1. Chapter: 1 Planning

2.  The word "plan" originated from then Medieval Latin word planus which meant a level or flat surface.  This evolved in French into being a map or a drawing of any object made by projection upon a flat surface.  In English this has become a more general sense of a scheme of action, design or method.  Planning in its current usage in business implies as what is happening in the business.  It does not include creativity or instinct, but it does add a layer of awareness that spells that how company or other survive in a changing environment.

3.  Planning means looking ahead and correcting future courses of action to be followed.  It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed programme regarding future courses of action.  It is rightly said “Well plan is half done”.  Therefore planning takes into consideration available & prospective human and physical resources of the organization so as to get effective co-ordination, contribution & perfect adjustment.  It is the basic management function which includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources.

4.  an understanding of the business' history  an examination of the business' environment  an assessment of the business' mission  goals  a process for reaching those goals  a process for gathering information  a realization that planning is a continuing process that is constantly improving.

5. “The process of setting goals, developing strategies, and outlining tasks and schedules to accomplish the goals.”

6.  According to Urwick, “Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses”. Planning is deciding best alternative among others to perform different managerial functions in order to achieve predetermined goals.  According to Koontz & O'Donnell, “Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur”.

7.  Business Plan: A business plan is used when one is starting a new business or a new process or product within a business. It includes not only a description of the new business, process or product, but also a discussion of how one plans on managing the marketing, development, production, and financing of this new venture.  Strategic plan: A strategic plan usually refers to the overall direction you wish your business to take over the longer term

8.  One of the most confusing aspects for those who want to plan is the variety of terms that are used in conjunction with planning.  How do you differentiate between a business plan, a financial plan, a marketing plan, a human resources plan, an operations plan, a strategic plan, a long-range plan and just plain general planning?  The simple answer is that each area of your business needs planning so each area should have its own perspective list of what it wishes to accomplish in the future.

9.  Any plan should include who, what, when, where, how, and why.  Who is needed to accomplish this task?  What needs to be done?  When does it start and end?  Where will it take place?  How will it happen?  Why must we do it?

10.  Planning is mainly concerned with looking ahead in the future. Forecasting provide the basic raw material for correct planning.  Planning involves the selection of best alternatives.  Planning is very closely related to goals or objectives of the organization.  The goals may be expressed or implied; however well define goals lead to efficiency in planning.

11.  Planning is required at all levels of management. However, its Scopes and importance increase successively at higher levels.  Planning is flexible as it is based on future conditions which too are dynamic.  Planning is continuous and unending process.  Planning is interdependent process; it coordinate the activities of various department, sections & sub-section.  Planning governs the survival, growth & prosperity of an organization

12.  Planning helps the management to implement future programmes in a systematic manner so that the management may get the maximum benefit out of the programme.  It enables the activities to be conducted in an orderly and coordinate manner to achieve the common goal of the organization.  Planning facilitate the process of decision making.

13.  Planning is the connection of all management activities; once planning done well other activities automatically follow.  The business objective can be easily secured through plans because planning enables a purposeful and orderly set of activities instead of random action, It provide co -ordinate efforts and reduce risk & uncertainty.  With the rapid growth of technological development it is essential for a management to keep latest technologies, otherwise products not easily survive in to the market.  Planning indirectly lads to large scale economies by avoiding wastage of men,money,material & Machinery.

14.  Planning leads to budgeting and budgeting leads to budgetary control, thus the success of budgetary control dependence considerably on effective planning.  A better utilization of resources and available facilities can be made because of planning. This reduce costs and results in higher profitability.  Planning encourages the sense of involvement and team spirit. Planned targets provide a basis upon which good performance can be rewarded and poor performance can be taken care of.

15.  Planning provide future course of action.  It course of action involved either repetitive or non-repetitive operation as well as short range and long range operations.  Nature of planning extended as per the business.  Other ways: objective setting, standing plans and master plan.

16.  Standing Plan: It includes policies, procedures,methods, rules etc.,It provide ready guidance for action or solving problem.  Master Plan: It indicate short term or single use plans. It include budgeting, programming and decided upon the strategy for particular project

17. Objective: “Objective is a term commonly used to indicate the end point of management programme”- Koontz & O’ Donnell. Objective are goals or predetermine results towards which all organized efforts are directed. Objectives are multiple because an organization wants to achieve several economic & social objectives simultaneously i.e. profit making, market standing,execuitive devlopment,social satisfaction etc.

18.  The objective must be predetermined.  A clear define objective provides the clear direction for managerial efforts.  Objective must be realistic.  Objective must be measurable.  Objective must have social sanction.

19.  Planning is goal-oriented.  Planning is made to achieve desired objective of business.  The goals established should general acceptance otherwise individual efforts & energies will go misguided and misdirected.  Planning identifies the action that would lead to desired goals quickly & economically.  It provides sense of direction to various activities. E.g. Maruti Udhyog is trying to capture once again Indian Car Market by launching diesel models.

20.  Planning is looking ahead.  Planning is done for future.  It requires to survive in future, analyzing it and predicting it.  Thus planning is based on forecasting.  A plan is a synthesis of forecast.  It is a mental predisposition for things to happen in future.

21.  Planning is an intellectual process.  Planning is a mental exercise involving creative thinking, sound judgement and imagination.  It is not a mere guesswork but a rotational thinking.  A manager can prepare sound plans only if he has sound judgement, foresight and imagination.  Planning is always based on goals, facts and considered estimates.

22.  Planning involves choice & decision making.  Planning essentially involves choice among various alternatives.  Therefore, if there is only one possible course of action, there is no need planning because there is no choice.  Thus, decision making is an integral part of planning.  A manager is surrounded by no. of alternatives. He has to pick the best depending upon requirements & resources of the enterprises.

23.  Planning is the primary function of management / Primacy of Planning.  Planning lays foundation for other functions of management.  It serves as a guide for organizing, staffing, directing and controlling.  All the functions of management are performed within the framework of plans laid out.  Therefore planning is the basic or fundamental function of management.

24.  Planning is a Continuous Process.  Planning is a never ending function due to the dynamic business environment.  Plans are also prepared for specific period of time and at the end of that period, plans are subjected to reevaluation and review in the light of new requirements and changing conditions.  Planning never comes into end till the enterprise exists issues, problems may keep cropping up and they have to be tackled by planning effectively.

25.  Planning is for all level.  It is required at all levels of management and in all departments of enterprise.levels of management  Of course, the scope of planning may differ from one level to another.  The top level may be more concerned about planning the organization as a whole whereas the middle level may be more specific in departmental plans and the lower level plans implementation of the same.

26.  Planning is designed for efficiency.  Planning leads to accomplishment of objectives at the minimum possible cost.  It avoids wastage of resources and ensures adequate and optimum utilization of resources.  A plan is worthless or useless if it does not value the cost incurred on it.  Therefore planning must lead to saving of time, effort and money.  Planning leads to proper utilization of men, money, materials, methods and machines.

27.  Planning is Flexible.  Planning is done for the future.  Since future is unpredictable, planning must provide enough room to cope with the changes in customer’s demand, competition, govt. policies etc.  Under changed circumstances, the original plan of action must be revised and updated to meet it more practical.

28.  Planning facilitates management by objectives.  Planning begins with determination of objectives.  It highlights the purposes for which various activities are to be undertaken.  In fact, it makes objectives more clear and specific.  Planning helps in focusing the attention of employees on the objectives or goals of enterprise.

29.  Without planning an organization has no guide.  Planning direct manager to prepare a ideology of the courses of action to be followed for accomplishment of objectives.  Therefore, planning brings order and rationality into the organization.

30.  Planning minimizes uncertainties.  Business is full of uncertainties.  There are risks of various types due to uncertainties.  Planning helps in reducing uncertainties of future as it involves anticipation of future events.  Although future cannot be predicted with percent accuracy but planning helps management to anticipate future and prepare for risks by necessary provisions to meet unexpected events.  Therefore with the help of planning, uncertainties can be forecasted which helps in preparing standbys as a result, uncertainties are minimized to a great extent.

31.  Planning facilitates co-ordination.  Planning helps to run around organizational goals.  All activities are directed towards common goals.  There is an integrated effort throughout the enterprise in various departments and groups.  It avoids duplication of efforts. In other words, it leads to better co-ordination.  It helps in finding out problems of work performance and aims at rectifying the same.

32.  Planning improves employee’s moral.  Planning creates an atmosphere of order and discipline in organization.  Employees know in advance what is expected of them and therefore conformity can be achieved easily.  This encourages employees to show their best and also earn reward for the same.  Planning creates a healthy attitude towards work environment which helps in boosting employees moral and efficiency.

33.  Planning helps in achieving economies.  Effective planning secures economy since it leads to orderly allocation of resources to various operations.  It also facilitates optimum utilization of resources which brings economy in operations.  It also avoids wastage of resources by selecting most appropriate use that will contribute to the objective of enterprise. For example, raw materials can be purchased in bulk and transportation cost can be minimized. At the same time it ensures regular supply for the production department, that is, overall efficiency.

34.  Planning facilitates controlling.  Planning facilitates existence of certain planned goals and standard of performance.  It provides basis of controlling.  We cannot think of an effective system of controlling without existence of well thought out plans.  Planning provides pre-determined goals against which actual performance is compared.  In fact, planning and controlling are the two sides of a same coin. If planning is root, controlling is the fruit.

35.  Planning provides competitive edge.  Planning provides competitive edge to the enterprise over the others which do not have effective planning. This is because of the fact that planning may involve changing in work methods, quality, quantity designs, extension of work, redefining of goals, etc.  With the help of forecasting not only the enterprise secures its future but at the same time it is able to estimate the future motives of it’s competitor which helps in facing future challenges.  Therefore, planning leads to best utilization of possible resources, improves quality of production and thus the competitive strength of the enterprise is improved.

36.  Planning encourages innovations.  In the process of planning, managers have the opportunities of suggesting ways and means of improving performance.  Planning is basically a decision making function which involves creative thinking and imagination that ultimately leads to innovation of methods and operations for growth and prosperity of the enterprise.

37. Internal Limitations  There are several limitations of planning. Some of them are acquire by in the process of planning like rigidity and other arise due to shortcoming of the techniques of planning and in the planners themselves.  Rigidity  Planning has tendency to make administration inflexible.  Planning implies prior determination of policies, procedures and programmes and a strict /strong attachment to cause to them in all circumstances.  There is no scope for individual freedom

38.  The development of employees is highly doubted because of which management might have faced lot of difficulties in future.  Misdirected Planning  Planning may be used to serve individual interests rather than the interest of the enterprise.  Attempts can be made to influence setting of objectives, formulation of plans and programmes to suit ones own requirement rather than that of whole organization.

39.  Machinery of planning can never be bias. Every planner has his own likes, dislikes, preferences, attitudes and interests which is reflected in planning.  Time consuming  Planning is a time consuming process because it involves collection of information, it’s analysis and interpretation thereof. This entire process takes a lot of time specially where there are a number of alternatives available.  Therefore planning is not suitable during emergency or crisis when quick decisions are required.

40.  Probability in planning  Planning is based on forecasts which are mere estimates about future.  These estimates may prove to be inexact due to the uncertainty of future.  Any change in the anticipated situation may made plans ineffective.  Plans do not always reflect real situations inspite of the sophisticated techniques of forecasting because future is unpredictable.

41.  False sense of security  Elaborate planning may create a false sense of security to the effect that everything is taken for granted.  Managers assume that as long as they work as per plans, it is satisfactory.  Therefore they fail to take up timely actions and an opportunity is lost.  Employees are more concerned about fulfillment of plan performance rather than any kind of change.

42.  Expensive  Collection, analysis and evaluation of different information, facts and alternatives involves a lot of expense in terms of time, effort and money  According to Koontz and O'Donnell, ’ Expenses on planning should never exceed the estimated benefits from planning. ’

43. External Limitations of Planning  Political Climate- Change of government from Congress to some other political party, etc.  Labor Union- Strikes, lockouts, agitations.  Technological changes- Modern techniques and equipments, computerization.

44.  Policies of competitors- E.g.. Policies of Coca Cola and Pepsi.  Natural Calamities- Earthquakes and floods.  Changes in demand and prices- Change in fashion, change in tastes, change in income level, demand falls, price falls, etc.

45.  Step 1: Identify hazards and risks  Step 2: Define goals and objectives  Step 3: Identify alternatives for solving  problems  Step 4: Select evaluation criteria  Step 5: Select feasible mitigation strategies  Step 6: Prepare a draft plan  Step 7: Prepare final plan  Step 8: Implement plan  Step 9: Monitor and periodically revise plan

46.  Objective should relate only to “what”, “when” not to “how”.  The executive, while setting objective,should ask himself,” What is expected of me”  He should also ensure that his objectives are consistent with and contribute to the total sectional, departmental and organization objective.

47.  The objective should be specific,precise and verifiable.  Objective should be a complete set. Increased in production may be achieved at a higher cost, as cost may be reduced by neglecting repairs and maintenance.  Objectives should be realistic and attainable.

48.  Company objectives  Divisional Objectives  Departmental Objectives  Employee Objectives

49. Company Objectives ( Profit, social responsibility etc) Divisional objectives ( Objectives of an operating division ) Departmental objectives ( Objectives of sale, production, finance) Employee objectives ( Individual objectives of the people working in the enterprise)

50.  Clear definition of objective encourages unified planning. The unify effect arises when the plans prepared by different departmental heads are adjusted to a common objective.  Objectives provide motivation to people in the organization.Objectives help in providing the sense of unity,harmony and accomplishment to co-operative efforts.

51.  When the work is goal oriented, unproductive task can be avoided.  Objectives provide standards which aid I the control of human efforts in an organization.  Objective serve to identify the organization and to link it to the groups upon which its existence depends.  Objective act as sound basis for developing administrative controls.

52.  Objectives contribute to the management process; they influence the purpose of the organization, policies, personnel leadership as well as managerial control.  Objectives indicate the contribution to be made by each unit and thus it is the basis for decentralization.

53.  It means moving away from the intended goal.  Reasons that result in to goal displacement:  When goals are not attainable  When employees lack confidence to work’  When route to achieve the goals is strict rules & regulation.  When manager are incompetent to achieve the goals.

54.  Planning help in devising means to achieve organization objectives.  It aids in accumulating information that can be used to develop detailed guidelines for achieves organizational goals.  Planning provides manager with a sense of direction. it helps in developing objectives, Which facilitate the smooth flow of organizational activities?  It provides guidelines for decision –making.

55.  Planning facilitates the optimum utilization of available resources, which in turn improves organizational effectiveness.  It provides a basis for control. Through control, managers ensure that the activities are in conformity with the developed plans.  Planning facilitates delegation of authority and coordination of various activities within the organization.

56.  Corporate planning  Functional Planning  Strategic Planning  Operational Planning  Long term Planning  Short term planning  Proactive planning  Reactive planning  Formal Planning  Informal Planning

57. This leads to the observation that there are three very different types of planning.  Corporate (or Group) Planning : involves the allocation of resources among the various businesses so that overall corporate value is maximized.  Functional Planning: Corporate planning integrate functional planning. like Marketing department –its substance planning like sales, sales promotion, segmentation etc. Basic feature of functional planning is it is derived out corporate planning.

58.  Business Unit Strategic Planning: is product to market driven. The issue is how a sustainable competitive advantage can be established. Strategy for a business unit should be based on its competitive position and consideration for the future industry structure.  Horizontal Unit Planning: exploits tangible interrelationships between business units. For example, every business unit in the corporation might need tax accounting, but the corporation might need only one tax accounting department.

59.  Operational Planning: It also known as short term & Tactical planning,usvally cover 1 year & so. “Operational planning is the process of deciding the most effective use of the resources already allocated and to develop a control mechanism to assure effective implementation of the action so that organizational objective are achieved”  Long term Planning: It is of strategic nature and involves more than 1 year period extending to 20 years or so. common long term period is 3-5 years. It related with all functional area and affected within the existing & long frame work of economic, social & technological factors.Example,new product development,product diversification etc.

60. Proactive planning: design the suitable course of action for future. Reactive Planning: That come after environmental changes. Formal Planning: Well structured Planning. Informal Planning: It based on the manager’s memory of event.

61.  Recognizing need for action.  Gathering necessary information.  Laying down objectives.  Determining planning premises.  Examining alternative courses of action.  Evaluation of action patterns.  Determining secondary plan.  Implementation of plans P.K.Agarwal_page no. 122 & 123

62.  Establishment of objectives  Planning requires a systematic approach.  Planning starts with the setting of goals and objectives to be achieved.  Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts.  Moreover objectives focus the attention of managers on the end results to be achieved.

63.  As a matter of fact, objectives provide nucleus to the planning process. Therefore, objectives should be stated in a clear, precise and unambiguous language. Otherwise the activities undertaken are bound to be ineffective.  As far as possible, objectives should be stated in quantitative terms. For example, Number of men working, wages given, units produced, etc. But such an objective cannot be stated in quantitative terms like performance of quality control manager, effectiveness of personnel manager.  Such goals should be specified in qualitative terms.  Hence objectives should be practical, acceptable, workable and achievable.

64.  Establishment of Planning Premises  Planning premises are the assumptions about the lively shape of events in future.  They serve as a basis of planning.  Establishment of planning premises is concerned with determining where one tends to deviate from the actual plans and causes of such deviations.  It is to find out what obstacles are there in the way of business during the course of operations.

65.  Establishment of planning premises is concerned to take such steps that avoids these obstacles to a great extent.  Planning premises may be internal or external. Internal includes capital investment policy, management labor relations, philosophy of management, etc. Whereas external includes socio- economic, political and economical changes.  Internal premises are controllable whereas external are non- controllable.

66.  Choice of alternative course of action  When forecast are available and premises are established, a number of alternative course of actions have to be considered.  For this purpose, each and every alternative will be evaluated by weighing its pros and cons in the light of resources available and requirements of the organization.  The merits, demerits as well as the consequences of each alternative must be examined before the choice is being made.  After objective and scientific evaluation, the best alternative is chosen.  The planners should take help of various quantitative techniques to judge the stability of an alternative.

67.  Formulation of derivative plans  Derivative plans are the sub plans or secondary plans which help in the achievement of main plan.  Secondary plans will flow from the basic plan. These are meant to support and expediate the achievement of basic plans.  These detail plans include policies, procedures, rules, programmes, budgets, schedules, etc. For example, if profit maximization is the main aim of the enterprise, derivative plans will include sales maximization, production maximization, and cost minimization.  Derivative plans indicate time schedule and sequence of accomplishing various tasks.

68.  Securing Co-operation  After the plans have been determined, it is necessary rather advisable to take subordinates or those who have to implement these plans into confidence.  The purposes behind taking them into confidence are :- ▪ Subordinates may feel motivated since they are involved in decision making process. ▪ The organization may be able to get valuable suggestions and improvement in formulation as well as implementation of plans.  Also the employees will be more interested in the execution of these plans

69.  Follow up/Appraisal of plans  After choosing a particular course of action, it is put into action.  After the selected plan is implemented, it is important to appraise its effectiveness.  This is done on the basis of feedback or information received from departments or persons concerned.  This enables the management to correct deviations or modify the plan.  This step establishes a link between planning and controlling function.  The follow up must go side by side the implementation of plans so that in the light of observations made, future plans can be made more realistic.

70.  Classification on the basis of the levels of the organization:  Strategic plan  Tactical plans  Operational plans  Classification on the basis of use.  Single use plan ( Pogramme, budget, strategies, projects)  Standing / multiple use plan ( Policies, procedures, methods, rules, standards)

71.  Classification on the basis of time:  Long term plans  Medium term plans  Short term plans  Classification on the basis of functional areas:  Production plans  Marketing plans  Finance plans

72. Standing / Multiple use plan StrategiespoliciesProceduresRules Single use plan ProgrammeBudgetSchedules

73.  Definition: It is the complex plan for bringing the organization from a given posture to a desire position in a future period of time.  Nature & characteristics of strategy  Types of strategy:  Master strategy: It is also called grand strategy implies the entire pattern of goal, policies and resources deployment of an organization. Nature/ characteristics/ P.K.Agarwal_131

74.  Derivates strategy: It refers to departmental strategy. It refers to specific deployment of resources. It is designed to support the master strategy for the achievement of organizational goal. It is also called programme strategy.  Minor strategy: It is also called as sub strategy and more specific and detailed. It is prepared to execute a derivative strategy

75. Determining the objectives Step-1 Ascertaining the specific areas of strength & weakness in the total environment Step-2 Preparing the action plan to achieve the objectives in the light of environmental forces Step-3

76.  Definition: A policy is a verbal, written or implied overall guide setting up boundaries that supply the general limits and direction in which managerial action will take place.  Features & nature of Policy.  Importance of policy:  It lead to uniform pattern of action.  It speed up the decision making.  It help men & boss both to work for better performance  It secure effective coordination & efforts, activities in the organization features of policy_p.K.Agarwal_132

77.  Organizational & functional policies:  Policies concerning enterprise( Example: Promotion policy; transfer policy; In short all HR policies)  Policies concerning departments or Policies concerning functions( Production policy, price policy; personnel policy)  Written & implied policy: Policies are explicitly stated in writing are written policies.( Example; manuals & records). Implied policies are not in print but they are understood from the functioning of management.

78. Originated, appealed & imposed policies  It is laid down by the top management to guide the lower level executives.  Types:  Internal policies  Imposed policies/ external policies

79. Step-1 Determining the policy areas & priorities Step-2 Collecting & analyzing the strategic information Step-3 Perception & generation of policy alternatives Step-4 Evaluation of policy alternatives Step-5 Choice of policy alternatives

80. Step-6 Testing of the policy Step-7 Communication of the policy Step-8 Review & revision of the chosen policy

81. Organizational goals & strategies Organizational resources Organizational structure Managerial values Organizational policies Internal factors Product market factor Socio- political factor Resource market factors External factors P.K.Agarwal_page no 134-135

82.  When the policies are reduced to black & white and compiled in to book or manuals, that may be designated as “ policy manual”  Positive points related to policy manuals  It provides a checklist of current policies which can be used to determine whether or not they are being adhered to.  Policy are stated in writing  It constitutes useful instructional device for acquitting the personnel with the principles and procedures required to make the policy effective in the operation of enterprise

83.  “ A procedure is a series of related task make up the chronological sequence and established way of performing the work to be accomplished” P.K.Agarwal_ page no 136

84.  Rules is a set of direction that must be followed by every member of the organization.  “ Rules are the statement that a specific action must or must not be taken in a given situation”  Rules must be in writing

85.  A programme is a sequence of activities where each sequence is times to successfully achieve the overall objectives.  A programme is a sequence of activities carried to implement a policy or accomplish objectives  Each programme has specific objectives, policies, procedures, methods and budget to support its expenses.

86.  Steps of programming:  Identify the activities required to accomplish objectives.  Determine the sequence of the activities  Specifying performance responsibility in terms of individuals  Determining the resources required for the programme.  Laying down the time schedule according to which the work is to be performed.  Types of programme:  Major programme ( setting up plant, machinery & modernization in existing unit)  Minor programme ( From where machinery purchase, installation, arranging fund etc..)

87.  Budget is a kind of single use plan of expected result expressed in numerical terms.  The term budget has been derived from the French word “ Bougettee” denoting the leather pouch in which fund are appropriated for meeting anticipated expenses.

88.  Coverage of function- Master & function budget  Nature of activities covered- capital & revenue budget.  Period of budget: Long term & short term budget  Flexibility adopted: Fixed & flexible budget

89.  Master budget: It is prepared for the entire organization incorporating the budget for different function.  Function budget: It is prepared to incorporating a major function and its sub function( Example; sales budget, production budget, cash budget etc..)

90.  Capital Budget: It facilitates for carrying out activities involve in capital expenditure whose return accrue over no of years.( example: cost of each project; projects for acquisition of new assets)  Revenue Budget: It involves the formulation of targets for a year or so on in respect of various organization activities such as production, marketing, finance etc…

91. Budget is prepared for every year. It is pre estimation data.  Long term budget: Business carry its activities along with yearly budget, they prepare budgets for longer period 2-3 years.  Short term Budget: It is for a yea or so and is divided in to a number of periods for effective implementation

92.  Fixed budgets: Budgets which pertain to only certain projected fixed volume of operations for a year or so.  Flexible Budget: A budget which is designed to change in accordance with the activities of the organization

93.  Performance budgeting  Zero base budgeting ( ZBB)  Strategic Budgeting:  Preparation of budget  Preparation of position papers L.M.Prasad_ page no 216-217

94.  It is the time table for the work to be done & operation to be undertaken.  It lays down the time limit for the completion of different job in the organization or in department

95.  Principles of coordinating planning  Principles of efficiency  Principles of flexibility  Principles of Consisting premising  Principles of contribution of objectives  Principles of acceptance  Principles of commitment  Principles of limiting factors  Principles of Navigational changes  Principles of Timing P.K.Agarwal_page no.125-126

96.  Planning has been considered as time consuming and expensive device.  Framing of plans involves money, energy and also risk without giving any guarantee as to the realization of assured goals.  Due to the heavy cost of planning and the risk involved in it, similar business concerns which are short of capital and which expect quick results can not afford to have a planning programme

97.  Planning makes the entire organizational set up extremely rigid.  Planning leads to probable results and not assured goal.  Machinery of planning can not be free from bias, forecasting methods,stastical data supplied etc.  In planning process,the quality of output is only as good as the quality of input.

98.  Tendency towards inflexibility to change, once the plans are framed is another limitation of planning.  Planning encourages a false sense of security against risk or uncertainty.  Emergencies demand on the spot decision,but planning delays it.  Standing plans demand repetitive operation but in absence of such operations, plans lose their significance.

99. Strategic planning Intermediate planning Operational planning

100.  Strategic planning v/s Tactical planning  Planning V/s Forecasting  Policy v/s strategy  Difference between levels of goals  Individual goals v/s organizational goals.  Difference between single use plan & standing plans.  Policies v/s procedures  Rules v/s policies  Rules v/s procedures  Problems in setting goal v/s ways to overcome problems

101.  “Planning premises are the anticipated environment in which plans are expected to operate. They include assumption or forecast of the future and known condition that will affect the operation of plans.”

102. External premises: These exist in an organization's external environment Various factors like: Economic Political & Legal Technological Socio-culture & Competitive

103. This factor are group for the opportunity & threat of the organization. An opportunity is favorable condition in the organization which enables the strengthen its position. A threat is unfavorable condidition causes a risk & damage to the organization position.

104. Internal Premises: In plan formulation it is also required. It related to the activities occurred within the organization. Example: organization structure, Management system. It implies on functional parameters also. It based on SWOT.

105. Strength= Strategic advantage over a competitors. Weakness= Limitation of organization. opportunity = favorable condition in the organization which enables the strengthen its position. threat = unfavorable condidition causes a risk & damage to the organization position

106. Exercise:1 Description of Strength & weakness of the Production. Exercise:2 Description of Strength & weakness of the Marketing

107. Tangible & Intangible premises: Tangible resources are those which can be expressed in quantitative terms like monetary unit, Unit of poduct,Machine hour and so on. Intangible premises are of qualitative nature and can not be translated in quantity.

108. Controllable & Uncontrollable Premises: Controllable premises are those that can be controlled by an organization action. Like internal factors, example organization policy, structure,systems,procedure etc. Uncontrollable premises are mostly external which can not controlled by organization's action.Example,rate of economic growth, population growth, taxation policy.

109. Semi controllable are those which can be controlled to some extent but not wholly. Example, Market share of co’s product,labour effeciency,product,price etc. It due to both internal &external factor. Example: co initiate a change of price of its product but this must be in given range. Upward change=too high, not acceptable by market. Downward change= too high, result in to losses.

110.  Most of the companies which undertake long term planning as a rational approach, develop planning premises which are relevant for this process.  The planning premises developed by Hindustan Lever Limited, a multi- product fast moving consumer goods(FMCG) company, which provide guidelines for its long term action.  See example ( L.M.Prasad_ page n0226)

111. 1. Selection of premises: 2. Collection of information. 3. Premises for contingency planning. 4. Communication of planning premises

112.  It is the first step in making premising effective.  Two type of environment variable have on individual organisation.these are general & relevant.  Relevant= for identifying the relevant environment; internal & external.  It is based on the personal judgment.

113.  Manager go for search the information so as to identify the likely future behaviour of these factor.  The collection techniques vary from simple to complex techniques.  The techniques preference depend on individual or the organization.  Collection involve cost in terms of both time & money.  Example: ETOP(Environmental threat & opportunity profile); SAP ( Strategic advantages profile)

114.  Planning premises are not constant but dynamic; some change slowly and steadily,other change rapidly.  Manager can do well if they develop alternative scenario & plan for each scenario.  To balance cost & benefit manager has to take in to consideration 4 steps; Alternative scenario. Trigger points Number of plans. Detail Plans.

115.  Only planning is not enough, its required to communicate those who involved with it.  Many organization prepare environmental threat an opportunity profile. (ETOP) & Strategic Advantage profile (SAP) then send to all manager to formulate plan in their own areas.  Basic problem is the confidential nature of some information.

116. “ Business forecasting refers to the statistical analysis of the past & current movement in the given time series so as to obtain clues about the future pattern of those events.”

117.  Forecasting related to the future events. This is needed for planning process because it device future course of action.  It defines the probability of happening of future events.  It is made by analyzing the past and present relevant events.  The analysis of various factor may require the use of various statistical tools & techniques. However the observation can also help in the process.

118.  Promotion of the organization  Key to planning  Coordination & control.  Success in organization

119.  Based on assumption  Not absolute truth.  Time & cost factor.

120.  Developing groundwork for forecasting.  Estimating Future business.  Comparing actual & projected results.  Refining the forecasting process.

121.  Quantitative forecasting  Qualitative forecasting  External environmental forecasting. ▪ Economic forecasting( Extrapolation, Leads & lags, Econometrics) ▪ Technological forecasting ( Exploratory forecasting, Normative forecasting) ▪ Forecasting regarding government policie s PPM-120-126

122.  Sales forecasting ( Jury of executive opinion method, sales force composite method or the grass root method, user’s expectation method, Statistical method- trend analysis; correlation analysis ; Mathematical models, deductive method )  Internal environmental forecasting:  Human resource  Non human resource

123.  Forecasting industry sales  Estimating current demands  Estimating future demands  Forecasting company sales  Sales quota L.M.Prasad_ 236-237