Chapter2 Planning Definition Planning is the most basic

Chapter-2 Planning

Definition: Planning is the most basic of all managerial functions. It is the process by which managers establish goals and define the method by which those goals are to be attained. It involves selecting missions and objectives and the actins to achieve them; it requires decision making that is, choosing from among alternatives future courses of actions. So planning can be thought of as a process of thinking before doing. Planning to manager means thinking about what is to be done, who is going to do it, and how and when he will do it. According to Weihrich and Koontz “Planning involves selecting missions and objectives and the actions to achieve them. ” According to Newman, “Planning is deciding in advance

The Nature of Planning: The nature of planning can be highlighted by studying its characteristics. They are as follows: 1. Planning is mental activity: Planning is not a simple process. It is an intelligent exercise and involves and forethought on the part of manager. 2. Planning is goal-oriented: Every plan specifies the goals to be attained in the future and steps necessary to reach them. A manager cannot do any planning unless the goals are known. 3. Planning is forward looking: Planning is in keeping with the edge, “look before you leap”. thus planning means looking ahead. it is futuristic in nature since it is performed to accomplish some objectives in future. 4. Planning pervades all managerial activity: Planning is the basic function of managers at all levels, although the nature and scope of planning will vary at each level. 5. Planning is based on facts: Planning is a conscious determination and projection of a course of action for the future. It is based on objectives, facts and considered forecasts. Thus planning is not a guess work. 6. Planning is flexible: Planning is a dynamic process capable of adjustments in accordance with the needs and requirements of the situations. Thus planning has to be flexible and cannot be rigid.

The requirement of a good planning: The five basic requirements for a good plan are that it be accessible, clear, specific, precise, and accurate. 1. Is it Accessible? To be accessible, a plan must provide the needed information so that you can find it. It must be in the proper format, and it must not be cluttered with extraneous material. Although having complete plans is important, voluminous plans are unwieldy. You need to know what is in the plan and where it is. You should be able to quickly find the original schedule and all subsequent revisions. Data should be clear and, to be most convenient, should be in a prescribed order and in a known, consistent, and no redundant format.

2. Is It Clear? If data are not complete and unmistakably clear, they cannot be used with confidence. If they cannot be used with confidence, there is no point in gathering them at all. 3. Is It Specific or stable? A specific plan identifies what will be done, when, by whom, and at what costs. If these items are not clear, the plan is not specific. 4. Is It Precise or comprehensive? Precision is a matter of relating the unit of measure to the total magnitude of the measurement. If, for example, you analyzed a project that took 14 programmer years, management would not be interested in units of minutes, hours, or probably even days. In fact, programmer weeks would probably be the finest level of detail they could usefully consider.

5. Is It Accurate? Although the other four points are all important, accuracy is crucial. A principal concern of the planning process is producing plans with predictable accuracy. Do not be too concerned about the errors in each small task plan as long as they appear to be random. That is, you want to have about as many overestimates as underestimates. As you work on larger projects or participate on development teams, the small-scale errors will balance each other out and the combined total will be more accurate.

Types of plan on the basis of organizational level: 1. Strategic Plans: Strategic plans are the plans developed to achieve strategic goals . It is a general plan outlining decisions of resource allocation, priorities and action steps a necessary to reach strategic goals. This type of plan generally have extended time horizon. These plans are set by the top management. 2. Tactical plans: Tactical plans aimed at achieving tactical goals. It is developed to implement specific parts of strategic plans. Generally have shorter time horizon. Tactical plans an intermediate-term focus. A plan that usually covers periods from one to three years. 3. Operational plans: An operational plan focuses on carrying out tactical plans to achieve operational goals. Developed by lower level managers (first line managers). Operational plans have a short-term focus and are relatively narrow in scope.

There are two types of operational plan: A. Single – use plan B. Standing plan A. Single use plan: Developed to carry out a course of action not likely to be repeated in the future. • Program: Single-use plan for a large set of activities. • Project: Single –use plan of less scope and complexity than a program. B. Standing plan: Developed for activities that recur regularly over period of time. Standing plans are drawn to cover issues that managers face repeatedly. For example-Managers may face the problem of late coming quite often. • Policy: Standing plan specifying the organization’s general response to a designated problem or situation. • Standard operating procedure (SOP): A standing plan that outlines the steps to be followed in particular circumstances. • Rules and Regulations: Standing plans describing exactly how specific activities are to be carried out.

Time frames for planning: As we previously noted, Strategic plans tend to have a long-term focus (Extended time horizon), Tactical plans an intermediate term focus, and time frames vary widely from industry to industry. I. Long-Range plans: A plan that covers many years, perhaps even decades; common long-range plans are for five years or more. II. Intermediate plans: A plan that usually covers periods from one to five years. III. Short Range plans: A plan that generally covers a span of one year or less. There are two basis types of short range planning as: - • Action plan-A plan used to operations any other kind of plan. • Reaction plan: A plan designed to allow the company to react to an unforeseen circumstance.

Types of planning Types of Plan on the basis or organizational level • Strategic Plans • Tactical Plans • Operational plans • Single use plan • Program • project Types of plan on the basis of time horizon • Long-range plans • Intermediate plans • Short Range plans 2. Standing Plan • Policy • Standard operating Procedure (SOP) • Rules & Regulations • Action Plan • Reaction Plan

Steps involved in planning: 1. Being aware of opportunities: In the light of- • The market • Competition • What customer wants • Our strengths and • Our weakness 2. Setting objectives or goals: • Where we want to be • What we want to accomplish and when 3. Considering planning premises: In what environment the assumptions of which plans are based are known as planning premises. They are forecast of future conditions. Assesment of future demand, customer taste and competition in the market can be made with the help of forecasting. • Internal • External

4. Identifying alternatives: What are the most promising alternatives to accomplishing our objectives? 5. Comparing alternatives in the light of goal sought: Which alternatives will give us the best chances of meeting our goals at the lowest cost and highest profit. 6. Choosing an alternative: Selecting the course of action we will pursue. 7. Formulating Supporting plans: Such as plan to: • Buy equipment • Buy materials • Hire and train workers • Develop a new product 8. Numberizing plans & making budgets: Develop such budget as • Volume and price sales • Operating expenses • Expenditure for capital equipment

Decision Making: According to Peter Drucker, "Whatever a manager does, he does through decision-making". A manager has to take a decision before acting or before preparing a plan for execution. Moreover, his ability is very often judged by the quality of decisions he takes. Thus, management is always a decision-making process. It is a part of every managerial function. This is because action is not possible unless a firm decision is taken about a business problem or situation. The Oxford Dictionary defines the term decision-making as "the action of carrying out or carrying into effect". According to Trewatha & Newport, "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem".

TYPES OF DECISIONS: 1. PROGRAMMED DECISIONS: Programmed decisions are routine and repetitive, and the organization typically develops specific ways to handle them. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guidelines. 2. NON PROGRAMMED DECISIONS: Non programmed decisions are typically one shot decisions that are usually less structured than programmed decision.

DECISION MAKING PROCESS: Decision making steps this model depicts are as follows- • Identify an existing problem • List possible alternatives for solving the problem • Select the most beneficial of these alternatives. • Implement the selected alternative. • Gather feedback to find out if the implemented alternative is solving the identified problem.