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Basic Concept of Planning

Planning is an intellectual process, the conscious determination of courses of action, the

basing of decision on purpose, facts and considered estimates. It means planning refers tothe following acts:

Formulating goals Identifying activities to be undertaken to attain these goals Choosing the means and allocating the resources to attain the goals Estimating the results.

Basic questions which are to be answered by the plan are:

1. Why a particular action is necessary?

( Goal orientation)

2. What is to be done? ( Different stages of activities)3. When to do? ( Framing the time)

4. Where to do? ( place where the activities will be undertaken)

5. Who will do? ( fixing responsibility)6. How will it be done? ( process or techniques to be followed)

Planning can be formal

Specific goals covering the period is defined

Goals are written and shared among the organizational members

Specific action programmes are incorporated

Planning can beinformal Nothing is written down

Little or no share of goals with others in the organization

Often done in small businesses where the owner-manager has a vision of where

he or she wants the business to go and how to get there.

More common in smaller organizations

Relationship between Planning and Decision making Decision making is required for setting goal and goal setting is the basic factor of

plan

Decision making is the catalyst that drives planning. Deciding best plan forattaining goal

Alternative selection requires decision

Support for implementing plan Evaluation of planning

Planning process

Being aware of opportunities

The market competition

Customer wants Our strength and weakness

Setting objectives/ goals Where we want to be

What and when we want to accomplish Traditional goal setting and management by objectives ( setting

goal jointly and reward are allocated on the basis of progress.

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Analysis of environmental forces Internal and external environmental forces

Identifying alternatives Most promising alternatives to attain our goals

Comparing alternatives in light of goals sought

Alternative which gives best chance of meeting goals at the lowestcost and high profit Choosing an alternative

Selecting one which we can pursue

Formulating supporting plans Such as- buy equipment, outsourcing or recruiting staffs etc.

Budgeting Budgeting as; volume and price of sales, operating expenses

Types of Plan

Strategic plans

Strategic plans are plans that apply to the entire organization,

establish the organizations overall goals, and seek to positionthe organization in terms of its environment.

It determines the general outline of resource allocation , prioritiesand action steps necessary to reach strategic goal.

Operational plans

Operational plans (sometimes referred to as tactical plans) are

plans that specify the details of how the overall goals are to be

achieved. (monthly, weekly, and day-to-day plans) Strategic plan includes the formulation of goals where as

operational plan define ways to achieve the goal.

Long-term plans those plans with a time frame beyondthree years

- Managers of organizations in complex , volatile environment face a special

dilemma. Such organizations probably needs the longer time horizon so, they

prepare long term plan.

- They constantly monitor the environment

Short-term plans

those plans covering one year or less.

- Useful for day to day operation

- It can be action plan ( a plan used to operationalize any other

kind of plan) and reaction plan ( a plan developed to react to

an unforeseen situation- intermediate term

- Any time period in between long term and short term plan.

- Useful to middle level managers.

Specific plans are plans that are clearly defined and which leave no

room for interpretation. They have clearly defined objectives.

Theres no ambiguity and no problem with misunderstanding.

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For example, a manager who seeks to increase her firms sales by

10 percent over a given 12-month period might establish specific

procedures, budget allocations, and schedules of activities to reachthat objectives.

The drawbacks of specific plans are that they require clarity and a

sense of predictability that often do not exist.

Directional plans are flexible plans that set out general guidelines.

When uncertainty is high and managers must be flexible in order to

respond to unexpected changes, directional plans are preferable.

They provide focus but dont lock managers into specific goals or

courses of action.

Instead of detailing a specific plan to cut costs by 4 percent andincrease revenues by 6 percent in the next six months, managersmight formulate a directional plan for improving profits by 5 to 10

percent over the next six months.

A single-use plan is a one-time plan specifically designed to

meet the needs of a unique situation.

- Developed to carry out a course of action not likely to be carried out in the future

Standing plans are ongoing plans that provide guidance for activities

performed repeatedly.

- Developed for activities that recur regularly over a time and it specifies theorganizations general response to a problems or situation.

Standing plans include policies, rules, and procedures.