Planning is the process of deciding how to achieve a goal by establishing policies, procedures, and goals.

Planning is the process of setting objectives and determining the best course of action to achieve those objectives. It involves analysing the current situation, forecasting future conditions, identifying resources, and outlining the steps needed to accomplish organisational or personal goals effectively.

Key Features of Planning:

1. Goal-Oriented: Planning focuses on achieving specific objectives.
2. Primary Function of Management: It serves as the foundation for other managerial functions such as organising, leading, and controlling.
3. Future-Oriented: Planning anticipates future opportunities, risks, and challenges.
4. Decision-Making: It involves evaluating various alternatives and choosing the best one.
5. Continuous Process: Planning is ongoing, as objectives and external conditions may change over time.

Example:

A company planning to launch a new product will:

1. Conduct market research to identify demand.
2. Set objectives, such as capturing 10% of the market within a year.
3. Determine the resources (financial, human, technological) needed.
4. Create a timeline and allocate responsibilities for product development and marketing.

Objectives Of Planning

1. To Set Objectives

• Planning establishes organisational goals and provides a direction for activities.
• It answers “what to achieve” and “how to achieve it.”

2. To Reduce Uncertainty

• Through forecasting and analysis, planning reduces uncertainties of the future.
• It anticipates potential changes and prepares strategies to manage them effectively.

3. To Focus Attention on Objectives

•  It ensures that all employees and departments work toward common goals.
• Planning clarifies priorities and aligns resources to achieve these objectives.

4. To Ensure Better Coordination

•  Planning integrates the efforts of all departments and individuals.
• It eliminates overlapping or conflicting activities, ensuring harmony in operations.

 To Enhance Efficiency

• By allocating resources optimally and reducing wastage, planning ensures high efficiency in operations.
• It provides a systematic approach to achieve targets with minimal resource usage.

6. To Promote Innovation

• Planning involves problem-solving and decision-making, which fosters creativity and innovation.
• Managers explore new methods, tools, and strategies during the planning process.

7. To Provide a Basis for Control

• Planning sets benchmarks or standards that can be used to measure actual performance.
• Any deviations from the plan can be identified and corrected promptly.

8. To Facilitate Decision-Making

• Planning provides a structured framework for evaluating alternatives.
• It ensures decisions are made systematically, considering risks and benefits.

Nature Of Planning

(1) Primary Function

Planning is the primary function of management. It precedes all other management functions. Without setting the goals to be achieved and line of action to be followed there is no meaning of organising, leading or controlling the activities of an organisation. In fact, all other functions of management largely depend upon planning. It sets all other functions into action. Hence, it is the basic function of management.

(2) Pervasiveness of Planning

Planning is a pervasive activity. Managers at all levels of organisation perform the planning function. However, the nature and scope of planning may differ at various levels of management Top management looks after strategic planning. The middle and lower management is concerned with administrative planning and operational planning respectively.

(3) Focus on Objectives

A plan must focus on accomplishing certain objectives/goals. It identifies the actions that would lead to the desired objectives quickly and economically. Planning cannot be imagined without objectives.

(4) Future-Oriented

Planning is always future-oriented because it is done for the future. It decides in the present what is to be done in the future. It is based on forecasting and a plan is a synthesis of forecasts. Thus, planning is based on farsightedness, which is forward looking in nature.

(5) Selective Process

In order to achieve a set of objectives, there are a number of alternatives, which are available to an organisation. He planning is essentially a process of choosing among alternatives. It is concerned with decision-making relating to

• what is to be done,
• how it is to be done
• when it is to be done, and
• by whom it is to be done.

(6) Intellectual Process

Planning is a intellectual process, which involves creative. thinking and. imagination. Managers have to consider various courses of action, go in detail the pros and cons of every course of action and then finally decide which course of action may suit them best. It is not mere guesswork but involves rational thinking. It requires the mental ability to think before acting.

(7) Continuous Process

Planning is a continuous and never ending process of a manager in an organisation. The manager plans on the basis of some assumptions, which may not come true in the future. Therefore, he has to go on modifying, revising and adjusting plans in the light of changing environment. A manager cannot plan once for all.

(8) Increases Efficiency

Planning aims to increase the efficiency of the organisation at all levels. The guiding principle of a good plan is the maximum output and profit at the minimum cost. Planning helps in the utilisation of resources and reducing wastage. In planning, the manager evaluates the alternatives on the basis of efficiency. Hence, the concept of efficiency is implicit in planning.

Limitation Of Planning

2. Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time but managers may not be in a position to change it. As the business environment is dynamic managers need to be given some flexibility to cope up with the changed circumstances.
3. Planning may not work in dynamic environment: Planning is based on anticipation of future happenings and since future is uncertain and dynamic so the organisation needs to adapt itself to changes. However planning cannot foresee the future eventseffectively.

3.Planning reduces creativity: Top management does planning and middle management does implementation of plan but they are not allowed to deviate from plan and thus creativity of these managers get reduced.

4.Planning involves huge costs: Huge costs are involved in the formulation of the plan. Detailed plans require scientific calculations to a ascertain data. Sometimes costs incurred on planning doesn’t justify the benefits derived

5.Planning is a time consuming: Many aspects need to be considered while formulating a plan, hence it is a very time consuming process.

6.Planning does not guarantee success: The success of an enterprise is possible only when plans are properly drawn and implemented. Managers tend to apply the previously tried and tested plans but a plan successful before may not be successful for all situations.

Process Of Planning

1. Setting Objectives:

Specify the objectives that the organisation wants to achieve.

• Set objectives for the entire organisation and each departments, units and employees.
  State the objectives of the organisation very clearly, and determine how all departments would contribute towards overall objectives.
• Objectives have to percolate down to each unit and employees at all levels so that they understand how their actions would contribute towards achieving objectives.
• Managers must contribute ideas and participate in the objective setting process.
• g. Setting sales target, new product launch, business expansion to new territories.

2. Developing Premises:

• Planning is a future oriented activity and the future is uncertain therefore the managers are required to make certain assumptions while drafting plans for the organisation.
• These assumptions about the future are called premises, these are the base material upon which plans are drawn.
• All managers involved in planning should be familiar with the same assumption and they all must agree to it.
• For e.g. forecasting is a technique used for gathering information to develop premises. An organisation uses various forecasts such as policy changes, new markets, demand of a product etc. for various purposes.
• Accuracy of forecast is necessary for successful plans.

3. Identifying Alternative Courses Of Action:

• Once objectives are set, assumptions are made and then alternative courses of action is determined.
• Managers must identify all the alternative courses of action for achieving the objectives of the organisation.
• The course of action may be routine or innovative. Innovative course can be adopted by involving more people and sharing their ideas.

4. Evaluating Alternative Courses Of Action

• The next step is to evaluate the pros and cons of each and every alternative course of action.
• Positive & negative aspects of each proposal is to be evaluated keeping in view the objectives to be achieved
• E.g. In financial decisions, risk-return trade-off are important. Riskier the investment, higher the returns. To evaluate such proposals, detailed calculation of earnings, taxes, earnings per share, dividends are made and then decision is taken.

5. Selecting The Best Alternative:

 The best plan from all the alternatives is selected and implemented.

• The ideal plan is the most feasible, profitable and with least negative consequences.
• In most plan drawing in a mathematical analysis is not possible hence managers experience , judgement and intuition plays and important role in selecting the most viable alternatives.

          Sometimes a combination of plans may be selected instead of   one best course.

6. Implementing The Plan

In this step the selected best plan is implemented ie putting plan into the action.

Managers start organising & assembling resources for implementing the plans.

• E.g. If there is a plan to increase production, then more labour, more machinery will be required. This step would also involve organising more labour and purchase of machinery.

7. Follow Up Action

• Involves monitoring the implemented plans and ensuring that the activities are being performed according to the schedule.
• Continuous monitoring is required to find out deviations from plans and corrective action has to be taken to achieve organisational objectives

Importance Of Planning

 Planning provides guidance: Planning is important as it gives you guidance for what to do. Without planning, individuals would work in multiple directions, limiting the organisation’s capacity to fulfil its goals.

1. Planned action minimises the risk of unexpected results: Operational planning is the process that enables management to anticipate change, analyse the consequences of change and develop effective responses.
2. Planning reduces inefficient activities: Planning serves as the foundation for coordinating the actions and efforts of various departments and individuals and thereby eliminates unnecessary and repetitive actions.
3. Planning encourages new ideas: Management begins with the importance of planning. Managers can build new ideas into plans.
4. Planning creates control standards: Planning sets the benchmarks for measuring and evaluating actual performance. Without planning, control is meaningless. So, planning serves as the foundation for control.

 Forms Of Plan

In management, plans are classified into various forms based on their purpose, scope, and duration. These include:

1. Strategic Plans

• Purpose: Focus on the overall direction and long-term objectives of the organisation.
• Scope: Organisation-wide.
• Duration: Long-term (3-10 years or more).
• Examples: Expansion strategies, market entry plans, diversification policies.

2. Tactical Plans

• Purpose: Translate strategic plans into specific departmental actions.
• Scope: Limited to specific departments or units.
• Duration: Medium-term (1-3 years).
• Examples: Marketing campaigns, production schedules.

3. Operational Plans

• Purpose: Define day-to-day activities required to achieve tactical plans.
• Scope: Focused on specific processes or teams.
• Duration: Short-term (weekly, monthly, or up to a year).
• Examples: Daily production targets, employee shift schedules.

4. Financial Plans

 Purpose: Manage the organisations financial resources and budgeting.

• Scope: Involves all financial operations.
• Duration: Can be short-term, medium-term, or long-term.
• Examples: Annual budgets, investment plans.

5. Growth Plans

• Purpose: Focus on expanding operations, markets, or products.
• Scope: Organisation-wide or specific areas.
• Duration: Typically medium to long-term.
• Examples: Market penetration strategies, product development plans.

6. Contingency Plans

• Purpose: Prepare for unexpected situations or crises.
• Scope: Organisation-wide or for specific risks.
• Duration: Ongoing and activated when needed.
• Examples: Disaster recovery plans, risk management strategies.

7. Standing Plans

•  Purpose: Provide guidance for recurring decisions and actions.
• Scope: Policies, procedures, and rules.
• Duration: Long-term, subject to periodic review.
• Examples: Employee conduct policies, standard operating procedures (SOPs).

8. Single-Use Plans

•  Purpose: Developed for unique or one-time projects.
• Scope: Specific to a single task or project.
• Duration: Temporary.
• Examples: Construction projects, product launches.

 Decision Making Process

1. Identifying the Problem

 The decision-making process begins with identifying the problem that requires attention. This step involves recognising the gap between the current situation and the desired outcome. Clearly defining the problem ensures that the organisation focuses on the right issues. For example, a retail store might notice a steady decline in customer footfall over the past six months. The management identifies this decline as the problem to be addressed, ensuring clarity about what needs to change.

 Diagnosing the Problem

 Once the problem is identified, it is essential to diagnose its root causes. This step involves gathering relevant data and analysing the factors contributing to the issue. Understanding the problem in depth ensures that the chosen solutions target the underlying causes rather than just the symptoms. For instance, in the retail store example, the management might analyse customer feedback, competitor strategies, and sales data. They could discover that a nearby competitor offers better discounts or that their own store lacks effective marketing strategies.

 Discover Alternatives

After diagnosing the problem, the next step is to explore possible solutions or alternatives. This step encourages creativity and brainstorming to generate a list of potential actions that could resolve the issue. It is important to consider multiple perspectives and not limit the range of options. For example, the retail store’s management could consider introducing loyalty programs, increasing advertising efforts, or redesigning the store layout to attract more customers. The focus here is on generating a variety of solutions without prematurely judging their feasibility.

4. Evaluate Alternatives

 Once a list of alternatives is created, each option needs to be evaluated based on its feasibility, costs, risks, and potential outcomes. This step helps in understanding the pros and cons of each choice. Using tools like cost-benefit analysis or SWOT analysis can aid in assessing the alternatives objectively. For example, the retail store could evaluate the cost of launching a loyalty program versus the expected increase in customer retention. Similarly, they might assess whether spending on online advertising would yield better results compared to in-store promotions.

5. Select the Best Alternative

 After evaluating all possible options, the best alternative is chosen. This decision should align with the organisations objectives, resources, and constraints. It often involves collaboration among decision-makers to ensure the chosen solution is practical and effective. For instance, the retail store’s management might decide to implement a loyalty program combined with targeted social media advertising, as these options seem both cost-effective and impactful in attracting more customers.

6. Implementation and Follow-up

The final step involves executing the chosen solution and monitoring its effectiveness. A detailed action plan is developed, which includes resource allocation, timelines, and responsibilities. Continuous monitoring ensures that the solution is working as intended and allows for adjustments if necessary. For example, the retail store implements its loyalty program and social media campaign. They monitor weekly customer engagement metrics and sales data to measure progress. If the results fall short of expectations, they might tweak the advertising strategy or expand the loyalty program’s benefits.

Techniques of decision making

 Decision-making is a critical managerial function, involving the selection of the best course of action among several alternatives. It can be approached through structured techniques and processes:

Techniques of Decision-Making

1. Decision Trees:Decision trees are graphical representations of decisions and their potential consequences, including probability assessments. They help visualise complex decision scenarios and calculate expected values to aid in decision-making.
2. SWOT Analysis: SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a strategic planning tool used to identify internal strengths and weaknesses, as well as external opportunities and threats. It helps organisations assess their current situation and make decisions based on their analysis.
3. Cost-Benefit Analysis: Cost-benefit analysis involves comparing a decision’s costs with the benefits it is expected to generate. By quantifying both costs and benefits, decision-makers can evaluate whether the decision is economically viable and make choices that maximise value.
4. Pareto Analysis: Pareto analysis, also known as the 80/20 rule, helps prioritise options by identifying the most significant factors contributing to a problem or opportunity. By focusing on the most critical issues, decision-makers can allocate resources more efficiently and address the root causes of problems.
5. Decision Matrix: A decision matrix is a structured tool used to evaluate and prioritise multiple alternatives based on predefined criteria. By assigning weights to different criteria and scoring alternatives accordingly, decision-makers can objectively compare options and select the most suitable one.
6. Brainstorming: Brainstorming is a group technique to generate creative ideas and solutions to problems. By encouraging open and free-flowing discussion, decision-makers can explore a wide range of possibilities and identify innovative approaches to decision-making.
7. Scenario Analysis: Scenario analysis involves considering possible scenarios and their potential implications on decision outcomes. By analysing best-case, worst-case, and most-likely scenarios, decision-makers can prepare for uncertainty and make more robust decisions.
8. Decision Support Systems (DSS): Decision support systems are computer-based tools that provide analytical support for decision-making processes. They help organise and analyse data, generate insights, and facilitate decision-making by providing decision-makers with relevant information and modelling capabilities.
9. Risk Management Techniques: Various risk management techniques, such as risk assessment, risk mitigation strategies, and contingency planning, help decision-makers identify, assess, and manage risks associated with different alternatives. By considering potential risks, decision-makers can make more informed choices and minimise negative outcomes.
10. Group Decision-Making Techniques: Techniques such as the Delphi method, nominal group technique, and consensus decision-making facilitate group collaboration and decision-making. By involving multiple stakeholders and leveraging collective expertise, decision-makers can gain diverse perspectives and reach consensus more effectively.