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PLANNING
Meaning - It is the process
of setting objectives and targets for a given time period and formulating an
action plan to achieve them effectively and efficiently. It concerns itself
with both ends and means that is what is to be done and how it is to be done.
Definition -
“Planning
seeks to bridge the gap between where we are and where we want to go. Planning is a trap to capture the future.
Importance of planning.
i)
Provides
direction- By stating in advance the future
course of action of what is to be done and how it is to be done. By stating in
advance it facilitates unity of
direction.
ii)
Reduces the
risk of uncertainty- By predicting future events and
preparing the organization to anticipate the future and face unexpected events.
iii)
Facilitates
decision making-planning helps the manager to look
into the future and make a sound judgment or choice from among the various
alternatives.
iv)
Reduces
overlapping and wasteful activities-Through
elimination and minimization of useless and redundant activities facilitating
clarity.
v)
Establishes
standard for controlling- “control is blind
without planning”. It
helps provide standard against which the actual performance are compared
and evaluated to estimate the deviations
.
Limitations of planning:
i. Planning does
not work in a dynamic environment - Planning
also has to work amidst the
influence of external environment which can render even the most effective plan inoperative.
ii. Planning is a
time consuming process as it requires
collection of information,
its
analysis and interpretation. It becomes a difficult exercise in times of unexpected
emergencies.
iii. I t involves
huge cost in its formulation. As a
lot of money needs to be expended
in the
collection, analysis and interpretation of data
iv. I t creates
rigidity in the mode of functioning. As
the employees are required
to
function as per the dictates of the predetermined policy.
v. It does not
guarantee success, as a wrong or a misconceived plan
or a well drawn plan when not
implemented can lead to failure.
vi. It reduces
creativity as the middle level managers and
the other decision makers have
to only follow and are not allowed to deviate from the plans.
vii. The human
element can give way to errors or
mistakes through wrong assumptions.
viii. It is prone to
external influences which can reduce its impact like
natural calamity, technology changes,
policy changes, competition.
Steps in planning process
i. Setting up
objectives: The process begins with identifying
and setting up of objectives.It
determines where to reach. The organizational objectives arrived at should be measurable, understandable, clear
and attainable.
ii. Developing
planning premises - Premises involve making assumptions
relating to future conditions. It provides
relevant facts and information relating to
future
conditions. Hence sound estimates or forecast need to be made.
iii. Identifying
alternative course of action : The
planner now arrives at the various
alternatives for performance of a task and evaluate the probable
consequence
of each option.
iv. Evaluating the
alternative course - The positive and negative impact of
each option in light of cost, risk
and benefits is worked out.
v. Selecting the
best alternative - This is actually the stage of decision
making where the most suitable
course of action is selected .The selected alternative is obviously the one which is most
feasible, profitable and has least negative
impact.
vi. Implementing the
plan : The plan is transformed into action
by activating the other managerial
function involving organizing various resources and securing cooperation and participation of other members
of the organization.
vii. Follow up plan :
This final culminating step
involves reviewing the existing plan for its relevance and effectiveness.
Types of plans:
(A) Standing or Repeatedly used Plans: As their name indicates
that these plans are formulated once
and they are repeatedly used. These plans continuously guide the managers. That is why it is said
that a standing plan is a standing guide to recurring
problems. These plans include :
1.
Objectives
2. Strategies
3. Policies
4. Procedures
5.
Methods and
6. Rules
(B) Single –use or Special or Adhoc Plans: These plans are
connected with some special problem.
These plans end the moment the problems are solved. After having been used once there is no importance of these
plans and in future, whenever they are needed
they are re-created. These plans include
1. Budget
and
2. Programme.
1) Objectives - Are the ends which the management seeks to achieve by
its operation.
• Represent the end point of
management.
• Set by top management.
• Defines the future state of
affairs.
• Guides the overall business
planning.
• Can be expressed in specific
terms. They can be measured .
2) Strategy - Provides broad shape of organization’s business, refers
to the future decisions defining the
organization’s directions and scope in the long run.
• It
involves a comprehensive plan which covers the determination of long term objectives, adoption of a particular
course of action and allocation of resources.
3) Policies - are general statements which guide thinking in decision
making.
• They
are based on objectives.
• They
guide managerial action and decisions.
• They
exist at all levels and departments of the organization.
4) Procedures - Are a chronological sequence of routine steps on how to
carry an activity.They detail the
exact manner in which the work is to be performed.
• It is
meant for the insiders to follow.
•
Policies and procedures are interlinked.
5) Rules - Are specific statements that inform what is to be done.
•
Reflects managerial decision.
•
Simplest plan.
• They
are to be enforced rigidly.
6) Methods - Are standardized ways or manners in which a task has to
be performed considering the
objectives.
•
Selection of a proper method saves time, money and effort.
7) Programmes - Detailed statements which are combination of goals,
policies, procedures, rules
tasks, human and physical resources required and the budget to
implement
any course of action.. All these plans together form a programme.
8) Budget - Is a statement of expected results expressed in
numerical terms for a definite
period of time in the future.
• It
quantifies future facts and figures.
•
Serves as a standard for measuring actual performance.
• It is
prepared for various groups of activities.
PLANNING
VERY SHORT ANSWER TYPE QUESTIONS (1 MARK)
1. What is planning?
Ans.
Planning is deciding in advance as to what needs to be done in future.
2. Which function of management bridges the gap between where we
are and where we want to go to?
Ans.
Planning.
3. Name the primary function of management.
Ans.
Planning.
4. One of the
functions of Management is considered as base' for all other functions. Name
that function.
Ans.
Planning
5. What all qualities are required for doing planning?
Ans.
Intelligence, Imagination, Foresight, Sound Judgment.
6. Name the feature of planning which says planning is a forward
looking function?
Ans.
Planning is futuristic.
7. How does planning create rigidity?
Ans. Planning creates rigidity by putting adverse effect
on initiative taken by the managers.
8. What is the basis for creating future course of action?
Ans.
Forecasts.
9. Give one limitation of planning function.
Ans.
Planning does not guarantee success.
10. Which is the most crucial step in planning process?
Ans.
Setting objectives.
11. Define 'Objective'?
Ans.
Objectives are desired future position that the management would like to reach.
12. Define 'Strategy'.
Ans. A strategy refers to future
decision action, defining the organisation's direction and
scope in the long run
13. Define 'Policy'.
Ans.
Policy is a general statement which guides decision making in a given set of
situations
14. Define 'Rules'.
Ans.
Rules are specific guidelines for behavior and action.
15. Give anyone example of 'budget'.
Ans.
Cash budget.
SHORT ANSWER TYPE QUESTIONS (3 OR 4 MARK)
1. What do you mean by planning?
Ans. Planning is deciding in advance about work to be
done in future. It is that function of management which lays down the
objectives and various actions to be taken for the achievement of those
objectives. According to Koontz and O'Donnel "Planning is an intellectual
process, the conscious determination of courses of action, the basing of
decision on purpose, facts and considered estimated".
2. What do you mean by a plan?
Ans. A plan is a formulation of certain steps and
actions which are essential for achieving certain specific results. Plans can
be classified on the basis of what theyfocus to achieve and the methods adopted
viz. objectives, strategy, policy etc. For example, if the planned output for a
week is 1,000 units and actual output is 580 units only, the planners have to
critically review their plans and modify: them, if need be, so as to achieve
the planned output.
3. Enumerate six points of importance of planning.
Ans.
Importance of planning is as under:
(i)
It provides direction for action.
(ii)
It reduces the risk of uncertainty
(iii)
It facilitates decision making.
(iv)
It establishes standards for controlling.
(v)
It promotes innovative ideas.
(vi)
It reduces overlapping and wasteful activities.
5. How is planning a pervasive function of management?
Ans. Planning is not the function of top management or
any particular department only. It is required at all the levels of management
and in all departments of an organisation.However the scope and nature of
planning is different at different levels and in different departments. For
example the top management lays down the plans for the organisation as a whole.
Middle level management has to make plans for each department and the plans
regarding the daily operations of an organisation are laid down by operational
management.
6. How is planning forward looking?
OR
Planning is futuristic' explain?
Ans. Planning is always for the future and never for the
past. It involves peeping in to future, analyzing and preparing plans
accordingly. Thus, planning is futuristic as it helps
in meeting likely future events effectively and
efficiently to best advantage of the organisation.For example, on the basis of
sales forecasts, annual plans for production and
sales
are drawn.
7. Planning involves decision making". Explain.
Ans. Planning is essentially a process of making choice
from among various alternatives.
There will be no need for planning, if there is only one
course of action, because there will be no choice. Hence need for planning
depends on the availability of alternatives.A manager, after examining and
evaluating the various alternatives, chooses the most appropriate one.
8. 'Planning reduces creativity'. How?
Ans. Usually in an organisation, planning function is
performed by the top management
and the rest of the members are required to implement
these plans. As a result,middle management and other members are neither
allowed to deviate from plans nor are they granted authority to act on their
own. Hence most of the initiative and creativity in them gets reduced.
9. 'Planning does not guarantee success'. Comment.
Ans. An organisation is successful only when the plans
are effectively drawn and implemented.A plan must be converted into action
otherwise it becomes meaningless.Generally, it is seen that managers are in the
habit of depending on previously tried and tested successful plans. But this practice
sometimes does not work and may actually lead to failure instead of success.
10. Enumerate the steps involved in the planning process.
Ans.
Steps of planning are as follows:
(i)
Setting up of objectives
(ii)
Developing premises.
(iii)
Identifying alternative courses of action.
(iv)
Evaluating alternative courses
(v)
Selecting an alternative.
(vi)
Implementation of plan.
(vii)
Follow up
11. What do you mean by objectives?
Ans. Objective can be defined as a position where the
management wants to reach in the future. These are the ends which an
organisation wants to achieve through its operations. They are measurable in
quantitative terms.For example, one objective of an organisation may be to
increase sales by 20%and return on investment by 10% in the forthcoming year.
12. Explain the meaning of policies.
Ans. A policy can be defined as a general statement that
provides guidelines for constructive thinking. They act as a guide to
managerial actions and decisions in implementing the strategy. A well defined
policy helps in solving the complexproblems easily.
For example, an organisation may have a credit policy,
pricing policy etc. on the basis of which objectives are decided and decisions
are made.
13. What is meant by procedures?
Ans. Procedures are routine steps framed to carry out
activities. These are plans that determine the order of any work performance.
Procedures are generally meant for insiders and define the chronological
sequence of doing any work for attaining predetermined objectives.
14. What do you mean by methods?
Ans. Methods are standard ways of doing planned jobs for
attaining the objectives. They
are more detailed than procedures. Methods are helpful
in simplification, standardization and systematization of work. For doing
different jobs, different methods can be adopted.
For example, for imparting training to employees at
different levels, different methods of training can be used viz for higher
level lectures or seminars and for supervisory level on the job training can be
used.
15. What do you mean by rules?
Ans. Rules can be defined as statements that tell us
what is to be done and what is not to
be done. Deviations from rules are not permitted unless
a policy decision is taken.They enforce rigidity and there is fine or penalty
if they are not followed.For example, prohibition on sale of tobacco within
certain radius of aneducational institution is a rule to be followed by all.
16. What do you mean by programmes?
Ans. Programmes are a solid combination of goals,
policies, procedures, rules,tasks, assignments, steps to be taken, resources to
be employed and other elements necessary to carry out a given course of action.
Programmes interlink the objectives, policies and procedures. They work out
even the minutest detail within broad policy framework of the organisation.
17. What is meant by budget?
Ans. Budget is a plan in numerical terms which
quantifies desired facts and figures. It is a statement of expected results
expressed in quantitative terms. For example, a sales budget helps in
forecasting the sales of a particular product in different areas during a
particular month. Similarly, a budget may be prepared to show the number of
workers required in factory at the time of packing the products.
LONG ANSWER TYPE QUESTIONS (5 OR 6 MARKS)
1. Defining 'organizational objectives' is the first step in the
process of planning.
Explain, in
brief, the other steps of this process.
Or
Explain the
steps involved in the process of planning.
Ans. It has been rightly said that defining
organizational objectives is the first step in the
process of planning. Other steps in the process of
planning a as follows:
(i) Establish planning premises
This step involves the establishment of planning
premises in which plans are, expected to operate. Planning premises are
assumptions relating to future conditions and events which are likely to have
an effect on achievement of goals
(ii) Identifying alternative courses of action
Under this step, various possible alternatives for
reaching objectives should be identified by managers.
(iii) Evaluating Alternative Courses
This step involves deep evaluation of various
alternative courses of action in light of the various objectives to be
achieved. The positive and negative aspect of each alternative is evaluated.
(iv) Selecting an alternative
This step involves the selection of the most optimum and
realistic plan with least negative results.
(v) Implement the plan
Under this step the best selected plan is put in to
action.
(vi) Follow up
Under this step, it is monitored whether the plans are
being implement and whether the activities are being performed according to the
schedule.
QUESTIONS WITH DIFFERENT DIFFICULTY LEVELS
1.
How does
planning reduce the risk of uncertainty? - 1 Mark
Ans. Planning reduces the risk of uncertainty by
visualizing/assessing future events and
providing remedies/ courses of action for such kinds of
events to the extent possible.
2. A company wants to increase sales; the alternatives may be
reducing prices
hanging packaging, improving packaging, etc. Which step of
planning process
relates with the above example? - 1 Mark
Ans. Identifying alternative courses of action.
3. Write anyone difference between policies and procedures. - 1
Mark
Ans. Procedures consist of series of steps whereas
policies are guidelines for decision
making.
4. A company needs a detailed plan for its new project?
‘Construction of a Shopping Mall'. What type of plan is it? - 1 Mark
Ans. Programme
5. Give anyone difference between Policy and Rule. - 1 Mark
Ans. Policy is flexible whereas rule is rigid.
6. "These are general statements that guide thinking and
channelise energise
towards a particular direction and help in solving routine
problems”. Identify
the type of plan. - 1M
Ans. Policy
7. 'Planning promotes innovative ideas’. Explain? - 3 or 4 Marks
Ans. Planning considered to be the most, challenging
function of the management as it
guides all Future actions and facilitates growth and
prosperity of the business organisation. Planning encourages managers to think
creatively generate innovative ideas; improve methods for Work execution etc.
Dealing with uncertainties of future, planning is the most challenging
function, which provides basis for growth and Prosperity of the business
enterprise
8. 'Planning focuses on achieving objectives'. Explain. - 3 or 4
Marks
Ans. Planning is a goal oriented process which helps in
defining objectives, and preparation
of necessary action plans to achieve goals. Thus,
planning is focused on clarifying what is to be done and how is that to be
done. The planning holds no purpose if it does not focus on achievement of
preset organizational or corporate objectives.
9. 'Planning is the basic function on of management'. Comment. -
3or4 Marks
Ans. Every management starts with planning. All other
functions like organizing, staffing,
directing and controlling are based on planning. It
precedes the execution of all other managerial functions and allows mangers to
organized, staff, direct andcontrol the activities in a better way so as to
achieve organizational goals. All the activities are created in such a way that
plans are easily carried out. This is also referred to as primacy of planning.
10. Why is planning considered as a mental exercise? - 3 or 4
Marks
Ans. Planning is an intellectual activity requiring
application of the mind, imagination and
sound judgment. It is a thinking function rather than a
doing function as it determines the actions to be taken. Moreover, planning
requires logical and systematic thinkingbased on the analysis of facts and
figures.
11.How can (i) Political climate and (ii) Policies of
competitors obstruct planning?
-3or4 Marks
Ans. (i)
Obstruction in planning due to political climate
When the government regulates the business practices or
introduces new trade policies, the plans of business enterprises may get upset.
Also political instability affects business plans. For example, change in the
taxation policy.
(ii) Obstruction in planning due to policies of competitors
The policies of competitors may lead to change in
business policies. For example, discounting policies of the competitors may
lead to change in pricing policy of a business enterprise.
12. What do you mean
by planning premises? - 3 or 4 Marks
Ans. Planning premises are assumptions relating to
future conditions and events whichare likely to have an effect on achievement
of goals. These are the bases upon which the entire structure of planning is
built. Every plan is drawn with certain assumptions. To make planning
effective, it is necessary that the premises should bebased on accurate
forecasts, existing plans or any past information about policies etc.For
example, demand for a product, cost of raw materials, interest rates, stateof
technology, intensity of competition, government policies etc.
14. 'Though planning is an important tool of management, yet it
is not a remedy for all types of problems", Do you agree with this
statement? Give any five reasons in support of your answer. - 5
or 6 Marks
Or
Explain the limitations of planning.
Or
Why do plans fail in spite of the best efforts of management?
Ans. Limitations of Planning:
(i)
Planning
creates rigidity
In an organisation, a well defined plan is drawn to
achieve some specified goals within a specified period of time. These plans lay
down the future course ofaction and it is not possible for the managers to
change them. Hence, it is not in the organisational interest to follow a
particular plan when circumstances have changed.
(ii) Planning does not work in a dynamic environment
The various forces of business environment like social,
economic,political, technological and legal keep on changing and the
organisations have to adaptthemselves to these changes. Thus, it becomes very
difficult to forecast when there is change in government policies, natural
calamity, political instability in the country etc.
(iii) Planning reduces creativity
Usually in an organisation planning function is
performed by the top management and the rest of the members are required to
implement these plans. Asa result, middle management and other members are
neither allowed to deviate from plans nor granted authority to act on their
own. Hence most of the initiative and creativity in them gets reduced.
iv) Planning involves huge cost
Huge cost is involved in the formation of plans. This cost
is in terms of money and time. For example, a lot of time is involved in
scientific calculations to certain facts and figures and to check the accuracy
of facts while formulating a plan. Likewise, a lot of money is spent on
boardroom meetings, discussions with experts and preliminary investigations to
find out the effectiveness of the plans Moreover sometimes the cost incurred in
formulating plans is higher than the benefits received from these plans.
v) Planning is a time consuming process
Sometimes top level management consumes a lot of time in
formulating the plans as a result of
which very less time is left with them to implement these plans.
vi) Planning does not guarantee success
An organisation is successful only when the plans are
effectively drawn and implemented. Managers are in the habit of depending on
previously tried antested successful plans, but this practice sometimes does
not work and may leadto failure instead of success.
