What is process of planning?

Planning Process

1. Setting Objectives:
– Objectives specify what the organization wants to achieve.
– Objectives can be set for the entire org. & stated to each dept. within the org. very clearly, to determine how all depts. would contribute towards overall objectives.
-Then these have to percolate down to all employees at all levels so that they understand how their actions contribute to achieving objectives.
– E.g. Objective could be to achieve sales, expansion of business etc.

2. Developing Premises:
– Plans are made on the basis of some assumptions.
– These assumptions, which provide the basis for planning, are called premises.
– All managers involved in planning should be familiar w/ them, cuz plans are expected to operate & reach their destination subject to these. They can be:
• Internal premises: Cost of products, capital, machinery, profitability etc.
• External premises: Changes in technology, population growth, competition, govt. policies etc

3. Identifying Alternative Courses Of Action:
– After setting the objectives, managers make a list of alternatives through which the org. can achieve its objectives as there can be many ways to achieve the objectives & managers must know all of them.
– E.g. Sales could be increased through any of the following ways:
• By enhancing advertising expenditure
• Appointing salesmen for door-to-door sales
• By offering discounts
• By adding more product lines.

4. Evaluating Alternative Courses Of Action
– Positive & negative aspects of each &every proposal need to be evaluated to determine their feasibility and consequences in the light of each objective to be achieved.
– E.g. In financial plans, risk-return trade-off are imp. Riskier the investment, higher the returns it is likely to give. To evaluate such proposals, detailed calc. of earnings, taxes, earnings per share etc. should be done.

5. Selecting The Best Alternative
– Real point of decision-making→ Best plan has to be adopted and implemented.
– The ideal plan = most feasible, profitable and with least negative consequences.
– Most plans may not be subjected to mathematical analysis. In such cases, subjectivity & manager‘s experience, judgment and intuition are important to select the most viable alternative.
– Sometimes a combination of plans may be selected instead of one best course.

6. Implementing The Plan
– Concerned with putting the plan into action.
– For implementing the plans, managers start organizing & assembling resources for it.
– E.g. If there is a plan to ↑ production, then more labour, more machinery will be reqd. This step would also involve organizing for more labour and purchase of machinery.

7. Follow Up Action
– This involves monitoring the plans and ensuring that activities are performed according to the schedule.
– Whenever there are deviations from plans, immediate action has to be taken to bring implementation according to the plan or make changes in the plan.