GOOD MORNING

FUNDAMENTALS OF PLANNING

INTRODUCTION
All organizations operate in an environment of uncertainty. To be successful, an organization must anticipate changes and make plans to adapt itself to the environment. Without Planning, an Organization is like a boat without a rudder. By setting goals and deciding how to achieve them, planning provides a steering mechanism for an organization.

MEANING
Planning is the process of bridging the gap between where we are and where we want to be in the future. In other words, Planning is looking ahead, relating todays events with tomorrows possibilities. It is the process of deciding in advance what to do, how to do, when to do and who does what.

DEFINITIONS
Planning is a continuous process of making present entrepreneurial decisions systematically and with best possible knowledge of their futurity, organizing systematically the efforts needed to carry out these decisions and measuring the results of those decisions against the expectations through an organized systematic feedback. PETER DRUCKER

Planning is a concept of executive function that embodies the skills of anticipating, influencing, and controlling the nature and direction of change. DALTON E.MCFARLAND Planning involves selecting mission and objectives and the actions to achieve them; it requires decision-making that is choosing from alternative future course of action. H.KOONTZ

NATURE OR FEATURES OF PLANNING

Planning is goal oriented. Planning is an intellectual process. Planning is a primary function. Planning is all-pervasive. Planning is forward-looking. Planning is a perpetual (continuous) process. Planning is an integrated process.

ESSENTIALS OF A GOOD PLAN

It should be based on a clearly-defined objectives. It must be simple. It should be rational and appropriate. It should be comprehensive. It should provide for a proper analysis and classification of actions. It must be flexible. It must be balanced.

 It must use all available resources and opportunities. It should be free from social and psychological biases.

STEPS IN PLANNING
Analysis of External Environment Analysis of Internal Environment Determination of Objectives Determining Planning Premises Examination of alternative course of action Selection of the best alternative course of action Determining secondary/supporting plans Providing for follow-up and evaluation.

 Perception of opportunities Establishing objectives Planning premises Identification of alternatives Evaluation of alternatives Choice of alternative plans Formulation of supporting plans Establishing sequence of activities.

PRINCIPLES OF PLANNING
Principle of contribution to objectives. Principle of primacy of planning. Principle of pervasiveness of planning. Principles of flexibility. Principle of periodicity. Principle of planning premises. Principle of limiting factor.

TYPES OF PLANS
Types of plan

Single- use plan Programmes Schedules Projects Budgets

Standing plan Mission Objectives Policies Procedures Methods Rules

 Standing plans: Standing plans are put to use again and again, over a long period of time.

Single use plans: Single use plans developed to carry out a course of action that is not likely to be repeated in the future.

Standing plans :

The mission, or purpose, identifies the basic purpose or function or tasks of an enterprise or agency or any part of it. Objectives, or goals, are the ends toward which activity is aimed. Policies are general statements or understandings that guide or channel thinking in decision making.

 Rules spell out specific required actions or nonactions, allowing no discretion Methods: indicate the simplified and standardized technique to be employed to carry out a task. Procedures Involves a selection and establishment of a logical series of tasks within the framework of predetermined policies and objectives.

Single use plans:

Schedule: It is a kind of time table of work, specifying the date when a task is to begin and the time needed to complete each task.

Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action.

 A budget is a statement of expected results expressed in numerical terms. Project: It is a small program.

TYPES OF PLANNING
Basis of types of planning :-

Coverage of Activities - Corporate Planning Functional Planning.

Importance of Contents Strategic Planning Tactical/Operational Planning

Time Period Long-term Planning Short-term Planning.

Approach Adopted Proactive Planning Reactive planning. Degree of Formalization Formal Planning Informal Planning.

Corporate Planning It denotes planning activities at the top level, also known as corporate level, which cover the entire organizational activities. Normally, corporate planning is divided into strategic planning or long-range planning and operational, tactical or short-range planning.

Functional Planning Functional planning is segmental, and it is undertaken for each major function of the organization like production, marketing, finance, HR/personnel etc. At the second level, functional planning is undertaken for sub-functions within each major function. Functional planning is derived out of corporate planning.

Strategic Planning Strategic planning sets the long-term direction of the organization in which it wants to proceed in future. SP is the process of deciding on objectives of the organization, on changes, on these objectives, on the resources used to attain these objectives, and on the policies that are to govern the acquisition, use and disposition of these resources.

Tactical/Operational Planning It is also known as short-term planning, usually covers one year or so. It is aimed at sustaining the organization in its production and distribution of current products or services to the existing markets. It is the process of deciding the most effective use of the resources already allocated and to develop a control mechanism to assure effective implementation of the actions so that organization objectives are achieved.

Long-term Planning It is of strategic nature and involves more than year and the more common long-term period is 3-5 years. It encompass all the functional areas of the business and are affected by economic, social, and technological factors.

Short-term Planning It is also known as operational or tactical planning.

Proactive Planning It involves designing suitable course of action in anticipation of likely changes in the relevant environment. It uses broad planning approaches, broad environmental scanning, decentralized control and reserve some resources to be utilize for their future use. Organizations do not wait for environment to change but take actions in advance of environmental change.

Reactive planning In reactive planning, organizations responses come after the environmental changes have taken place. After the changes take place, these organization starts planning. In such a situation, the organizations loses opportunities to those organizations which adopts proactive approach.

Formal Planning It is in the form of well-structured process involving different steps. Large organizations undertake planning in formal way in which they create separate corporate planning cell. The planning process that is adopted is rational, systematic, well-documented and regular.

Informal Planning It is undertaken, generally , by smaller companies. The planning process is based on managers memory of events, intuitions rather than based on systematic evaluation of environmental happennings.

PLANNING PREMISES
Planning Premises: The term Premises refers to a propositions stated or assumed at the beginning of a deed. In the context of planning, it involves various assumptions on which plans are formulated. Since, there are many factors which affect the implementation of a plan, assumptions are made in respect of these factors.

Planning Premises are the anticipated environment in which plans are expected to operate. They include assumptions or forecasts of the future and known conditions that will affect the operation of plans. KOONTZ Thus, Planning premises include both anticipated and known conditions under which plans are formulated.

TYPES OF P P :

1. 2. 3. 4. 5. 6.

External Premises. Internal Premises. Tangible Premises. Intangible premises. Controllable Premises and Uncontrollable premises.

FORECASTING
Introduction: It is a systematic attempt to probe the future so as to recognize problems and opportunities and turn them into plans of action. It helps in analysing the economic, political and market information to reduce the risks involved in making business decisions and long-range plans.

 It involves a look ahead approach in business. A systematic attempt is made to look into all the factors [past and present] affecting the working of the organization.

Meaning and Definitions: Forecasting is a systematic guessing of the future course of events with the help of analysis of past and present events. Forecasting provides a basis for a planning.
A forecast is a prediction and its purpose is to calculate and predict some future event or condition. WEBSTER DICTIONARY

Features:
It is concerned with future events. Necessary for planning. [planning process]. Guessing of future events and their impact. Considers all the factors [past and present] which affect organization. It uses scientific, mathematical and statistical technique.

Forecasting Process:
1. Thorough preparation of foundation/Developing the groundwork. 2. Estimation of future. 3. Comparison of results/Comparing the actual with estimated result. 4. Refining the forecast process.

Areas of Forecasting: Competition Supply of labour Economic conditions Growth trend Social change Political change Technology New laws and regulations