Chapter 4 — Planning

Chapter 4 covers Planning — its meaning and concept, features, importance, limitations, the seven-step planning process, and the different types of plans such as objectives, strategy, policy, procedure, method, rule, programme, and budget.

Planning is deciding in advance what to do and how to do it. It involves setting objectives and developing appropriate courses of action to achieve them, and is closely connected with creativity and innovation.

The seven features are: planning focuses on achieving objectives, it is the primary function of management, it is pervasive (required at all levels and departments), it is continuous, it is futuristic, it involves decision making among alternatives, and it is a mental exercise requiring foresight and sound judgement.

Planning provides direction to all departments, reduces the risks of uncertainty by anticipating changes, reduces overlapping and wasteful activities, promotes innovative ideas, facilitates decision making by evaluating alternatives, and establishes standards against which actual performance can be measured for controlling.

The six major limitations are: planning leads to rigidity (fixed plans may not suit changed circumstances), it may not work in a dynamic environment, it reduces creativity (middle management only implements plans), it involves huge costs in time and money, it is time-consuming, and it does not guarantee success.

The seven steps are: (i) setting objectives, (ii) developing premises or assumptions about the future, (iii) identifying alternative courses of action, (iv) evaluating the pros and cons of each alternative, (v) selecting the best alternative, (vi) implementing the plan, and (vii) follow-up action to monitor whether objectives are being achieved.

Single-use plans are developed for a one-time event or project not likely to be repeated in future; they include budgets, programmes, and projects. Standing plans are used for activities that occur regularly over a period of time to ensure smooth internal operations; they include policies, procedures, methods, and rules.

Policies are general statements that guide thinking or channelise energies towards a particular direction. They provide a basis for interpreting strategy and define the broad parameters within which a manager may function, applying to all levels and departments of the organisation.

A procedure is a set of routine steps specified in a chronological order for how to carry out activities in particular circumstances. A method deals with one step of a procedure and prescribes the exact manner in which that specific task is to be performed; proper selection of method saves time, money, and effort.

A budget is a statement of expected results expressed in numerical terms that quantifies future facts and figures. It is a planning instrument because it involves forecasting; it is also a control device because actual figures can be compared with expected figures and corrective action taken for any deviations.

A strategy is a comprehensive plan for accomplishing an organisation's objectives. Its three dimensions are: (i) determining long-term objectives, (ii) adopting a particular course of action, and (iii) allocating resources necessary to achieve the objective.

Success depends on plans being properly drawn up and implemented. Managers sometimes rely on previously tried plans without considering changed conditions. There are many unknown factors to consider, and complacency or a false sense of security can lead to failure even when a plan is in place.

Premises are assumptions about the future on which plans are drawn. Since planning is concerned with an uncertain future, managers make assumptions using forecasts, existing plans, or past information about policies. All managers involved in planning must use the same premises.

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