PLANNING-FUNCTION OF MANAGEMENT

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.