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The Nature and Purpose of Planning

Planning involves envisioning a desired future and determining effective actions to achieve goals. It helps organizations handle complexity, achieve success, identify opportunities, and utilize resources effectively. Planning establishes objectives and evaluates alternatives to select the best course of action. Key components of plans include missions, objectives, premises, policies, procedures, rules, and budgets. The planning process involves establishing objectives, developing premises, determining alternatives, evaluating options, and selecting the optimal course of action.

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91 views50 pages

The Nature and Purpose of Planning

Planning involves envisioning a desired future and determining effective actions to achieve goals. It helps organizations handle complexity, achieve success, identify opportunities, and utilize resources effectively. Planning establishes objectives and evaluates alternatives to select the best course of action. Key components of plans include missions, objectives, premises, policies, procedures, rules, and budgets. The planning process involves establishing objectives, developing premises, determining alternatives, evaluating options, and selecting the optimal course of action.

Uploaded by

babu41652107
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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The Nature and Purpose

of
Planning
Plans are nothing
planning is every thing
Planning

Definition :

Planning is the design of a desired future


and of effective ways of bringing it about.

____________________

Planning is looking ahead in order to visualize


and decide a future course of action to allow
to achieve a desired goal.
Purposes of Planning
• In business (and in life ) things are so complex
that without proper planning they can not be
handled.

• It is a pre- requisite not only to achieve success


but even to survive in a complex and competitive
world.

• It helps in determining opportunities


• It helps in identification of courses of action.
• It helps in proper utilization of resources
effectively.
• It helps in working in an organized manner.
Nature of Planning
1. Planning is the most important function of
management.

2. Planning has central role in linking all other


managerial functions.

3. Planning is pervasive and oversees all other


managerial functions.
Functions of Managers
•Planning

•Staffing

•Organizing

•Leading

•Controlling
Managerial Skills
•Human

•Conceptual

•Design

•Technical

All functions and skills


are linked to planning function.
Benefits of Planning

• Planning leads to success.


• It acts as a bridge between where we
are and where we want to be.
• It helps in saving resources, money and
time.
• Jobs are well coordinated thus duplication
of effort is avoided and skills and
potentials are fully utilized.
Myths about Planning

• Planning that proves inaccurate is a waste of

management time.

• Planning can eliminate change.

• Planning reduces flexibility.


Plan
Is a pre-determined course of action.

•It brings orderliness.

•Avoids confusion.

•Gives better use of resources.

•Cuts waste.

Plans are changed or modified but not

abandoned.
Effectiveness:
is the achievement of objective.

Efficiency:
Is the achievement of objective with least
amount of resources.
Effectiveness of Plans

Effectiveness of plan pertains to

the degree to which it achieves

its objectives.
Efficiency of Plans

Efficiency of plan refers to its

attainment of objective at a

reasonable cost.
Types of Plans
• Single use or one time plans
• Standing Plans
• Specific Plans
• Subject Plans
• Directional Plans
• Short Term Plans
• Long Term Plans
• Operational Plans
• Strategic Plans
Single Use or One Time Plan

It is specifically designed to meet the needs


of a unique situation and is created in
response to non-programmed decisions that
managers make.
Standing Plans

Ongoing plans that provide guidance for


activities repeatedly performed and are
created in response to programmed decisions
that managers make.
Non-Programmed Decision

Unique decisions that require a custom-made


solution.
Programmed Decision

A repetitive decision that can be handled by a


routine approach.
Specific Plans

These plans are clearly defined and explicit


and leave no room for interpretation.
Subject Plans
These plans are limited to one particular
aspect of an organization’s activates.
eg.
Marketing
Production
Recruitment
Financial
Manpower etc
Directional Plans

These are flexible plans that set out general


guide lines and permit considerable discretion to
users.
Short Term Plans

Plans that are formulated to cover a period of


less than one year.
Long–Term Plans

Plans that are formulated to extend upto


beyond five years.
Operational Plans

Plans that specify details on how overall


objectives are to be achieved.
Strategic plans

These plans are organization–wide, establish


overall objectives and position an organization
in term of its environments.
Cornerstone of Planning
Objectives

Goals

• Multiplicity of objectives

• Stated objectives
• Real objectives

• Traditional objective setting


Objective
It is a desired outcome for groups or an entire
organization.

Goal

It is a desired out come for an individual.


Stated Objectives

Official statements of what an organization


says and what it wants public to believe.
Real Objectives

Objectives that an organization actually


pursues, as defined by the action of its
Management.
Traditional Objective Setting

Objectives are set at the top and then broken


down into sub-objectives for each level in an
organization. The top imposes its standards on
every one below.
Principle of Planning
The more thoroughly individuals charged with
planning understand and agree to utilize
consistent planning premises the more
coordinated and realistic planning will be.
Components of Plans
Mission

Objectives

Premises

Policies

Procedures

Rules

Budgets
Mission
The purpose of an organization is called its
mission.
Policies

Guidelines that establish parameters for


making decisions.
Premises

This is the anticipated environment in which


plans are expected to operate and include
forecasts of the future and conditions that
are likely to affect the operation in future.
Procedures

A series of interrelated sequential steps that


can be used to respond to a structured problem.
Rules

Explicit statements that tells managers


what they ought or ought not to do.
Structured problem

It is a straightforward, familiar and easily


defined problem.

Non Structured problem

A new problem for which information is


ambiguous or incomplete.
Budget

A budget is a numerical plan for allocating


resources to specific activities.

A budget is a statement of expected results


expressed in numerical terms.
Types of Budget

Revenue: A budget that projects future


sales

Expense: A budget that lists the


primary activities by a unit
and allocates amount to each

Profit: A budget to determine a unit’s


contribution to overall profit
of an organization
Cash:
A budget that forecasts how much an
organization will have and how much it will
need to meet expenses
Capital Expenditure:
A budget that forecasts investments in
property, buildings and major equipment.
Fixed:
A budget that assumes a fixed level of
sales or production.
Variable:
A budget that takes into account those
cost that vary with volume of production.
Approaches to Budgeting
Incremental (or traditional)
A budget that allocates funds to various activities
according to allocations in the pervious period (and
adjusted to cater for inflation etc)

Zero-base
A system in which budget requests start form
scratch regardless of pervious budgetary
allocations.
Steps in Planning

Pre-requisite : Awareness of opportunities

1st: Establishing Objectives


2nd: Developing Premises
3rd: Determining Alternative Courses
4th: Evaluating
5th: Selecting Best Course

Post-requisite
Derivative or Supportive Plans
Awareness of Opportunities
• Not strictly a step in planning process. But it is

a real starting point.

• Managers must look at possible opportunities in the

light of their organization's strengths and weaknesses

• Must also look at future environment both external

and internal.

• Setting realistic objectives depends on this

awareness.
1st Step: Establishing
•
Objectives
Selecting objectives for the entire organization.

• Based on organizational objectives, establishing objectives for each

subordinate work unit.

Organizational objectives give direction to the major plans, which define

objectives for every major department.

Major departmental objectives control objectives of subordinate departments.


2nd Step: Developing Premises
Developing premises is critical to planning. These include:

. Forecasts

. Basic Policies

. Existing Plans

. Anticipated Environment
3rd Step: Determining
Alternative Courses
• There is seldom a plan for which

reasonable alternatives do not exist.

• Common problem is not finding alternatives

but reducing their numbers.

• Most fruitful possibilities must be looked

at.
4th Step: Evaluating Alternative
Courses
• Evaluate courses by examining their strong and weak

points.

• Weigh them in the light of premises and objectives.

• Complex courses can be evaluated with the help of

operational research, mathematical and computing

techniques.
Evaluating Alternative
Courses

1. Establishing criteria

2. SFA test
5th Step: Selecting the Best
Course
Selecting the best course is the real point of decision

making.

. By establishing criteria, eg

Achieving objectives at least cost

Requiring least changes

Ensuring maximum return on investment

. SFA Test

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