Unit IV: PLANNING:

 Meaning of planning
 Features of planning
 Importance of planning
 Limitations of planning
 Planning process.
 Type of plans: (i) Single use plans (ii) Standing plans.

PLANNING:

Meaning of Planning:
Planning is the primary function of management. It serves as the basis for all
other functions of management.

“Planning may be defined as ‘deciding in advance what is to be done, when ,

how and by whom it is to be done’ ”

It bridges the gap between ‘ where we are and where we want to go’.

Planning involves setting objectives and developing appropriate courses of

action to achieve these objectives. Thus, it is closely connected with creativity
and innovation.

Thus, planning provides a rational approach for achieving predetermined

objectives.
Q. Planning seeks to_______________________the gap between where we are and where we
want to go.

Q. Which function of management is considered as the base of all other

functions.
Q. One of the functions of management is closely connected with creativity
and innovation. Identify the management function.
Q. Name the function of management which involves setting objectives and
developing appropriate courses of action to achieve these objectives.

Q. Karan, is working as a supervisor in XYZ Ltd. To achieve the target he

wants to try a new method and different way of allocating the work. His
superior did not permit him and forced him to do the work strictly as per the
plan. Name the limitation of planning indicating in above case.

FEATURES OF PLANNING PIC PIFF Case study question paper

2018

1. Planning focuses on achieving objectives:

Planning function of management starts with determination of objectives. Once
the objectives are set up, the next step is to determine the steps/activities that are
to be followed to achieve these objectives. Planning is not an end in itself but a
means towards achievement of an objective. Planning has no meaning
unless it contributes to the achievement of predetermined
organizational goals.

2. Planning is a primary function of management:

Planning is a primary function of management in the sense
that it lays down the base for other functions of management
i.e. organizing, staffing, directing and controlling. All other
functions are performed within the framework of the plans
drawn. Thus, Planning precedes other functions. This is also
referred to as the primacy of planning.
3. Planning is pervasive:

Planning is required at all levels of management as well as in all departments

of the organization. It is not an exclusive function of top management.
 For example, the top management undertakes planning for the organization as
a whole. Middle management does the departmental planning. At the lowest
level, day-to-day operational planning is done by supervisors.

4. Planning is futuristic:

Planning essentially involves looking ahead and preparing for the future. The main
idea of planning is to meet future events to the best advantage of the organization.
Through forecasting, future events and conditions are anticipated and plans are
drawn accordingly. Planning is, therefore, regarded as a forward looking function
based on forecasting. Accurate forecasts, therefore, become essential for
successful plans.

5. Planning involves decision making:

Planning essentially involves choice from among various alternatives and

activities. If there is only one possible course of action, there is no need for
planning because there is no choice. Planning identifies various alternatives,
evaluating and examining the alternatives and choosing the most appropriate
one.

6. Planning is a mental exercise:/intellectual process

Planning requires application of the mind involving foresight, intelligent

imagination and sound judgement. It is basically an intellectual activity of
thinking rather than doing. Planning requires logical and systematic thinking
rather than guess work.

7. Planning is continuous:

Plans are prepared for a specific period of time - may be for a month, a quarter,
or a year. At the end of that period there is need for a new plan to be drawn on
the basis of new requirements and future conditions. Hence, planning is
a continuous process. It means that a plan is framed; it is implemented, and is
followed by another plan and so on.

Importance of Planning PPREFR

1. Planning provides directions: With the help of planning, the objectives

of the organization, along with the course of action, are clearly defined.
The result is that the efforts of all the employees are directed towards
achieving the predetermined objectives. By stating in advance how the
 work is to be done, planning provides direction for action. If there was no
planning, employees would be working in different directions and the
organization would not be able to achieve its goals efficiently.

2. Planning reduces the risk of uncertainty: Business operates in an

uncertain environment and faces several types of risks. Planning is an
activity which enables a manager to look ahead, pre-assess the future
uncertainties, consider the impact of changes on business and develop
appropriate managerial responses to face these uncertainties with minimum
loss or wastages of resources.

3. Planning reduces overlapping and wasteful activities: Planning serves as

the basis of coordinating the activities and efforts of different departments and
individuals whereby useless and redundant activities are reduced and ensures
better utilization of organizational resources.

4. Planning promotes innovative ideas : Planning, being an intellectual

process, provides a greater scope of finding new ideas, better methods and
procedures to perform a particular job. Planning process forces managers to
think differently which promotes innovative and creative ideas.

5. Planning facilitates decision making: Under planning, targets are laid down
and the best course of action is developed to achieve the targets efficiently. To
determine the best course of action the manager identifies various alternatives,
evaluate each alternative and select the most viable option (i.e. best
decision) Thus planning facilitates decision making.
6. Planning establishes standards for controlling : Planning involves
setting goals. Controlling means comparison between planned and
actual performance and if there is any deviation between the standards
and the actual then corrective actions are taken to match the actual
performance with the standards. But if there is no standards fixed under
planning then how to perform the controlling function as there is no base
for comparison. So the base for comparison is provided by planning
function. Thus planning establishes standards for controlling.

Q. ‘Planning is certainly important as it tells us where to go; it provides

direction and reduces the risk of uncertainty by preparing forecast.'
This statement enumerates some of the points highlighting the
importance of planning. State any four points of importance of
planning not mentioned in the statement.
Limitations of Planning: TRRIGD

1. Planning leads to rigidity: Planning decides the future course of action

and managers may not be in a position to change it. Detailed planning
creates a rigid framework in the organization and subordinates are
supposed to work only as per the plans already framed and deviations
from the plans are considered to be highly undesirable.

2. Planning may not work in dynamic environment: External factors such

as government policies, political factors, industrial or trade policies etc.,
are not constant. These keep on changing and may disturb the functioning
of the organiz4;ation. It becomes difficult to accurately assess the future
trends in the environment and this may create obstacles in effective
planning.

3. Planning involves huge costs: When plans are drawn up, huge cost is
involved in their formulation in terms of money and efforts. These may be
in terms of time and money . There are number of incidental costs as well,
like expenses on boardroom meetings, discussion with professional
experts and preliminary investigations to find out the viability of the plan.

4. Planning is time consuming: Sometimes plans to be drawn up take so

much of time that there is not much time left for their implementation and it
is not feasible in emergencies. The whole process of planning requires
considerable amount of time from the organizational members.

5. Planning does not guarantee success: The success of an enterprise is

possible only when plans are properly drawn and implemented. In
many situations, this does not happen. Sometimes managers depend
on previously tried successful plans, but it is not always true that a plan
which has worked successfully before, will also work effectively again.

6. Planning reduces creativity: In planning, work is to be done as per pre-

determined plans. It is decided in advance what is to be done, how it is to
be done and who is going to do it. There is very little scope for deviating
from the plans. This blind conformity with the pre-determined guidelines
discourages individual’s initiative & creativity.
 TRRIGD
Q. Karan, is working as a supervisor in XYZ Ltd. To achieve the target he wants to
try a new method and different way of allocating the work. His superior did not
permit him and forced him to do the work strictly as per the plan. Name the
limitation of planning indicating in above case.

Q. ABC LTD. has a plan of increasing profits by 20%. It has devoted a lot of time and money
to this plan. But the competition starts increasing, so it could not change its plan to beat its
competitors because huge amount of money had already been devoted to the pre-decided
plan. It caused losses to the company.
Explain any two limitations of planning highlighted in the above case. Also, quote the lines
from it.
Ans.

1st Limitation: ‘ABC Ltd. has devoted a lot of time and money to its plan.’

Planning is a time consuming process. It also involves huge costs.

2. ‘The competition starts increasing, so it could not change its plan to beat its
competitors because huge amount of money had already been devoted to the pre-
decided plan.’

Planning leads to rigidity. Following a pre-decided plan, when

circumstances change, may not turn out to be in the organization’s
interest

Planning Process. S DIES IF

1. Setting Objectives: The first and foremost step in the planning process is
setting objectives. Objectives should be stated clearly for all the departments,
units and employees. This step provides the rationale for undertaking various
activities as well as indicating the direction of efforts.
 2. Developing premises: Plans are made on the basis of some assumptions
about the future. These assumptions, which provide the bases for planning are
called planning premises .These consist of forecasting future conditions and
events that are likely to have bearing on the pursuit of the goal, like market
demand for goods, cost of raw materials, state of technology, intensity of
competition, Govt. policy etc.
3. Identifying alternative courses of action: Once objectives are set and
premises are developed, the next step would be to search alternative courses
of action. All the alternative courses of action should be identified in order to
achieve the predetermined objectives.
4. Evaluating alternative Courses: The alternatives generated in the previous
stage are evaluated in the light of feasibility, objectives, cost involved,
availability of capital etc. In other words, the positive as well as negative
aspects associated with each and every alternative course of action is
evaluated and analysed.
5. Selecting an alternative: In this step the best alternative is chosen for
reaching organizational objectives. The ideal plan should be the one which is
most feasible, profitable and with least negative aspects.
6. Implementing the plan: Once the plans are developed they are put into
action. Successful implementation of the plan ensures understanding and
whole-hearted cooperation of all the employees.
7. Follow up action: This step involves monitoring the implementation of plans.
This step ensures that plans are being implemented and activities are
performed as per schedule.

Q.Name the step in the process of planning which is considered the “real point of decision
making”. ( S.P.2019-20) S DIES IF

Q. What is the most critical step in the planning process.

Types of Plan

Standing or repeated use plans:

As the name suggests these plans are formulated once and repeatedly used. They
are designed to be used over and over again because they focus on organizational
situations that occur repeatedly. They are made to guide managerial decisions for
recurring problems. These plans continuously guide the manager. That is why it is
said that a standing plan is a standing guide to recurring problems.

1. Objectives: The first and foremost step of the planning process is setting
organizational objectives. Objectives are defined as the end results (desired
 future positions) towards which all managerial efforts and organizational
activities are directed and an organization seeks to achieve . They serve as
guides for overall business planning. Objectives should be clear, specific and
unambiguous, numerically expressed and time bounded. (to be achieved within
a given period of time)

Examples: Increasing sales by 10%, earning 20% return on investment.

2. Strategy: A strategy provides the broad contours of an organisation’s
business. Strategies refer to future decisions defining the organizational
directions and scope in long run. It is a comprehensive plan for accomplishing
organization objectives. Comprehensive plan includes the following three
dimensions.
(i) Determining long term objectives,
(ii) Adopting a particular course of action, and
(iii) Allocating resources necessary to achieve the objectives.
It is a plan prepared to counter the acts of opponent.
Initially it was used with reference to war. A strategy is generally made to fight
the changing business environment specially competition e.g., marketing
strategy. The changes in the economic, political, social, legal and technological
environment will affect an organisation’s strategy.

Types of Standing Plans

3. Policy: Policies are general statements that guide thinking or channelize

energies towards a particular direction. They define the broad
parameters within which a manager may function or may take a decision.
They are guides to managerial action and decisions in the
implementation of strategy.
 There are policies for all levels and departments in the organisation
ranging from major company policies to minor policies.
 The manager may use his/her discretion to interpret and apply a
policy.
 For example, recruitment policy, promotion policy pricing policy, credit
policy.

4. Procedure: Procedures refers to a series of specific steps on how to be

performed in a chronological order to carry out the routine activities. They
detail the exact manner in which any work is to be performed. They are
specified in a chronological order and are generally meant for insiders to follow.
Example: There may be a procedure for hiring employees, for requisitioning
supplies before production.
 5. Rule: Rules provide guidelines for actions. Rules are specific statement that
tells what is to be done and what not to be done. Rules are specific regulations
which must be followed by the employees in an organization. They spell out
the actions or non-actions of employees. There is no discretion allowed in rules
i.e. they must be followed strictly and any disobedience may lead to penalty.
Rules are rigid which ensure discipline in the organization. A rule is a guide to
human behavior.
For example: ‘No smoking’ in the office premises’.
6. Method: Methods refer to the prescribed ways or manner in which a task has
to be performed. It deals with the best way to perform a particular task. It deals
with a task comprising one step of a procedure and specifies how this step is to
be performed. The method may vary from task to task. Example, various
methods of training are adopted by an organization to train its employees like
apprenticeship training, vestibule training etc.
Single Use Plan: Single use plans are those plans which are developed for a one-
time event or project and are of non-recurring nature.
Types of Single Use Plan
1. Programme: A programme is a single use plan containing detailed statements
about project; outlining the objectives, policies, procedures, rules, tasks,
physical and human resources required to implement any course of action.
E.g., cleanliness programme in the organisation.

2. Budget: A budget is a statement of expected result expressed in numerical terms for

a definite period of time in the future. Budgets are of many types like: Cash budget,
sales budget etc.

Q.1 Name the type of Plan which is time bound and linked
with measurable outcome.
Q.2 ‘Planning is required at all levels of management as well as in all
departments of the organisation’ is one of the characteristics of Planning.
Choose the correct option from the following alternatives:
(a) Planning involves decision making.
(b) Planning focuses on achieving objectives.
(c) Planning is pervasive
(d)Planning is Continuous.
Q. 3. Top Management undertakes planning for the organization as a whole,
middle management does the departmental planning and at the lowest level,
day-to-day operational planning is done by supervisors. Identify the
characteristic of planning highlighted by this statement.
Q. 4. “Planning requires application of the mind involving foresight and vision,
intelligent imagination and sound judgment.” Identify the characteristic of
planning highlighted by this statement.

Q. 5. “Planning helps the manager to look into the future and make a choice
from amongst various alternative courses of action”. Which point related to
importance of planning has been referred to in the above line?. Choose from
the following alternatives.
(a) Planning provides direction. (b) Planning promotes innovative ideas.
(c) Planning facilitates decision making (d) Planning is futuristic.

Q.6. ‘The ends that the management seeks to achieve through its operation.’
Choose the correct option from the following: (a) Policy (b) method (c)
Objectives (d) Budget.

7.. ___________________ refers to routine steps on how to carry out activities. Fill in the
blank with the correct alternative.
(a) Policy (b) Rule (c) Procedure (d) Strategy

8.. Identify from the following which is not the feature of budget.
(a) Budget is an element of planning
(b) Budget relates to both planning and controlling (c) Budgets are goal oriented (d) Budget relates to
incurring expenses.
Q 9.. Name the type of a plan which is also a control device from which
deviations can be taken care of.

10. ‘Smoking is prohibited in the factory’. Choose the type of Plan from the following
options.
(a) policy (b) Rule (c) Procedure (d) Method.

11.‘Which type of plan has the least flexibility’?

Choose from the following options: (a) Rule (b) Objective (c) Methods (d)
Budget .
Q 12. Name the type of plan which reflects the managerial decision that a
certain action must or must not be taken.

13. Q.________________define the broad parameters within which a manager may function. They are
guides to managerial actions and decisions. Fill in the blank with appropriate type of plan out of the
following options.
(a) Objectives (b) Policy (c) Procedure (d) Strategy

14. ‘ Programme’ as type of Plan belongs to one of the following alternatives:

(a) Single use plan (ii) Repeated use plans (iii) Both Single use and repeated
use plan (iv) procedures

Q 15. Two year ago, Madhu completed her degree in food technology. She worked for
sometime in a company that manufactured chutneys, pickles and murabbas. She was
not happy in the company and decided to have her own organic food processing unit
for the same. She set the objectives and the targets and formulated an action plan to
achieve the same.
One of her objectives was to earn 10% profit on the amount invested in the first year . It
was decided that raw materials like fruits, vegetables, spices, etc. will be purchased on
three months credit from farmers cultivating only organic crops . She also decided to
follow the steps required for marketing of the products through her own outlets. She
appointed Mohan as the Production Manager who decided the exact manner in which
the production activities were to be carried out. Mohan also prepared a statement
showing the number of workers that will be required in the factory throughout the
year. Madhu informed Mohan about her area wise sales target for different products
for the forthcoming quarter. While working on the production table, a penalty of Rs.
100 per day for not wearing caps, gloves and apron was announced.
Quoting lines from the above paragraph, identify and explain the different types of
plans discussed.

Q. An electronic company is facing a problem of declining market share due to increased

competition from other new and existing players in the market. Its competitors are
introducing lower price models for mass consumers who are price sensitive. For quality
conscious consumers, company is introducing new model LED TV and DVD players with added
features and new technological advancements. For this, the company raises extra funds Rs. 5
crore form banks.
Name the type of plan the company is preparing. State the steps which the company follows
to implement this plan quoting the line from the above para.

Ans. The type of plan needed to be prepared under this situation is ‘Strategy’.
Steps involved in preparing this plan are:
(i) Determining long-term objectives:
(ii) Adopting a particular course of action:
(iii) Allocating resources necessary to achieve the objectives: