Concept of planning
Planning is deciding in advance what to do and how to do it.
Planning aims at bridging the gap between present and desired performance i.e. where we are at present and where we want to go in future, by achieving the objectives.
Features of planning
1. Focus on achieving objectives
Organisation is setup with a general purpose in view. This purpose can be achieved by setting specific objectives and achieving those objectives. Planning sets specific objectives and provides ways for achieving these objectives. Planning basically puts focus on achieving the set objectives or goals.
2. Primary function of management
Planning is the primary function of management as it lays the base for all other functions of management. All other functions of management are performed within the framework of the plans drawn by the planning process. Thats the reason why it is referred as primary function of management.
3. Pervasive
Planning is pervasive which means it is present at all levels of management and in all departments. Thats why an organisation has plans at different levels like departmental plan, divisional plan, sectional plan, etc.
4. Continuous process
A plan is formulated for a specific period but planning is a continuous process. After the end of this period, a new plan is formulated keeping next goal or task that is set but planning never stops in an organisation and done repeatedly. There is continuity in plan formation and implementation.
5. Futuristic
You remember the definition of planning, it is deciding in advance what to do and how to do it. Thus, planning is futuristic as it is primarily concerned with looking ahead and preparing an organisation for future. The basic purpose of planning is to meet future environmental requirements effectively to achieve organisational objectives.
Importance of planning
1. Providing direction of action
Planning provides direction for action by prescribing in advance what is to be done and how it is to be done. Planning sets objectives and all departments and individual of an organisation are clear about what they have to achieve and proceed in same direction.
2. Reducing risks of uncertainty
Planning is undertaken in the context of business environment which changes continuously. Such changes create uncertainty and consequently, risks for an organisation. Though, Planning does not reduce uncertainty, it reduces the risk of uncertainty. Planning can anticipate the changes in the business environment in advance and reduce the risk of any uncertainty.
3. Promoting innovative ideas
Planning is a mental exercise, it promotes innovative ideas which are unique in some way to solve business problem or to achieve organisational objectives in new ways.
4. Establishing standard for controlling
Planning provides standards for controlling. Actual performance results are evaluated against these standards in controlling. If there is any deviation between the two, necessary corrective actions are taken at the controlling stage to ensure that no deviation takes place between the standards established by planning and actual results in future.
5. Facilitating decision making
Planning facilitates decision making by providing guidelines about how decisions should be made. Such guidelines are in the form of policies, procedure, rules, etc., which are kept in mind while making decisions.
Limitations of planning
1. Rigidity in organisational functioning
Planning lead to rigidity in organisational functioning because when a plan is prepared through the planning process, it works as a benchmark for everyone in an organisation.
2. Time-consuming process
Planning is a time-consuming process. It requires collection of information from different sources, and then those information are analysed and then implied in a plan. This is why planning requires a lot of time as data collection and analysis of that day is a very lengthy process.
3. Costly process
Planning is a costly process. Various types of costs are involved in planning process like payment of salaries and other financial benefits to the person involved in planning process. Collection and analysis of data also involves a lot cost thus planning is a costly process.
4. No guarantee of success
Planning never assures success. The plan made can collapse any time leading to no success in the objectives that were made. Plan can fail due to many reasons like even if the plan is good when it is made it does not bring the desired result when implemented or the plan made must have some faults in the very starting only. In many situations, this is not done because of lack of suitable implementation process.
5. Dynamic environment
Planning only works when the business environment remains stable or changes on predicted lines. In many cases there are surprising changes. Such changes may be in government policies, technological break-throughs, increase in cost, etc. These changes affect the dynamic environment of business and make it more difficult to work within this rapidly changing environment.
Planning process
1. Setting objectives
The setting objectives is the first and foremost step of planning. Objectives are the end results which are to be achieved during the plan period. Objectives may be set in quantitative terms like 35% growth in sales or in quantitative terms like developing employees, undertaking research and development activities and so on. Objectives can also be set for any task to give end results and achieving goals.
2. Establishing planning permises
Planning permises are the assumption about future environmental scenario and organisational resources. These assumptions are the base material upon which plans are made. At this steps the business environment is analysed thoroughly and assumptions, forecasting about future conditions are made on the basis of current situation.
3. Identifying alternative course of action
There are many alternative ways through which an organisation may achieve its stated objectives. In this step those courses of action are identified in which the plan may me implemented.
4. Evaluating alternative courses
The various courses of action that were identified earlier are now analysed and evaluated properly. The various positive and negative aspects are evaluated to identify the best and most appropriate alternative through which the desired objectives may be achieved. For evaluation every organisation fixes there certain criteria like in terms of cost, returns, risk and vision of the organisation.
5. Selecting an alternative
The course of action that were identified and evaluated on various aspects are now selected. To select the appropriate alternative after the evaluation is essential to achieve the organisational objectives.
Selection of alternative plays an important role in implementation and succession of a plan.
6. Plan implementation
When a plan is selected it is implemented, that is, it is put into action. The alternative selected is now implemented with a view to achieve the set objectives. For implementing a plan, various action plans are prepared to make arrangements for required resources.
7. Follow-up of action
When a plan is put into action, a follow-up action is required to see whether it is being implemented and activities are being performed according to schedule or not. Monitoring implemented plan is quite important for ensuring that the stated objectives are achieved or not.