UNIT-II

PLANNING
1. Nature of Planning
Planning is primary function of management:
The functions of management are broadly classified as planning, organisation, direction
and control. It is thus the first function of management at all levels. Since planning is involved
at all managerial functions, it is rightly called as an essence of management.
Planning focuses on objectives:
Planning is a process to determine the objectives or goals of an enterprise. It lays down
the means to achieve these objectives. The purpose of every plan is to contribute in the
achievement of objectives of an enterprise.
Planning is a function of all managers:
Every manager must plan. A manager at a higher level has to devote more time to
planning as compared to persons at the lower level. So the President or Managing director in a
company devotes more time to planning than the supervisor.
Planning as an intellectual process:
Planning is a mental work basically concerned with thinking before doing. It is an
intellectual process and involves creative thinking and imagination. Wherever planning is done,
all activities are orderly undertaken as per plans rather than on the basis of guess work. Planning
lays down a course of action to be followed on the basis of facts and considered estimates,
keeping in view the objectives, goals and purpose of an enterprise.
Planning as a continuous process:
Planning is a continuous and permanent process and has no end. A manager makes new
plans and also modifies the old plans in the light of information received from the persons who
are concerned with the execution of plans. It is a never ending process.
Planning is dynamic (flexible):
Planning is a dynamic function in the sense that the changes and modifications are
continuously done in the planned course of action on account of changes in business
environment.
Planning secures efficiency, economy and accuracy:
A pre- requisite of planning is that it should lead to the attainment of objectives at the
least cost. It should also help in the optimum utilisation of available human and physical
resources by securing efficiency, economy and accuracy in the business enterprises. Planning
is also economical because it brings down the cost to the minimum.
 Planning involves forecasting:
Planning largely depends upon accurate business forecasting. The scientific techniques
of forecasting help in projecting the present trends into future. ‘It is a kind of future picture
wherein proximate events are outlined with some distinctness while remote events appear
progressively less distinct.”
Planning and linking factors:
A plan should be formulated in the light of limiting factors which may be any one of
five M’s viz., men, money, machines, materials and management.
Planning is realistic:
A plan always outlines the results to be attained and as such it is realistic in nature.

2. PURPOSE OF PLANNING IN MANAGEMENT

The following are some of the important purpose of planning in an organization.
Facilitates Accomplishment of Objectives:
The aim of planning is to facilitate the attainment of objectives. It focuses its attention
on the objectives of the organization. It states the objectives of each department in the
organization and of the enterprise as a whole.
Ensures Economy in Operations:
Since planning emphasizes efficient operation and consistency, it minimizes costs and
gains economical operation. Coordinated group effort, even flow of work and deliberate
decisions are due to planning.
Precedes Control:
Control involves those activities which are carried out to force events to conform to
plans. Plans serves as standards of performance. Control seeks to compare actual performance
with set standards. So control cannot be exercised without plans.
Provides for Future Contingency:
Planning is required because future is uncertain. Planning enables the management to
look into the future and discover suitable alternative course of action. Planning helps the
management to have a clear-cut idea about the future and to frame a suitable programme for
action. Even when the future is highly certain, planning is essential to decide the best course
of action.
Facilitates Optimum Utilization of Resources:
Various resources that are relevant to an organization namely, funds, physical
resources, manpower, technological know-how, etc., are by and large inadequate due to
demand from competing organizations and have alternative uses.
 Pre-requisites for other Managerial Functions:
The purposes of planning is to provide a conceptual and concrete basis for initiating
and undertaking other managerial functions like staffing, organizing, directing and control.
Planning is a primary function and it goes a long way to improve efficiency of other functions
of management and makes the management tasks more effective.
All Pervasive Function:
Planning is a function of managers at all levels though the scope, nature and extent of
planning differs from one enterprise to another and from one level to another. Irrespective of
the level and area of his operation, each and every manager has to perform this function.
Planning at the top level will be fundamental, broad and far-reaching. Managers at other levels
may plan about their departmental activities for a short period.
Coordinates the Activities:
Coordination is an important factor for the smooth functioning of an organization. As
pointed out by H.G. Hicks, “planning coordinates the activities of the organization toward
defined and agreed upon objectives. The alternative is random behaviour”.
Provides for the Delegation of Authority:
Planning provides for the delegation of authority to subordinates. Well-formulated
plans serve as guides to subordinates and reduce risk involved in delegation of authority.
3. STEPS IN PLANNING PROCESS
• Being Aware of Opportunity
• Establishing Objectives or Goals
• Developing Planning Premises
• Determining Alternatives
• Evaluating Alternatives
• Selecting the Best Alternative
• Formulation of Supporting Plan
• Establishing Sequence of Activities

4. TYPES OF PLANNING
Here, we attempt to discuss in depth about the four types of Planning.
Operational Planning
This plan simply means the daily activities which are focused in achieving the goal.
Operational Plans are generally the single used plans or the ongoing plan. These plans include
specific rules and regulations and procedures to stand by it. They provide an adequate guideline
for the step to step processing of the work.
 Strategic Planning
The reason for planning is chalked out in the strategic plan. Strategic plans are generally
long-term thinking processes executed by the top-level managers. It is a big picture to cast a
vision and requires mission processing.
Tactical Planning
Tactical Plan is the backbone of Strategic Plan. Generally speaking, they are focused,
specific and short-term plans. Tactical plans form the outline of a strategic plan that eventually
structures the organizational plan. The strategic plans that get chunked into actionable plans
are called Tactical Planning.
Contingency Planning
Contingencies might occur in business. To tackle the contingencies, the contingency
planning is drafted. Thyer ae also named as ‘Special Planning’ by the business experts. In a
situation of change, contingency planning proves to be helpful.
5. MERITS OF PLANNING
• Planning reduces uncertainty
• Planning is focused on objectives
• Planning facilitates control
• Planning encourages creativity
• Planning anticipates problems and cope with change
• Planning gives a manual for activity
• Planning further develops asset use
• Plans give inspiration and responsibility
• Plans set execution principles

DEMERITS OF PLANNING

• Planning is time consuming process

• Planning could lead to lack of reliable data
• Planning could be a costly process
• Planning leads to rigidity
• Planning is resistance to change
• Planning prompts a lack of concern
• Plans forestall adaptability
• Planning hinder innovativeness
6. NATURE OF OBJECTIVES
The objectives are very precise, time-based, measurable actions that support the
completion of a goal. Objectives typically must,
• Be related directly to the goal;
• Be clear, Concise, and understandable
• Be stated in terms of results;
• Being with an action verb;
• Specify a date for accomplishment; and
• Be measurable.

7. IMPORTANCE OF OBJECTIVES
Create direction and guidance:
Every business needs guidelines. Objectives direct the company's activities toward

achieving the goals and visions of the owners.

Motivate employees:

Employees become more enthusiastic and spirited in their work when they know what

is expected of them. Their work is more directed with less wasted time. They get particularly

interested when they learn about the rewards for meeting and exceeding their objectives. If
 employees don't have the skills for their jobs, they are inspired to learn more and find ways to

improve their performance.

Establish standards to evaluate performance:

Objectives establish standards of performance. They are measuring sticks to identify

the successes and failures of an organization and its employees. Performance reporting helps

managers identify non-performing areas and to take corrective actions.

Form the basis to set budgets:

Once the path for the company's development has been defined, objectives help allocate

the funds needed to achieve the goals. Budgets set specific dollar amounts for departments that

employees can use for guidance. Financial reports give the owner the information to make sure

that everything stays on the road.

Develop structure of project plans:

Objectives form the structure for project development and measurement of performance

along the way. Applying objectives to a project defines the timeline of activities needed to

complete the plan.

A business that does not have defined objectives is wandering, lost in the woods. The

likelihood of success is remote, since people in the business are not certain as to where they

should be going. A business owner has a vision of his company, and the objectives are the

reasons to communicate his ideas to employees.

8. WHAT IS MANAGEMENT BY OBJECTIVES (MBO)?

Management by objectives (MBO) is a strategic management model that aims to

improve the performance of an organization by clearly defining objectives that are agreed to

by both management and employees. According to the theory, having a say in goal setting and

action plans encourages participation and commitment among employees, as well as aligning

objectives across the organization.

9. ADVANTAGES AND DISADVANTAGES OF MANAGEMENT BY OBJECTIVES

(MBO)

MBO comes with many advantages and disadvantages.

Advantages

• Employees take pride in their work and are assigned goals they know they can achieve

that match their strengths, skills, and educational experiences.

• Assigning tailored goals brings a sense of importance to employees, boosting their

output and loyalty to the company.

• Communication between management and employees is increased.

• Management can create goals that lead to the success of the company.

Disadvantages

• As MBO is focused on goals and targets, it often ignores other parts of a company,

such as the culture of conduct, a healthy work ethos, and areas for involvement and

contribution.

• Strain is increased on employees to meet the goals in a specified time frame.

• Employees are encouraged to meet targets by any means necessary, meaning that

shortcuts could be taken and the quality of work compromised.

• If management solely relies on MBO for all management responsibilities, it can be

problematic for areas that don’t fit under MBO.

10. WHAT IS THE PROCESS OF MBO?

There are five steps in the Process of Management by Objectives. Such as,

• Define Objectives,

• Share them with Employees,

• Encourage employees to participate,

• Monitor progress, and

• Evaluate Performance and reward achievements.