PLANNING Samir K Mahajan, M.Sc, Ph.D.,UGC-NET Assistant Professor (Economics) Department of Mathematics & Humanities Institute of Technology Nirma University _-eebm_even_2014/

MEANING Planning is the act of determining the organization’s objectives/goals and the means for achieving them. Planning entails/implies setting of organisations objectives and goals, and choosing future courses of action/strategies and developing policies, rules. procedures, and forecasting future outcomes. PLANNING

ELEMENTS OF PLANNING Objectives Objectives are the ends /the specific targets /planned output to be reached by an organisation. Objectives specify future conditions that a manger hopes to achieve. Eg. market share, Goals Goals are derived form objectives, and are work-oriented time-bound targets measured in quantitative or qualitative terms. Strategies Strategies / courses of action are the means (specific planned activities) through which an organization tries to relate itself with its environment in order to develop certain advantages which help in achieving its objectives. Strategy gives the direction in which human and physical resources will be deployed and applied in order to realise the organisation objective. Forecasts Forecasts are predictions or estimates of the changes in the environment which may affect the business plans. Such forecasts may be economic, technological, political, social and so on. However, demand/sales forecast is the basis of most planning. Planning without forecasting is not possible.

PLANNING AS A PROCESS/STEPS INVOLVED IN PLANNING Planning is the process of setting organisation’s goals and courses of action, developing rules and procedures, and forecasting future outcomes. The major steps involved in the planning process of an organisation or enterprise are as follows:

 Establishing Objectives Establishment of organizational or overall objectives is the first and most crucial step in planning. Objectives are the planed output/ends of an organisation - specified in clear and measurable terms. The objectives are set in the light of the opportunities perceived by managers, and are influenced by the values and beliefs of executives, mission of the organization, organizational resources, etc. One cannot make plans unless one knows what is to be accom­plished. Objectives provide the guidelines (what to do) for the preparation of strategic/future course of action(how to do). Major/Organizaitonal objectives should be broken into depart­mental, sectional and individual objectives and goals. STEPS INVOLVED IN PLANNING contd.

 Establishment of Planning Premises Planning premises are assumptions about future events/ conditions which are likely to happen within and outside the organisation. Since the future events are not known accurately at the time of planning, managers have to make certain assumptions, either based on their intuitions or analysis or forecasting of the factors responsible for such events. Internal premises include organizational polices, various resources and the ability of the organisation to withstand the external pressure. Internal premises create strength or weakness for organisation. External premises include all factors in external environment like political, social technological, competitors' plans and actions, government policies, market conditions. External premise create threat or opportunity to the organization. STEPS INVOLVED IN PLANNING contd.

 Determining Alternative Course of action After setting the premises, the next logical step in planning is to determine the list of possible courses of action that will lead to objectives or goals. This is necessary to ensure success of the objectives and to reduce cost.  Evaluating Alternative Courses After deciding alternatives course of action, planners are required to evaluate the strong and weak points of each course of action. Evaluation of alternative is a must to arrive at a decision, and choose the best course of action.  Selecting the best course of action Selecting best course of action is the point of decision making. Best course of action is the one which has the most advantages/strong points, and the fewest serious disadvantages/weak points in the perspective of enterprise needs, resources and objectives laid down. STEPS INVOLVED IN PLANNING contd.

 Formulating derivative plans Formulating derivative plans is intended to give effect and support to the basic/organisation plan. This is done by breaking down the basic or major plan into supporting plans for each department or branch, for each product, for each month or quarter such as: staffing plan, operating plan, financial plan, maintenance, stores, purchase, etc. Supporting/derivative plans set specific targets for each manager and department of the organisation  Establishing Sequence of Activities Timing and sequence of activities are determined after formulating basic and derivative plans, so that plans may be put into action. Timing gives practical shape and concrete form to the plans. The starting and finishing times are fixed for each piece of work, so as to indicate when, within what time that work is to be commenced and completed. STEPS INVOLVED IN PLANNING contd.

 Follow up and review Formulating plans and chalking out of programmes are not sufficient unless follow-up action is provided to see that plans so prepared and programmes chalked out are being carried out in accordingly, and to see whether these are not kept in cold storage. It is also required to see whether the plan is working well in the present situation. If conditions have changed or the current plan has become out-dated and inoperative, it should be modified or replaced by another plan. The plan should be communicated to all persons concerned. Planning is effective only when the persons involved work in a team spirit and all are committed to the objectives, policies, programmes, strategies envisaged in the plan. STEPS INVOLVED IN PLANNING contd.

Meaning of Plan Plan is a blueprint for action. It specifies : o resource allocations o schedules o actions necessary for attaining goals and objectives PLAN

CLASSIFICATION OF PLAN organisation level Strategic Plans Tactical Plan Operational Plan frequency of use Standing Plan Single-use Plan Time Frame Long- term Medium -term Short- term

PLANS BASED ON ORGANISATION LEVEL On the basis of organisation level, plans can be strategic, tactical or operational. These plan relate to different levels of management.  Strategic Plans Strategic plans establish strategic /over all objectives for the organisations. Strategic plans are general plan applicable to the entire organisation, and are usually developed by the top management in consultation with board of directors and the middle management. They or are usually prepared for five years or more. Managers developing strategic plans work in an environment of uncertainty, and are required to make assumptions about future threats and opportunities. The major areas for strategic goals are o Market Standing o Human Resources o Financial Resources o Physical Resources o Productivity o Profit requirements o Social Responsibility o Innovation

 Tactical Plans Tactical plans are prepared for implementation of strategic plans, and essentially indicate the actions that major departments and sub-units should take to execute strategic plans. Tactical plans are developed by the middle-level managers, who may consult lower-level managers before finalizing the plans and communicating it to the top-level management. Compared to the strategic, tactical plans cover a shorter time-frame usually one or five years. PLANS BASED ON ORGANISATION LEVEL contd.

Operational plans are developed to determine the steps necessary for achieving tactical goals. These are stated in specific & quantitative terms, and serves as the department manager’s guide to day-to-day operations. Operations plans are developed by lower-level managers in an environment of relative certainty. Hence, the amount of risk involved in making operation plan is less than that of tactical plans. These plans generally consider time-frame of less than a year, such as: a few months, weeks, or even a few days. These plans spell out specifically what must be accomplished over short time periods in order to achieve operational goals. Unless operational goals are achieved, tactical and strategic goals will not be achieved. Therefore, operational plans are necessary for the success of tactical and strategic plans.  Operational Plans PLANS BASED ON ORGANISATION LEVEL contd.

Plans Based on Frequency of Use Based on frequency and extent of use, plans can be of two types: standing and single-use plans.  Standing Plan Standing Plans are developed in dealing with recurring situations, are used over and over again during a long period of time. E.g. long term objectives, strategies, policies, procedures and rules, schedules  Single-use Plan A single-use plan is a one-time plan aimed at specific goals, and is designed to deal with unique, non-recurring situations. Once the goal has been achieved, the plan ceases to exist. Generally, these plans are derived from the standing plans. E.g. programme, projects, budgets, targets.

PLANS BASED ON TIME FRAME Organisational plans based on time can be classified into long-term, intermediate and short-term plans. Long-Term Plans Long-Term Plans are the strategic plans of an organisation having time frame exceeding five years. These are developed the top management and involves setting up of board objectives, policies and procedures for achieving these objectives. Long-term plans provide a direction to the organisation. Intermediate plans Intermediate plans generally cover time periods ranging from one to five years and specify the organisation’s activities to be carried out to achieve the desired objectives. These plans provide direction to medium level management. Outcomes of intermediate plans are certain and predictable. Short-term plans Short-term plans generally cover time period up to one year and provide first-level managers with guidelines (what he has to do; how, where and when he has to do it) for carrying out the day-to-day activities of an organisation. These plan take care of the individual activities needed to achieve the overall activities outlined in the long-term plan.