CHAPTER 4 PLANNING
Que. Define the term Planning.
Ans. Planning is deciding in advance what is to be done in future. This is the primary function of management. It involves determination of goals as well as activities required to achieve the goals. Planning is deciding in advance-what to do, how to do it, when & by whom. It bridges the gap between where we are and where we want to go. The process of planning includes determination of goals, looking for various alternative courses of action to achieve these goals & selecting the best possible alternate.
Que. Explain the features of planning?
Ans. Following are the main features of planning
1) Planning focuses on achieving objectives:-Planning involve determination of goals as well as the activities to be undertaken to achieve the goals. Thus, planning is helpful in achieving corporate objectives.
2) Planning is a primary function of management:-Planning lays down the base for other functions of management. All other managerial functions are performed according to planning. Other functions of management are also equally important but planning is the first function of management.
3) Planning is pervasive activity:-Planning is required at all levels of management as well as in all departments of the organization. It is not the exclusive function of the top management. Planning is required at all levels & in all departments.
4) Planning is continuous: The completion of one plan may require the other plan to be undertaken. Hence, planning is never ending activity. It is a continuous process. Management has to frame new plans according to changed circumstances.
5) Planning is futuristic:-Planning is looking ahead and preparing for the future. The purpose of planning is to meet future events effectively to the best advantage of an organization. Thus, planning is a forward looking functions based on forecasting.
6) Planning involves decision making:-It involves choice from various alternatives & activities. If there are no alternatives available there is no need of planning. Planning involves examination & evaluation of available alternatives and choosing the best one.
7) Planning is a mental exercise: In Planning decisions are taken as the basis of data and information available and the best alternative is chosen. It invites vision, the ability to forecast etc. This is how planning is an intellectual process.
8) Planning is flexible: Planning is flexible in nature. Planning is based upon some future assumptions. These assumptions may not come true. Under the circumstances original planning must be changed according to new situations.
Que. What is importance of Planning?
Ans. Following points highlight the importance of planning
1) Planning reduces the risks of uncertainty:- Business organizations have to function in an uncertain environment. Planning helps to reduce the risk of uncertainty. Although future event cannot be predicted with absolute accuracy, planning helps management to anticipate future & Prepare for future uncertainties.
2) Planning provides directions::-Before preparation of plan objectives to be achieved must be clearly stated. If objectives are not clear the actual activities undertaken may lead to wastage of efforts and inefficiency. Planning exercise make the objective clear. Proper planning safes the organization from diversion & Prevents need less actions.
3) Planning leads to economy & efficiency:-Proper planning reduces wastage & avoids need less efforts. It is decided in advance how a particular work will be done. Availability of advance information leads to economy & efficiency.
4) Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition.
5) Planning promotes innovative ideas:-Planning provides opportunity to the managers to give suggestions for improving their performance & achieving higher targets. This promotes creativity among managers.
6) Planning establishes standards for controlling:-Plans provide the standard against which actual performance is measured. Without planning there cannot be any control. If actual performance is not as per the planned performance, proper action should be taken to correct deviation.
Que. What are the limitations of planning?
Ans. Following the main limitations of planning
(i) Planning leads to rigidity: Planning makes the working of the organization rigid. In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. This judgment kind of rigidity in plans may create difficulty. Managers need to be given some flexibility to be able to cope with the changed circumstances.
(ii) Planning may not work in a dynamic environment: The business environment is dynamic, nothing is constant. There are certain factors which are beyond the control of management but affect the future performance of the business. E.g. Change in technology, change in government policies, natural calamities. Planning will be effected by changes in these factors
(iii) Planning reduces creativity: - Planning puts the managerial activities in a rigid framework. All the activities are carried out according to the plans. Employees are more concerned with the observance of rules & regulations laid down in plans. Existing plans are followed irrespective of changes in the environment.
(iv) Planning involves huge costs: - Planning is an expensive & time-consuming process. Planning involve collection of information, its analysis & interpretation. The process may take considerable time & money. If these costs are not justified by the benefits derived from the plan it may have deterring effect on the enterprise.
(v) Planning is a time-consuming process: - Planning requires time for thinking, analyzing the situation and designing the final plan. Planning is not useful in emergency situations where immediate decisions are to be made.
(vi) Lack of accuracy: - Planning is based upon forecasting. Plans may not reflect the real situation. There is always probability in planning. Future is uncertain so one cannot blindly realize on planning.
(vii) Psychological Barriers:- There are some inbuilt psychological difficulties. For example, people have preference for the present as against future as future is relatively uncertain. Also planning involves change and adjustment to such changes. And people tend to resist change.
(viii) Human elements: -Planning suffers from certain limitations due to the human factors present in the planners themselves. For example they may prepare reports and instructions too elaborate to be of any practical use.
(ix) Limited practical value:- Some people are of the opinion that planning is too much theoretical to be of any practical use. Instead, other means can be used to get the desired results by meeting the situation as and when they arise.
(x) External limitations: - Following are the some external limitations of planning
a) Change in Govt. Policy: - Every organization is affected by the government policies. Change in govt. Taxation policies, license policies may affect the business to a large extent.
b) Change in fashion: - This also affects the demand of a product in the market. Hence all plans will fail if there is change in fashion.
c) Emergency situation: - During the emergency situation like war, riot, flood etc. all plans will be affected.
Que. Explain the planning process?
Ans. The following steps are common in the formulation of a plan.
(i) Setting Objectives:- The first step in planning process is to set objectives. Objectives point out the end result of planning. Objectives provide guidelines for various decision-makings. Therefore, plan objectives must be cleared & specific. Objectives should be decided on the basis of analysis of relevant information and data. All the future problems that are likely to arise should be undertaken in advance before determination of objectives.
(ii) Developing Premises:- It means establishing assumptions of plan. It involves forecasting future conditions & events, which are likely to have bearing on the objectives. Certain assumptions about the condition expected to prevail for example, demand for goods, cost of raw material, Govt. Policies, etc. are derived from forecast. These are known as planning premises, which are the basis of plans.
(iii) Identifying alternative courses of action: - Once organizational objectives have been clearly stated a manager should list as many available alternatives as possible for reaching those objectives. For instance, alternatives may be market development, product development, strategic alliance, joint venture and so on.
(iv) Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative. Each course will have many variables which have to be weighed against each other. The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved.
(v) Selecting an alternative: - This is the fifth step of planning process. Many alternatives are available. Planning requires that each alternative should be analysed, taking into account the relevant facts of each alternative. Merits & demerits as well as consequences of selection of each alternative must be examined before making a choice.
(vi) Implement the plan:- Once plans have been developed, they are ready to be put into action. The plans should furnish the organization with both long range and short range direction for activity. Obviously, the organization does not directly benefit from the planning process until this step is carried out.
(vii) Follow up:- Planning is a continuous process. Plans are to be revived on the basis of changed circumstances. Plans are revised according to the need of time. Review of plans helps the managers to draw subsequent plans.
Que. Explain different types of plans.
Ans. Depending upon the nature and scope, plans can be broadly classified in the following manner.
Goals
A goal is a desired state of affairs, which an organization wants to realize. Goals are collective ends towards which organizations direct their energies and activities. Goals may be short term or long term in nature. Short term goals are supposed to support and merge into long term goals.
Objectives.
Objectives are the goals or predetermined results towards which organizational efforts are directed. Objectives therefore, indicate the end points of planning. They are the results to be achieved. As for as possible, objectives expressed in quantitative, measurable, concrete terms, in the form of a written statement of desired results to be achieved within a given time period. To be more specific, objectives need to meet five specifications. An objective should
(1) Relate to a single specific topic
(2) Relate to a result, not to an activity to be performed
(3) Be measurable and stated in quantitative terms whenever feasible
(4) Contain a time deadline for its achievement; and
(5) Be challenging but achievable.
Polices
A policy specifies the organisation’s general response to a designated problem or situation. Policies are guides to thinking. Policies are plans in that they are general statements or understandings, which guide or channel thinking decision-making. Since policies are guides to decision-making, it follows that they must allow for some discretion, otherwise they would be rules.
Procedures
Procedures as the type of plan is guide to action and not guide to thinking. As guide to actions, procedure specifies the manner and chronological sequence for handling future activities of the organizations. It outlines the steps to be followed in particular circumstances.
Rules
A rule is also type of plan in as much as it determines and requires some kind of positive or negative compliance on the part of subordinates. Rules are also chosen form amongst the many available alternatives. Being guide to actions rule are more close to procedure than policy. This rule allows no deviation from a stated course of action and in no way interferes with the rest of the procedure for handling orders. Thus if in a factory “ No Smoking” is a rule, all employees must follow it strictly and refrain form smoking.
Methods
Methods are formalized and standardized way of accomplishing repetitive and routine jobs. They are designed to keep operations running on planned and desired lines to prevent confusion to ensure economy and efficiency. Methods provide detailed and specific guidance for day to day action. Methods are helpful in the simplification, standardization and simplification, and systematization of work. They serve as uniform norms to guide and control operations and performance.
Programmes.
Programmes are a combination 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. They are ordinarily supported by budgets. They may be major or minor programmes.
Budget
Budget is a single use plan. It may be defined as a statement containing expected results in numerical terms relating to certain activities of the enterprise for a definite period of time. A budget may be expressed either in financial terms or in terms of labour hours, or any other numerically measurable term. It may deal with operations, as the expense budget does; it may reflect capital outlays, as the capital expenditures budget does; or it may show cash flow as the cash budget does. Budget is also a control device. However making a budget is clearly planning process whereas its administration to compel events to conform to budgeted figures is control process. Budget will hardly serve the purpose of a control device if it does not reflect plans.
Que. Distinguish between the followings
I. Policies and objectives II. Policies and Procedure
III. Policies and Rules IV Rules and Methods
Ans.
Difference between Policies and objectives
Policy
Objective
1. Policy is derived from some objective.
1. Objective is more fundamental
2. Policy is guide to thinking in decision making.
2. Objectives are the end-points of planning.
3. Policy is often related to one particular objective.
3. An objective may require laying down more than one policy.
4. Policies are formulated at the top level, middle level and lower level management.
4. Objectives are determined by the owners or top management of the business
Difference between Policies and Procedure
Policy
Procedure.
A policy is a guide to thinking in decision making.
It is derived from objectives.
It leaves some scope for the manager’s discretion.
It is expressed in the form of a general statement.
Policy is flexible
A procedure is a guide to action.
It is derived from policy.
It gives no discretion to person concerned with its implementation.
It is expressed in more specific terms.
It is more or less rigid.
Difference between Policies and Rules
Policies
Rules
A general statement.
Guide to decision making.
Lay down management attitude.
Flexible many have some exceptions.
Provide discretion during implementation
The most specific statement.
Guide to behavior.
Indicates what should or should not be done.
Rigid, no exceptions or devaluations.
Provide no scope for discretion
Difference between Rules and Methods
Rules
Methods
1. Taboos and norms;
1. Standard ways of doing things;
2. Seeks to ensure discipline;
2. Seeks to increase efficiency of operations;
3. No standardization required;
3. Standardisation is essential;
4. Based on common sense, objectives
4. Based on research and analysis;
5. Penalty attached to violation;
5. No penalty for violation;
6. Regarded as official and authoritative;
6. Regarded as logical or rational;
7. Associated with control;
7. Not associated directly with control;
8. Relate to behaviour of individuals and groups.
8. Relate to physical and other tasks.
Que. Define the term Planning.
Ans. Planning is deciding in advance what is to be done in future. This is the primary function of management. It involves determination of goals as well as activities required to achieve the goals. Planning is deciding in advance-what to do, how to do it, when & by whom. It bridges the gap between where we are and where we want to go. The process of planning includes determination of goals, looking for various alternative courses of action to achieve these goals & selecting the best possible alternate.
Que. Explain the features of planning?
Ans. Following are the main features of planning
1) Planning focuses on achieving objectives:-Planning involve determination of goals as well as the activities to be undertaken to achieve the goals. Thus, planning is helpful in achieving corporate objectives.
2) Planning is a primary function of management:-Planning lays down the base for other functions of management. All other managerial functions are performed according to planning. Other functions of management are also equally important but planning is the first function of management.
3) Planning is pervasive activity:-Planning is required at all levels of management as well as in all departments of the organization. It is not the exclusive function of the top management. Planning is required at all levels & in all departments.
4) Planning is continuous: The completion of one plan may require the other plan to be undertaken. Hence, planning is never ending activity. It is a continuous process. Management has to frame new plans according to changed circumstances.
5) Planning is futuristic:-Planning is looking ahead and preparing for the future. The purpose of planning is to meet future events effectively to the best advantage of an organization. Thus, planning is a forward looking functions based on forecasting.
6) Planning involves decision making:-It involves choice from various alternatives & activities. If there are no alternatives available there is no need of planning. Planning involves examination & evaluation of available alternatives and choosing the best one.
7) Planning is a mental exercise: In Planning decisions are taken as the basis of data and information available and the best alternative is chosen. It invites vision, the ability to forecast etc. This is how planning is an intellectual process.
8) Planning is flexible: Planning is flexible in nature. Planning is based upon some future assumptions. These assumptions may not come true. Under the circumstances original planning must be changed according to new situations.
Que. What is importance of Planning?
Ans. Following points highlight the importance of planning
1) Planning reduces the risks of uncertainty:- Business organizations have to function in an uncertain environment. Planning helps to reduce the risk of uncertainty. Although future event cannot be predicted with absolute accuracy, planning helps management to anticipate future & Prepare for future uncertainties.
2) Planning provides directions::-Before preparation of plan objectives to be achieved must be clearly stated. If objectives are not clear the actual activities undertaken may lead to wastage of efforts and inefficiency. Planning exercise make the objective clear. Proper planning safes the organization from diversion & Prevents need less actions.
3) Planning leads to economy & efficiency:-Proper planning reduces wastage & avoids need less efforts. It is decided in advance how a particular work will be done. Availability of advance information leads to economy & efficiency.
4) Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition.
5) Planning promotes innovative ideas:-Planning provides opportunity to the managers to give suggestions for improving their performance & achieving higher targets. This promotes creativity among managers.
6) Planning establishes standards for controlling:-Plans provide the standard against which actual performance is measured. Without planning there cannot be any control. If actual performance is not as per the planned performance, proper action should be taken to correct deviation.
Que. What are the limitations of planning?
Ans. Following the main limitations of planning
(i) Planning leads to rigidity: Planning makes the working of the organization rigid. In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. This judgment kind of rigidity in plans may create difficulty. Managers need to be given some flexibility to be able to cope with the changed circumstances.
(ii) Planning may not work in a dynamic environment: The business environment is dynamic, nothing is constant. There are certain factors which are beyond the control of management but affect the future performance of the business. E.g. Change in technology, change in government policies, natural calamities. Planning will be effected by changes in these factors
(iii) Planning reduces creativity: - Planning puts the managerial activities in a rigid framework. All the activities are carried out according to the plans. Employees are more concerned with the observance of rules & regulations laid down in plans. Existing plans are followed irrespective of changes in the environment.
(iv) Planning involves huge costs: - Planning is an expensive & time-consuming process. Planning involve collection of information, its analysis & interpretation. The process may take considerable time & money. If these costs are not justified by the benefits derived from the plan it may have deterring effect on the enterprise.
(v) Planning is a time-consuming process: - Planning requires time for thinking, analyzing the situation and designing the final plan. Planning is not useful in emergency situations where immediate decisions are to be made.
(vi) Lack of accuracy: - Planning is based upon forecasting. Plans may not reflect the real situation. There is always probability in planning. Future is uncertain so one cannot blindly realize on planning.
(vii) Psychological Barriers:- There are some inbuilt psychological difficulties. For example, people have preference for the present as against future as future is relatively uncertain. Also planning involves change and adjustment to such changes. And people tend to resist change.
(viii) Human elements: -Planning suffers from certain limitations due to the human factors present in the planners themselves. For example they may prepare reports and instructions too elaborate to be of any practical use.
(ix) Limited practical value:- Some people are of the opinion that planning is too much theoretical to be of any practical use. Instead, other means can be used to get the desired results by meeting the situation as and when they arise.
(x) External limitations: - Following are the some external limitations of planning
a) Change in Govt. Policy: - Every organization is affected by the government policies. Change in govt. Taxation policies, license policies may affect the business to a large extent.
b) Change in fashion: - This also affects the demand of a product in the market. Hence all plans will fail if there is change in fashion.
c) Emergency situation: - During the emergency situation like war, riot, flood etc. all plans will be affected.
Que. Explain the planning process?
Ans. The following steps are common in the formulation of a plan.
(i) Setting Objectives:- The first step in planning process is to set objectives. Objectives point out the end result of planning. Objectives provide guidelines for various decision-makings. Therefore, plan objectives must be cleared & specific. Objectives should be decided on the basis of analysis of relevant information and data. All the future problems that are likely to arise should be undertaken in advance before determination of objectives.
(ii) Developing Premises:- It means establishing assumptions of plan. It involves forecasting future conditions & events, which are likely to have bearing on the objectives. Certain assumptions about the condition expected to prevail for example, demand for goods, cost of raw material, Govt. Policies, etc. are derived from forecast. These are known as planning premises, which are the basis of plans.
(iii) Identifying alternative courses of action: - Once organizational objectives have been clearly stated a manager should list as many available alternatives as possible for reaching those objectives. For instance, alternatives may be market development, product development, strategic alliance, joint venture and so on.
(iv) Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative. Each course will have many variables which have to be weighed against each other. The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved.
(v) Selecting an alternative: - This is the fifth step of planning process. Many alternatives are available. Planning requires that each alternative should be analysed, taking into account the relevant facts of each alternative. Merits & demerits as well as consequences of selection of each alternative must be examined before making a choice.
(vi) Implement the plan:- Once plans have been developed, they are ready to be put into action. The plans should furnish the organization with both long range and short range direction for activity. Obviously, the organization does not directly benefit from the planning process until this step is carried out.
(vii) Follow up:- Planning is a continuous process. Plans are to be revived on the basis of changed circumstances. Plans are revised according to the need of time. Review of plans helps the managers to draw subsequent plans.
Que. Explain different types of plans.
Ans. Depending upon the nature and scope, plans can be broadly classified in the following manner.
Goals
A goal is a desired state of affairs, which an organization wants to realize. Goals are collective ends towards which organizations direct their energies and activities. Goals may be short term or long term in nature. Short term goals are supposed to support and merge into long term goals.
Objectives.
Objectives are the goals or predetermined results towards which organizational efforts are directed. Objectives therefore, indicate the end points of planning. They are the results to be achieved. As for as possible, objectives expressed in quantitative, measurable, concrete terms, in the form of a written statement of desired results to be achieved within a given time period. To be more specific, objectives need to meet five specifications. An objective should
(1) Relate to a single specific topic
(2) Relate to a result, not to an activity to be performed
(3) Be measurable and stated in quantitative terms whenever feasible
(4) Contain a time deadline for its achievement; and
(5) Be challenging but achievable.
Polices
A policy specifies the organisation’s general response to a designated problem or situation. Policies are guides to thinking. Policies are plans in that they are general statements or understandings, which guide or channel thinking decision-making. Since policies are guides to decision-making, it follows that they must allow for some discretion, otherwise they would be rules.
Procedures
Procedures as the type of plan is guide to action and not guide to thinking. As guide to actions, procedure specifies the manner and chronological sequence for handling future activities of the organizations. It outlines the steps to be followed in particular circumstances.
Rules
A rule is also type of plan in as much as it determines and requires some kind of positive or negative compliance on the part of subordinates. Rules are also chosen form amongst the many available alternatives. Being guide to actions rule are more close to procedure than policy. This rule allows no deviation from a stated course of action and in no way interferes with the rest of the procedure for handling orders. Thus if in a factory “ No Smoking” is a rule, all employees must follow it strictly and refrain form smoking.
Methods
Methods are formalized and standardized way of accomplishing repetitive and routine jobs. They are designed to keep operations running on planned and desired lines to prevent confusion to ensure economy and efficiency. Methods provide detailed and specific guidance for day to day action. Methods are helpful in the simplification, standardization and simplification, and systematization of work. They serve as uniform norms to guide and control operations and performance.
Programmes.
Programmes are a combination 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. They are ordinarily supported by budgets. They may be major or minor programmes.
Budget
Budget is a single use plan. It may be defined as a statement containing expected results in numerical terms relating to certain activities of the enterprise for a definite period of time. A budget may be expressed either in financial terms or in terms of labour hours, or any other numerically measurable term. It may deal with operations, as the expense budget does; it may reflect capital outlays, as the capital expenditures budget does; or it may show cash flow as the cash budget does. Budget is also a control device. However making a budget is clearly planning process whereas its administration to compel events to conform to budgeted figures is control process. Budget will hardly serve the purpose of a control device if it does not reflect plans.
Que. Distinguish between the followings
I. Policies and objectives II. Policies and Procedure
III. Policies and Rules IV Rules and Methods
Ans.
Difference between Policies and objectives
Policy
Objective
1. Policy is derived from some objective.
1. Objective is more fundamental
2. Policy is guide to thinking in decision making.
2. Objectives are the end-points of planning.
3. Policy is often related to one particular objective.
3. An objective may require laying down more than one policy.
4. Policies are formulated at the top level, middle level and lower level management.
4. Objectives are determined by the owners or top management of the business
Difference between Policies and Procedure
Policy
Procedure.
A policy is a guide to thinking in decision making.
It is derived from objectives.
It leaves some scope for the manager’s discretion.
It is expressed in the form of a general statement.
Policy is flexible
A procedure is a guide to action.
It is derived from policy.
It gives no discretion to person concerned with its implementation.
It is expressed in more specific terms.
It is more or less rigid.
Difference between Policies and Rules
Policies
Rules
A general statement.
Guide to decision making.
Lay down management attitude.
Flexible many have some exceptions.
Provide discretion during implementation
The most specific statement.
Guide to behavior.
Indicates what should or should not be done.
Rigid, no exceptions or devaluations.
Provide no scope for discretion
Difference between Rules and Methods
Rules
Methods
1. Taboos and norms;
1. Standard ways of doing things;
2. Seeks to ensure discipline;
2. Seeks to increase efficiency of operations;
3. No standardization required;
3. Standardisation is essential;
4. Based on common sense, objectives
4. Based on research and analysis;
5. Penalty attached to violation;
5. No penalty for violation;
6. Regarded as official and authoritative;
6. Regarded as logical or rational;
7. Associated with control;
7. Not associated directly with control;
8. Relate to behaviour of individuals and groups.
8. Relate to physical and other tasks.
