[Commerce Class Notes] on Planning Pdf for Exam

Planning means deciding in advance what to do, why to do it, and when to do it. It is one of the foremost managerial functions. Before initiating a task, the manager must formulate an idea of how to perform a particular task. Hence, this function of management is closely related to creativity and innovation. A manager can only know where he has to go if he first sets an objective as planning bridges a gap between where we stand today and where we want to reach. Planning is all about what managers at all levels perform. It requires adopting a decision as it involves making a choice from an alternative course of action.

Thus, planning involves setting the target and developing an appropriate method or strategy to attain the desired objective. Planning provides an intellectual approach for attaining the organization’s predetermined goals. Hence, all members need to work together toward achieving organizational goals. These goals set the target which needs to be achieved and against which actual performance is measured. Therefore, planning means setting objectives and targets and developing an action plan to attain them.

The planning that is formulated has a given time frame but time is a limited resource. It needs to be used intelligently. If the timing is not considered, the conditions in the environment may change and all the business plans may go unproductive. Planning may go in vain if it is not implemented.

Planning Definition

Planning is defined as setting an objective for a given time period, developing various strategies or methods to attain them, and then selecting the best possible alternatives from the various methods available.

Feature/ Nature/ Characteristics of Planning

1. Planning Contributes to the Objective- Planning helps in achieving the objective. We cannot think of achieving any objective without any kind of planning. Planning is one of the primary functions of management that contributes immensely to the achievement of predetermined objectives. Planning is The Primary Function of Management- Planning is the first step that any manager or anyone adapts to use to move towards any goal.

2. Pervasive- Planning is universal. Planning is there in every organization, whether it is a small size, mid-size or large size or at whatever level it is, every manager, every individual employee plans on at his/her level.

3. Planning is Futuristic- We do planning for the future. Hence it is called a futuristic process. We always stay in the present and plan for the future. Planning is never done in the past.

4. Planning is Continuous- We plan to achieve any goal.  Planning is done for a specific period of time. It may be for a month, a quarter, or a year.  There is always a need for a new plan after the expiry of that period. Hence it is called a continuous process. The continuation of planning is related to the business cycle. It implies that once the plan is framed and implemented, it is followed by another plan and so on.

5. Planning Involves Decision Making- In planning, function managers evaluate various alternatives and select the most appropriate way to manage things.

6. Planning is a Mental Exercise- In planning, assumptions and predictions regarding the future are made by scanning the environment properly. This activity requires a higher level of intelligence.

Importance/ Significance of Planning

1. Planning Provides Direction- Planning provides us with direction. How to work in the future includes planning. By stating in advance, how work has to be done, planning provides direction for action.

2. Planning Reduces the Risk of Uncertainties- Uncertainty means any events in the future that change our course of action. Planning helps the manager to face uncertainty. We cannot remove such uncertainty from our life. However, due to planning, we can work on such uncertainty. Just like an unforeseen event is going to come in which we are going in loss. So, if we are already ready, we have made funds for it, then we will be able to use it to fight that unforeseen situation.

3. Planning Reduces Overlapping and Wasteful Activity- Overlapping means the working relationship has not been allocated specifically. If we plan, our time will not be wasted.

4. Planning Promotes Innovative Ideas- If you are planning, then you get feedback from your senior managers or juniors, from there you can get innovative ideas. Besides, if you make your employees part of the decision-making, then you can get new creative ideas from there too.

5. Planning Facilitates Decision- Planning helps in decision-making. The more efficient you plan, the more right you will be in the decision. With good planning, our decision-making gets accurate, it becomes feasible and it also gets improved.

6. Planning Establishes a Standard for Controlling- Controlling is incomplete without planning and planning is incomplete without controlling. If you have done the planning but you do not know if the thing is happening or not, then the planning is useless. In case, there is no planned output then the controlling manager will have no base to compare whether the actual output is adequate or not.

7. Focuses Attention on Objectives of that Company- Through planning, efforts of all the employees are directed towards the achievement of organizational goals and objectives.

Limitations of Planning

1. Planning Leads to Rigidity- Once the planning is made, then it gets very difficult to change something in it.

2. Planning May Not Work in a Dynamic Environment- If continual changes are happening in the environment, then planning will not be effective as things will not run according to the plan we have prepared. We have made a plan according to the situation. But If there are continual changes occurring in the environment, then the right prediction, right planning becomes almost impossible.

3. It Reduces Creativity- Planning reduces the creativity of employees of any organization because employees just have to implement the plan which is already decided by the top management. Hence, they do not get the opportunity to show their creativity or their innovativeness. Therefore, much of the initiative or creativity inherent in employees get lost or reduced, and also innovative ideas stop coming.

4. Planning Involves Huge Costs- When plans are formulated, huge costs are involved in their formulation. These may be in terms of time and money. For example, lots of time is spent checking the accuracy of facts. Detailed plans demand scientific calculations to verify facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans. Several incidental costs are also involved, like expenses on boardroom meetings, discussions with professional experts, and preliminary investigations to find out the feasibility of the plan.

Sometimes the plans that are formulated take so much time that there is no time left for their implementation.

5. Planning Does Not Guarantee Success- Planning only provides a base for analyzing for the future. It is not a solution for the future course of action.

6. Lack of Accuracy- In planning, many assumptions are made to decide about the future course of action. Sometimes planning is not accurate. Assuming for the future cannot be 100% accurate.

Planning Process

• Setting up the Objective- Till the manager does not have an objective, he cannot do the planning, so the goal should always be clear.

• Developing Premises- As we know the future is certain, therefore planning is always made keeping the future in mind. Hence in the function of management, certain assumptions are required to be made. These assumptions are known as premises. Premises means making assumptions for the future. The manager can make the assumption by studying the past decisions, policies, studying the facts, and existing plans.

• Listing the Various Alternatives for Achieving the Objectives- After setting up objectives, the managers make a list of alternatives through which the organization can achieve its objectives.

• Evaluation of Different Alternatives- In this step of the planning process, managers evaluate and closely examine each of the alternative plans. Every alternative will go through an examination where all its pros and cons will be weighed. The alternative plans need to be examined taking into account the organizational objectives.

• Selecting an Alternative-  This is the stage of planning in which the manager has to adopt a decision. Here, the manager will choose the best and most feasible plan to implement. The ideal alternative that is selected by the manager should be the most profitable one with the least amount of negative consequences and is also adaptable to dynamic situations.

• Implement the Plan-  This is the step where other managerial functions are also considered. The step is concerned with putting the plan into action, i.e., doing what is required. For example, if a manager makes a plan to increase production then more labor, and more machinery will be required. Hence, this step would also involve arranging for labor and the purchase of machinery.

• Follow Up- To find out whether plans that are formulated are being implemented and activities are performed according to schedule is also part of the planning process. To stick with the plan and follow it in a given time frame is equally important to ensure that organization objectives are attained.

Conclusion

In simple terms, planning is the process of formulating key decisions for an organization to grow successfully in the next few years.