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Management Concepts & Organisational Behaviour - Planning

Characteristics of a Sound Plan - Planning

   Posted On :  17.05.2018 09:51 pm

A sound plan should have the following characteristics:

Characteristics of a Sound Plan
 
 
A sound plan should have the following characteristics:
 
 
Primacy: Planning is an important managerial function that usually precedes other functions. Obviously, without setting the goals to be reached and the lines of actions to be followed, there is nothing to organize, to direct, or to control in the enterprise. But this should not lead us to think that planning is isolated from other managerial functions.
 
Continuity: Planning is a continuous and never ending activity of a manager to keep the enterprise as a going concern. One plan begets another plan to be followed by a series of other plans in quick succession. Actually, a hierarchy of plans operates in the enterprise at any time. Planning gets used up where tomorrow becomes today and calls for further planning day in and day out. Again, the incessant changes make re-planning a continuous necessity.
 
Flexibility: Planning leads to the adoption of a specific course of action and the rejection of other possibilities. This confinement to one course takes away flexibility. But if future and assumptions upon which planning is based prove wrong, the course of action is to be modified for avoiding any deadlock. Accordingly, when the future cannot be molded to conform to the course of action, the flexibility is to be ingrained in planning by way of adapting the course of action to the demands of current situations.
 
Consistency: Planning is made by different managers at different times. Maintenance of consistency or the unity of planning is one of its essential requirements. Objectives provide the common focus for unifying managerial action in planning. Moreover, policies and procedures introduce a consistency of executive behaviour and action in matters of planning.
 
Precision:Planning must be precise with respect to its meaning, scope and nature. As guides to action, planning is to be framed in intelligible and meaningful terms by way of pinpointing the expected results. Planning must be realistic in scope rather than being dreams indicating pious desires. As planning errors are far more serious and cannot be offset by effective organizing or controlling, the accuracy and precision is of outmost importance.

Pervasiveness: Planning is a pervasive activity covering the entire enterprise and every level of management. Planning is not the exclusive responsibility of top management only. But it extends to middle and lower managements as well. Although top managers are mostly preoccupied with planning because of the wider scope of operational and decision making authority, planning is of equal importance to every manager.

Long Range Planning and Short Range Planning

 
 
Planning involves deciding a future course of action.Plans always has some time frame-the period in future that a plan covers. Based on the length of time involved, plans are usually classified as strategic or long range plans and operational or short range plans, strategic plans are designed to meet the broad objectives of the organisation to implement the mission that provides justification for the organisation’s existence. Operational plans provide details as to how strategic plans will be accomplished. However, it must be remembered that both strategic and operational plans are not mutually exclusive, but are complimentary. We will first discuss strategic planning and then proceed to operational planning.
 

Long Range Planning / Strategic Planning

 
 
The terms long range planning, Strategic planning, and Corporate planning are used synonymously by many authors. Strategic planning has its origin in military organizations where the objective is to envisage a variety of contingencies that may arise when large forces move into operation. Viewed in this backdrop, strategic planning in a business organisation envisages a comprehensive study of the various external and internal parameters that affect a company in charting a course of action to achieve the goals.
 

Strategic Planning helps the Management in:

 
 
1. coping effectively with future contingencies.
 
2. providing an early opportunity to correct mistakes.
 
3. making decisions about the right things at the right time: and
 
4. understanding what actions to take in order to shape the future.
 
 
George Steiner has defined strategic planning as “the process of determining the major objectives of an organisation and the policies and strategies that will govern the acquisition, use and disposition of resources to achieve those objectives”. Strategic plans reflect the socio-economic purpose of the organisation and the values and philosophy of the top management. In simple, they relate the organisation to the environment in which it operates by providing answers to the basic questions like:
 
1. Where are we now?
 
2. Where do we want to go? And
 
3. Why do we want to go there?
 
 
Organisations in the west have been exposed to the strategic planning since long. In India, many subsidiaries of the multinational corporations made a beginning in this direction. Indian companies (Private and public sector) have also realized the importance of strategic planning, thanks to the changed realities in the last few years. As a result, every company has now begun to speak in terms of corporate mission, strategic planning and organisational vision. Strategic planning serves the following two functions.
 

Anticipates Future Opportunities and Threats

 
 
An accurate assessment of the future opportunities and threats is crucial to the success of any business. Business environment is changing so fast these days that a deliberate corporate effort is called for to keep abreast with the changes. The changes that occur may be precursors of future

 threats and opportunities. The investment in large business enterprise today runs into thousands of crores of rupees. The gestation period is too long. During this period many things may change.
Effectiveness of the business organissation lies in converting the threats into opportunities. For instance, when the crude oil prices were hiked in 1973 by the OPEC countries, it created havoc on petro-based industries. Automobile companies as a result were forced to change to small fuel efficient cars. In this case, the threat was converted into an excellent opportunity. Small car thus has become the fashion of the day. Similarly, ITC in India, continuously hounded by excise levies and taxes on their main tobacco products cigarettes , had to think of diversification into hotels, paper, agro products and aquaculture – which ultimately turned out to be a God sent opportunity.
 

Provide Clarity of Purpose and Direction

 
 
As a result of the overall increase in the size of companies, the internal departments (production, marketing, finance, personnel etc.) have also become quite large. With growing specialization in each of these areas, these departments are prone to become watertight compartment giving rise to inter-departmental rifts. Corporate strategies spelt out clearly help in smoothening out some of the interdepartmental conflicts. Strategic planning provides unity of purpose and direction, the much emphasized management principle.
 
For example,it is not unusual, for instance, for marketing department to ask the production department to shorten their productions runs, to cater to the demands of various models which is normally resisted by the latter. Similarly, the design department may often specify certain change in the product which may raise the cost of production. The finance department may try to block any measure that increases the cost of production.
 
The manager’s success depends largely on understanding the trends in the environment. The trends contain signals and give clues about the potential opportunities and impending threats. Many organizations have paid a heavy price for their failure to draw the right meanings from the signals. In some cases, though the management is aware of the trends, a fixed mindset or resistance to change make them cling on to the status-quo.

 Take the case of the public sector gaint, HMT which prided itself, for a long time on its dominance in the Indian wrist watch market. The company was on a high tide for a long time and failed to understand the shift in the consumer preference towards the trendier, sleek quartz watches. It was so complacent that it took the market for granted. In the meantime much of the HMT’s traditional markets have been captured effortlessly by TITAN. TITAN with its innovative marketing strategies has, no doubt, changed the face of the Indian watch market. This is only one or the several examples of failures in strategic planning in the contemporary business world.
 

Short Range Planning / Operational Planning

 
 
Strategic planning is the prerogative of the top management which is the highest policy making body in any organisation, where as operational planning is done at the lower levels. Strategic planning is mostly concerned with the “why” of the things, whereas operational planning is concerned with the “how” of the things. The focus in strategic planning is on long-term, while it is on short-term in operational planning. Further, planning is less detailed in the former because it is not involved with the day-to-day operations whereas it is more detailed in the latter, considering its nature, operational planning is also called tactical planning.
 
However, Operational plans stem or originate from strategic plans. In other words, strategic planning provides guidance and boundaries for operational planning. Effective management, therefore, must have a strategy and must operate on the day- to- day level to achieve it. Both should not be viewed as mutually exclusive because operational planning identifies the major activities to achieve the objectives of strategic planning. For example, if the strategic plan is to face competition with new and innovative products, major tasks to achieve this goal would be clarified by operational planning. The possible tasks at the operational level include:
 
1. strengthening the research and development department;
 
2. motivating the people to work on new products; and
 
3. creating a climate in the organisation where people are willing to take risks.

 
 
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