Though there may be a few variations in the exact procedure adopted by different organizations in planning, the following are the broad steps:
Though there may be a few variations
in the exact procedure adopted by different organizations in planning, the
following are the broad steps:
Planning begins with decisions
about what the organization wants to achieve during a specified period. The
goals of an organization and various subunits have to be decided and spelt out
in clear terms. It is always desirable to express the goals in quantitative
terms for all the key areas of the business like production, profit,
productivity, market share, employee relations, social responsibilities, etc.
For instance, instead of saying that the objective of business is to achieve a
fair rate of return on the investment, it may be given a quantitive expression,
say, 10 or 15 percent return on the investment. The time frame in which the
objectives have to be achieved must also be specified. Besides, adequate
attention has to be paid to the resources required to achieve the objectives.
Thus what to achieve, when, how and with what resources are a few important
questions that should be answered at this stage.
Since goal setting is the
essential first step in planning, managers who fail to set meaningful goals
cannot make effective plans. If Telco is able to retain its dominance in the
Heavy Commercial Vehicle (HCV) segment, it is because all the employees of the
organization know clearly that the primary objective is retaining the
leadership in the industry. For instance, SAIL’s corporate mission “Infrastructuring
India” explains basic purpose and board objectives of the company to a larger
extent. The mission of the organization, the corporate values, experience,
polices provide adequate guidance to the managers in goal setting.
Outlining Planning premises
Planning premises, in simple, are
the assumptions about the various elements of the environment. Planning
assumptions or premises provide the basic framework in which plans operate.
Appropriate assumptions have to be made on various aspects of the environment –
both internal and external to the organization. Otherwise, it will be like
fighting a battle without a clear assessment of the enemy’s strengths and
i. Internal premises: Important internal premises include sales forecasts and policies of the
organization. Each one of these elements is a critical success factor. For
instance, the accuracy of the sales forecast influences the procurement of
resources, production scheduling and the marketing strategies to be pursued to
achieve the objectives. Similarly, however effective the objectives are, it is
the people who have to perform and achieve. If their attitude is not positive,
External premises: Important
external premises relate to all those factors in the environment outside
the organization. They include issues related to technology, general economic
conditions, government policies and attitude towards business, demographic
trends, socio-cultural changes in the society, political stability, degree of
competition in the market, availability of various resources and so on.
It is evident that some of these
factors are tangible while others are intangible. For example, material and
human resources availability, etc. are tangible factors which can be stated in
quantitative terms. On the other hand factors like political stability,
attitudes of the people, certain other sociological factors are intangible, in
that they cannot be
measured quantitatively. Effective premising – the
making of appropriate assumptions, helps the organization to identify the
favourable and unfavourable elements in the environment. Though accurate
premising is difficult, anticipating future situations, problems and
opportunities would undoubtedly help the managers in reducing the risk, though
not completely eliminating it.
the planning period
How far in the future should a
plan be made is another pertinent question in the process of planning.
Businesses vary in their planning periods. In some cases plans are made for a
short period, varying from a few months to a year, while in some other cases,
they are made to cover a longer period, to cover a period of more than a year.
The period may extend up to 5-10 years and even beyond. Companies normally plan
for a period that can be reasonably anticipated. The lead time involved in the
development and commercialization of a product and time required to recover the
capital investment (pay-back period) influence the choice of the length of the
plan. Again, in the same organization, different plan periods may exist for
different purposes. This gives raise to the two important concepts –
operational planning and strategic planning. While operational plans focus on
the short-term, strategic plans focus on the long-term.
alternatives and select the course of action
The next logical step in planning
involves the development of various alternative courses of action, evaluating
these alternatives and choosing the most suitable alternative. Objectives may
be achieved by different courses of action (alternatives). For example,
technical know-how may be developed by in-house research, collaboration with a
foreign company or by tying up with a research laboratory. Similarly, an
organization can grow by expanding its scale of operations or through
acquisitions and mergers. Technical feasibility, economic viability and the impact
on the society are the general thumb rules to select the course of action. The
alternative courses are evaluated in the light of the premises and the overall
goals of the organization.
finalized after a thorough analysis of various alternatives suggests the proposed course of action. To make it
operational, it has to be split into departmental plans. Plans for the various
operational units within the departments have to be formulated. The plans thus
developed for the various levels down the organization are called derivative
plans. For instance, production and marketing of 10,000 units of a product and
achieving a return of 10 percent on the investment may be the enterprise’s plan
relevant for the whole organization. Its effective execution is possible only
when specific plans are finalized for the various departments like production,
marketing, finance, personnel and so on with clear-cut objectives to be pursued
by these departments.
Success of the plan is measured
by the results and the ease with which it is implemented. Therefore, provision
for adequate follow-up to determine compliance should be included in the
planning work. To make sure that the plan is contributing for the results, its
review at regular intervals is essential. Such a review helps in taking
corrective action, when the plan is in force.
Tags : Management Concepts & Organisational Behaviour - Planning
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