are drawn. Planning focuses managerial attention on the purposes for which various activities are be undertaken. The objectives so decided serve as a guide for deciding what actions should be taken. Thus, planning helps in achieving the objectives of the organisation by directing resources and efforts towards the common objectives.
2. Makes Activities Meaningful : When goals are clearly defined actions become meaningful. Managers and employees know how their activities relate to the goals of the organisation. They understand the importance of their activities and relationship between different activities. Everyone becomes conscious of his own contribution towards achievement of organisational goals. This acts as a motivating force and employees are encouraged to work harder.
3. Brings Order in Place of Chaos: Planning helps the organisation to keep on the right path. Planning ensures clarity in thought and action. By stating in advance how work is to be done, planning provides directions for actions. It avoids aimless and ad hoc actions. Planning enables orderly functioning of the organisation.
4. Reduces Risks of Uncertainty: Business enterprises operate in an uncertain environment and face several types of risks. Planning enables these enterprises to predict future events and prepare to face the unexpected events. In the process of planning managers look ahead, anticipate change, consider the impact of change and develop appropriate responses. With the help of planning, managers can identify potential dangers and take steps to overcome them. For example, forecasting of population growth gives an idea of future demand.
5. Improves Economy of Operations: Planning involves selection of the best possible course of action. Plans indicate how various tasks are to be completed and how resources are to be utilised. It helps to eliminate all types of waste and to achieve optimum utilisation of available resources. Planned action is always better than unplanned action. Planning helps to minimise the cost of operations and improves the competitive strength of an enterprise.
6. Provides Basis for Control: Planning provides the standards against which the actual performance can be measured and evaluated. A comparison of performance with the planned results helps to identify the deviations and to take corrective steps to make the events conform to plans. Planning makes control meaningful and effective. In fact, control is blind without planning. Thus, planning provides the basis for control.
7. Promotes Innovation and Creativity: Sound planning encourages creative thinking. Managers get the opportunity to develop new ideas and apply these ideas in creating new products and services. This leads to growth and expansion of business. According to M. E. Hurley, “A good planning process will provide avenues for individual participation, will throw up more ideas about the company and its environment, will encourage an atmosphere of frankness and corporate self-criticism and will stimulate managers to achieve more.” Thus, planning forces managers to think differently.
8. Facilitates Decision Making: Decision making involves searching for various alternative courses of action, evaluating them and selecting the best course of action. Under planning, targets are laid down. With the help of these targets, managers can better evaluate alternative courses of action and select the best alternative. As a result, hasty decisions and random actions can be avoided. Without planning decisions may become ad hoc and random choices based on impulse and intuition.
9. Helps in Co-ordination : Planned targets and programmes serve as the basis of harmonising the efforts of different departments, sections and individuals. Establishment of common goals helps to secure unity of purpose. Co-operation and co-ordination between departments becomes easy because people at all levels are involved in planning.
10. Bridges the Gap Between Present and Future: Planning bridges the gap between where we are (present position) and where we want to go (future position).
Systematic approach to planning is necessary for preparing sound plans.
1. Establishing Objectives: Planning is an intellectual process which an executive carries before any other function. But while planning, the question which must arise in the mind of the executive is “what is the objective of doing the job” So the first step in planning is the determination of objectives. Objectives provide direction to various activities in the enterprise. Planning has no utility if it is not related to objectives.
Overall objectives define what is to be accomplished in general terms. The derivative objectives focus on more details, that is, what is to be accomplished, where action is to take place, who is to perform it, how it is to be undertaken, and when it is to be accomplished.
2. Collection of Information and Forecasting: Sufficient information must be collected in order to make the plans and sub plans. Necessary information includes the critical assessment of the current status of the organisation together with the changes expected in the environment. The assessment of external environment helps a manager to identify the strength and weaknesses of the organisation. All this helps a manager to formulate effective plan serve as an important basis of planning.
3. Development of Planning Premises : This step involves making assumptions concerning the behaviour of internal and external actors identified in the second step. It is essential to identify the assumptions on which the plans will be based. Assumptions denote the expected environment in the future and are known as ‘planning premises Again, forecasting is important in premising. It helps in making realistic assumptions about sales, costs, prices, products, echnological developments, etc. in the future. The assumptions along with the future forecasts provide a basis for the plans.
4. Search of Alternatives: Usually, there are several alternatives for any plan. The planner must try to find out all the possible alternatives. Without resorting to such a search, he is likely to be guided by his limited imagination. At the time of finding or developing alternatives, the planner should not consider unviable alternatives. It may be noted that determination of alternative plans can be a time consuming task because objectives which have been established initially may be found to be inflexible. It is also possible that the assumptions need revision in the light of the changed circumstances.
5. Evaluation of Alternatives: Once alternative action plans have been determined, they must be evaluated with reference to considerations like cost, long-range objectives, limited resources, expected payback, risk, and many intangible factors to select the satisfactory course of action. Many quantitative techniques are available to evaluate alternatives. The manager may take the help of these techniques to reach the most objective result. The best possible alternative may be chosen by the manager after detailed analysis. Sometimes, evaluation of available alternatives may disclose that two or more courses are advisable and so the concerned manager may decide to choose two or more alternatives and combine them to suit the requirements of the situation.
6. Selection of Plan and Development of Derivative Plans : The final step in the planning process is to select the most feasible plan and develop derivative plans. The plans must also include the feedback mechanism. The hierarchy of plans must be both integrated and flexible to meet the changing internal and external environment. The derivative plans are required to support the basic or overall plans because the latter cannot be executed effectively unless they are supported by the derivative or sub-plans. The derivative plans are developed within the frame-work of the basic overall plan. For instance, if an airline decides to acquire a fleet of new planes, it will be followed by the development of a host of derivative plans dealing with the employment and training of various types of personnel, the acquisition of spare parts, the installation of maintenance facilities, scheduling. advertising, financing and insurance.
