DECISION MAKING AND THE PLANNING PROCESS

MEANING OF PLANNING Planning is a familiar everyday activity.

Individual and organizations both need plan. Planning is the first function of management. It is a basic process we use to select our goals and to determine how best to achieve them.

Planning is to find out a suitable course of action to achieve objectives before taking action. In other words, Planning is deciding in advance what is to be done. It is a projected course of action. It is a design for tomorrows action.

MEANING OF PLANNING According to Koontz & O’Donnell,

“Planning is deciding in advance what to do, how to do and when is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur”.

MEANING OF PLANNING Managers at all levels require planning.

Planning is every managers job. Upper level managers usually plan for the

entire organization and they cover a longer time in advance.

Lower level managers planned for their own department or branches and they cover a shorter time in advance.

Planning is a process that does not end. When a plan is agreed upon, plans are to be implemented. A plan may sound very high, but it will not carry any meaning or result, if it is not implemented.

CHARACTERISTICS OF PLANNING Planning is goal-oriented: Planning is made

to achieve desired objective of business. The goals established should have general acceptance otherwise individual efforts & energies will go misguided and misdirected. Planning identifies the action that would lead to desired goals quickly & economically.

Planning is looking ahead: Planning is done for future. It requires peeping in future, analyzing it and predicting it. Thus planning is based on forecasting. It is a mental predisposition for things to happen in future.

 

CHARACTERISTICS OF PLANNING Planning is an intellectual process: Planning

is a mental exercise involving creative thinking, sound judgments and imagination. It is not a mere guesswork but a rotational thinking. A manager can prepare sound plans only if he has sound judgments, foresight and imagination.

Planning is the primary function of management: Planning lays foundation for other functions of management. It serves as a guide for organizing, staffing, directing and controlling. All the functions of management are performed within the framework of plans laid out. Therefore planning is the basic or fundamental function of management.

CHARACTERISTICS OF PLANNING Planning is a Continuous Process: Planning

is a never ending function due to the dynamic business environment. Plans are also prepared for specific period of time and at the end of that period, plans are subjected to revaluation and review in the light of new requirements and changing conditions. Planning never comes into end till the enterprise exists issues, problems may keep cropping up and they have to be tackled by planning effectively.

Planning is all Pervasive: It is required at all levels of management and in all departments of enterprise. Of course, the scope of planning may differ from one level to another.

CHARACTERISTICS OF PLANNING The top level may be more concerned about

planning the organization as a whole whereas the middle level may be more specific in departmental plans and the lower level plans implementation of the same.

Planning is designed for efficiency: Planning leads to accomplishment of objectives at the minimum possible cost. It avoids wastage of resources and ensures adequate and optimum utilization of resources. A plan is worthless or useless if it does not value the cost incurred on it. Therefore planning must lead to saving of time, effort and money. Planning leads to proper utilization of men, money, materials, methods and machines.

CLASSIFICATION OF PLANNING At a general level, there are three kinds of

organizational plans:1. Strategic Plans: A general plan outlining

decisions of resource allocation, priorities and action steps necessary to reach strategic goals. This plan covers a longer span of time. This involves upper level management.

2. Tactical Plans: A plan aimed at achieving tactical goals and developed to implement parts of a strategic plan. These plans involve upper and middle level management, and compared with strategic plans, have a somewhat shorter time horizon.

CLASSIFICATION OF PLANNING3. Operational Plan: These plans focuses on

carrying out tactical plans to achieve operational goals. These are developed by middle and lover level

managers, and these plans have a short term focus and relatively narrow in scope.

According to the time frame of plan, Planning can be classified as-

1. Short Range Plan: A plan that generally covers upto a year or less than a year.

2. Long Range Plan: A plan that covers more than a year and above.

CLASSIFICATION OF OPERATIONAL PLAN1. Single use plan: A plan which can be used

for a single time only is known as single use plan. It is a plan which is developed to carry out a course of action that is not likely to be repeated in the future.

2. Standing plan: These plans are used again and again and the plan does not loose its effectiveness because of its repetitive use.

3. Goal: A plan expressed in terms of results to be achieved is known as goal.

ADVANTAGES OF PLANNING

1. Planning minimizes uncertainties: Business is full of uncertainties. There are risks of various types due to uncertainties. Planning helps in reducing uncertainties of future as it involves anticipation of future events. Although future cannot be predicted with cent percent accuracy but planning helps management to anticipate future and prepare for risks by necessary provisions to meet unexpected turn of events.

2. Planning facilitates coordination: Planning revolves around organizational goals. All activities are directed towards common goals. There is an integrated effort throughout the enterprise in various departments and groups. It leads to better co-ordination.

ADVANTAGES OF PLANNING3. Planning improves employee’s morale:

Planning creates an atmosphere of order and discipline in organization. Employees know in advance what is expected of them and therefore conformity can be achieved easily. This encourages employees to show their best and also earn reward for the same. Planning creates a healthy attitude towards work environment which helps in boosting employees moral and efficiency.

4. Planning helps in achieving wealth: Effective planning secures economy since it leads to orderly allocation of resources to various operations. It also facilitates optimum utilization of resources which brings economy in operations. It also avoids wastage of resources by selecting most appropriate use that will contribute to the objective of enterprise.

ADVANTAGES OF PLANNING5. Planning facilitates controlling: Planning

facilitates existence of certain planned goals and standard of performance. It provides basis of controlling. We cannot think of an effective system of controlling without existence of well thought out plans.

6. Planning encourages innovation: In the process of planning, managers have the opportunities of suggesting ways and means of improving performance. Planning is basically a decision making function which involves creative thinking and imagination that ultimately leads to innovation of methods and operations for growth and prosperity of the enterprise.

DISADVANTAGES OF PLANNING Internal Limitations: There are several

limitations of planning. Some of them are inherit in the process of planning like rigidity and other arise due to shortcoming of the techniques of planning and in the planners themselves.

1.Time consuming: Planning is a time consuming process because it involves collection of information, it’s analysis and interpretation thereof. This entire process takes a lot of time specially where there are a number of alternatives available. Therefore planning is not suitable during emergency or crisis when quick decisions are required.

DISADVANTAGES OF PLANNING2. Expensive: Collection, analysis and evaluation of

different information, facts and alternatives involves a lot of expense in terms of time, effort and money. According to Koontz and O’Donell, ’ Expenses on planning should never exceed the estimated benefits from planning. ’

External limitations of Planning: Political Climate- Change of government from

Congress to some other political party, etc. Labor Union- Strikes, lockouts Technological changes- Modern techniques and

equipments, computerization. Policies of competitors Natural Calamities- Earthquakes and floods. Changes in demand and prices 

BARRIERS TO GOAL SETTING AND PLANNING As part of managing the goal-setting and

planning processes, managers must understand the barriers that can disrupt them. Managers must also know how to overcome the barriers. Major barriers are-

Inappropriate goals Improper reward system Dynamic and complex environment Reluctance to establish goals Resistance to change Constraints

OVERCOMING THE BARRIERS Understanding the purposes of goals and

planning Communication and participation Consistency, revision and updating Effective reward system.

Thank You