A sound plan should have the following characteristics:
Characteristics of a Sound
A sound plan should have the
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.
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
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
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.
Tags : Management Concepts & Organisational Behaviour - Planning
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