Subject: Management Concepts and Organizational Behaviour

Subject Code: MC-101 Author: Dr. Karam Pal

Lesson No: 04 Vetter: Dr. B. S. Bodla

PLANNING
Objectives : The objectives of this lesson are to understand and the nature and
process of planning; to appreciate, why it is necessary to do
planning; to understand the merits and demerits of planning; to grasp
the principles of planning and to understand the various kinds and
level of plans.

Lesson Structure:
4.1 The Concept of Planning
4.2 Myths about Planning
4.3 Nature and Scope of Planning
4.4 Importance of Planning
4.5 Advantages and Limits of Planning
4.6 Measures to Overcome Limitations of Planning
4.7 Basic Principles of Planning
4.8 Categories and Levels of Planning
4.9 Essential Steps in Planning
4.10 Summary
4.11 Self Assessment Questions
4.12 Suggested Readings

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4.1 THE CONCEPT OF PLANNING
Planning is the most fundamental function of management. An organization
can succeed in effective utilization of its human financial and material
resources only when its management decides in advance its objectives, and
methods of achieving them. Without it purposive and coordinated effort is
not possible, and what results are chaos, confusion and wastage of
resources. Planning involves determination of objectives of the business,
formation of programmes and courses of action for their attainment,
development of schedules and timings of action and assignment of
responsibilities for their implementation. Planning thus precedes all efforts
and action, as it is the plans and programmes that determine the kind of
decisions and activities required for the attainment of the desired goals. It
lies at the basis of all other managerial functions including organizing,
staffing, directing and controlling. In the absence of planning, it will be
impossible to decide what activities are required, how they should be
combined into jobs and departments, who will be responsible for what kind
of decisions and actions, and how various decisions and activities are to be
coordinated. And, in the absence of organizing involving the above
managerial activities, staffing cannot proceed, and directing cannot be
exercised. Planning is also an essential prerequisite for the performance of
control function, as it provides criteria for evaluating performance.
Planning thus precedes all managerial functions.

Definition of Planning : Planning is the process of deciding in advance

what is to be done, who is to do it, how it is to be done and when it is to be
done. It is the process of determining a course of action, so as to achieve
the desired results. It helps to bridge the gap from where we are, to where
we want to go. It makes it possible for things to occur which would not

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otherwise happen. Planning is a higher order mental process requiring the
use of intellectual faculties, imagination, foresight and sound judgment.
According to Koontz, O'Donnell and Weihrich, "Planning is an
intellectually demanding process; it requires the conscious determination
of courses of action and the basing of decisions on purpose, knowledge and
considered estimates".

Planning is a process which involves anticipation of future course of events

and deciding the best course of action. It is a process of thinking before
doing. To plan is to produce a scheme for future action; to bring about
specified results, at specified cost, in a specified period of time. It is
deliberate attempt to influence, exploit, bring about, and control the nature,
direction, extent, speed and effects of change. It may even attempt
deliberately to create change, remembering always that change (like
decision) in any one sector will in the same way affect other sectors.
Planning is a deliberate and conscious effort done to formulate the design
and orderly sequence actions through which it is expected to reach the
objectives. Planning is a systematic attempt to decide a particular course of
action for the future, it leads to determination of objectives of the group
activity and the steps necessary to achieve them. Thus, it can be said that
planning is the selecting and relating of facts and the making and using of
assumptions regarding the future in the visualization and formulation of
proposed activities believed necessary to achieve desired results.

Planning is thus deciding in advance the future state of business of an

enterprise, and the means of attaining it. Its elements are :

1. What will be done – what are the objectives of business in the short
and in the long run?

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 2. What resources will be required – This involves estimation of the
available and potential resources, estimation of resources required
for the achievement of objectives, and filling the gap between the
two, if any.

3. How it will be done – This involves two things : (i) determination of

tasks, activities, projects, programmes, etc., required for the
attainment of objectives, and (ii) formulation of strategies, policies,
procedures, methods, standard and budgets for the above purpose.

4. Who will do it – It involves assignment of responsibilities to various

managers relating to contributions they are expected to make for the
attainment of enterprise objectives. This is preceded by the breaking
down of the total enterprise objectives into segmental objectives,
resulting into divisional, departmental, sectional and individual
objectives.

5. When it will be done – It involves determination of the timing and

sequence, if any, for the performance of various activities and
execution of various projects and their parts.

4.2 MYTHS ABOUT PLANNING

There are certain commonly prevalent myths and fallacies about planning.
An attempt is being made to highlight some of the important concepts of
planning by way of its distinguishing features, so as to clarify the
misconceptions:

(i) Planning does no attempt to make future decisions : Planning

choosing of the more desirable future alternatives open to a
company, is the process so that better decisions may be made.

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 Planning provides a frame of reference within which the present
decisions are to be made. At the same time, a plan often leads to
additional but related decisions. For example, a college plan to
introduce a new degree or diploma, necessitates the need for
decisions like what should be the duration of the course leading to
the degree or diploma, together with detailed curricula in the specific
courses to be included, the system of evaluation of examination, and
the necessary practical training, if any, etc.

(ii) Planning is not just forecasting or making projections : Forecasts

are mere estimates of the future, and indicate what may or may not
happen. However, corporate planning goes beyond these forecasts
and asks questions like :

(a) Are we in right business?

(b) What are our basic goals and objectives?

(c) When shall our present products become obsolete?

(d) Are our markets expanding or shrinking?

(e) Do we want to merge or go for takeover?

(iii) Planning is not a static process : Indeed, plans are obsolete as soon as
they are executed, because the environment assumed in their preparation
may have already changed. Planning is a continuous process. It involves
continuous analysis and adjustments of the plans and even objectives in the
context of changing circumstances.

4.3 NATURE AND SCOPE OF PLANNING

The nature of planning can be understood by focusing on its following

aspects :

1. Planning is a Continuous Process

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 Planning deals with the future, and future, by its very nature, is
uncertain. Although the planner bases his plans on an informed and
intelligent estimate of the future, the future events may not turnout to
be exactly as predicted. This aspect of planning makes it a
continuous process. Plans tend to be a statement of future intentions
relating to objectives and means of their attainment. They do not
acquire finality because revisions are needed to be made in them in
response to changes taking place in the internal as well as external
environment of enterprise. Planning should, therefore, be a
continuous process and hence no plan is final, it is always subject to
a revision.

2. Planning concerns all Managers

It is the responsibility of every manager to set his goals and

operating plans. In doing so, he formulates his goals and plans
within the framework of the goals and plans of his superior. Thus,
planning is not the responsibility of the top management or the staff
of planning department only; all those who are responsible for the
achievement of results, have an obligation to plan into the future.
However, managers at higher levels, being responsible for a
relatively larger unit of the enterprise, devote a larger part of their
time to planning, and the time span of their plans also tends to be
longer than that of managers at lower levels. It shows that planning
acquires greater importance and tends to the longer in the future at
higher than at lower management levels.

3. Plans are arranged in a Hierarchy

Plans are first set for the entire organization called the corporate
plan. The corporate plan provides the framework for the formulation

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 of divisional departmental and sectional goals. Each of these
organizational components sets its plans laying down the
programmes, projects, budgets, resource requirements, etc. The
plans of each lower component are aggregated into the plans of
successively higher component until the corporate plan integrates all
component plans into a composite whole. For example, in the
production department, each shop superintendent sets his plans,
which are successively integrated into the general foremen's, works
manager's and production manager's plans. All departmental plans
are then integrated in the corporate plan. Thus, there is a hierarchy of
plans comprising the corporate plan, divisional/department plans,
sectional plans and individual manger's unit plans.

4. Planning Commits an Organization into the Future

Planning commits an organization into the future, as past, present

and future is tied in a chain. An organization’s objectives, strategies,
policies and operating plans affect its future effectiveness, as
decisions made and activities undertaken in the present continue to
have their impact into the future. Some of the plans affect the near
future, while others affect it in the long run. For example, plans for
product diversification or production capacity affect a company long
into the future, and are not easily reversible, whereas plans relating
to the layout of its office locations can be changed with relatively
less difficulty in the future. This focuses on the need for better and
more careful planning.

5. Planning is Antithesis of States Quo

Planning is undertaken with the conscious purpose of attaining a

position for the company that would not be accomplished otherwise.

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 Planning, therefore, implies change in organizational objectives,
policies, products, marketing strategies and so forth. However,
planning itself is affected by unforeseen environmental changes. It,
therefore, needs examination and re-examination, continual
reconsideration of the future, constant searching for more effective
methods and improved results.

Planning is thus an all pervasive, continuous and dynamic process. It

imposes on all executives a responsibility to estimate and anticipate
the future, prepare the organization to cope with its challenges as
well as take advantage of the opportunities created by it, while at the
same time, influence tomorrow's events by today's pre-emptive
decisions and actions.

4.4 IMPORTANCE OF PLANNING

While planning does not guarantee success in organizational

objectives, there is evidence that companies that engaged in formal
planning consistently performed better than those with none or
limited formal planning and improved their own performance over a
period of time. It is very rare for an organization to succeed solely
by luck or circumstances. Some of the reasons as to why planning is
considered a vital managerial function are given below :

1. Planning is essential in modern business : The growing

complexity of the modern business with rapid technological
changes, dynamic changes in the consumer preferences and
growing tough competition necessities orderly operations, not
only in the current environment but also in the future

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 environment. Since planning takes a future outlook, it takes
into account the possible future developments.

2. Planning affects performance : A number of empirical

studies provide evidence of organizational success being a
function of formal planning, the success being measured by
such factors as return on investment, sales volume, growth in
earnings per share and so on. An investigation of firms in
various industrial products as machinery, steel, oil, chemicals
and drugs revealed that companies that engaged in formal
planning consistently performed better than those with no
formal planning.

3. Planning puts focus on objectives : The effectiveness of

formal planning is primarily based upon clarity of objectives.
Objectives provide a direction and all planning decisions are
directed towards achievement of these objectives. Plans
continuously reinforce the importance of these objectives by
focusing on them. This ensures maximum utility of
managerial time and efforts.

4. Planning anticipates problems and uncertainties : A

significant aspect of any formal planning process in collection
of relevant information for the purpose of forecasting the
future as accurately as possible. This would minimize the
chances of haphazard decisions. Since the future needs of the
organization are anticipated in advance, the proper acquisition
and allocation of resources can be planned, thus minimizing
wastage and ensuring optimal utility of these resources.

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 5. Planning is necessary to facilitate control : Controlling
involves the continual analysis and measurement of actual
operations against the established standards. These standards
are set in the light of objectives to by achieved. Periodic
reviews of operations can determine whether the plans are
being implemented correctly. Well developed plans can aid
the process of control in two ways.

First, the planning process establishes a system of advance

warning of possible deviations from the expected
performance. Second contribution of planning to the control
process is that it provides quantitative data which would make
it easier to compare the actual performance in quantitative
terms, not only with the expectations of the organization but
also with the industry statistics or market forecasts.

6. Planning helps in the process of decision making : Since

planning specifies the actions and steps to be taken in order to
accomplish organizational objectives, it serves as a basis for
decision-making about future activities. It also helps
managers to make routine decisions about current activities
since the objectives, plans, policies, schedules and so on are
clearly laid down.

4.5 ADVANTAGES AND LIMITATIONS OF PLANNING

The importance of formal planning has already been discussed. A vigorous

and detailed planning programme helps managers to be future oriented. It
gives the mangers some purpose and direction. A sound blue print for plans

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with specific objective and action statements has numerous advantages for
the organization which are as follows :

1. Focuses Attention on Objectives : Since all planning is directed

towards achieving enterprise objectives, the very act of planning
focuses attention on these objectives. Laying down the objectives is
the first step in planning. If the objectives are clearly laid down, the
execution of plans will also be directed towards these objectives.

2 Ensures Economical Operation : Planning involves a lot of mental

exercise which is directed towards achieving efficient operation in
the enterprise. It substitutes joint directed effort for uncoordinated
piecemeal activity, even flow of work for uneven flow, and
deliberate decisions for snap judgement costs. This helps in better
utilization of resources and thus minimizing costs.

3. Reduces Uncertainty : Planning helps in reducing uncertainties of

future because it involves anticipation of future events. Effective
planning is the result of deliberate thinking based on facts and
figures. It involves forecasting also. Planning gives an opportunity to
a business manager to foresee various uncertainties which may be
caused by changes in technology, taste and fashion of the people,
etc. Sufficient provision is made in the plans to offset these
uncertainties.

4. Facilitates Control : Planning helps the managers in performing

their function of control. Planning and control are inseparable in the
sense that unplanned action cannot be controlled because control
involves keeping activities on the predetermined course by rectifying
deviations from plans. Planning helps control by furnishing
standards of control. It lays down objectives and standards of

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 performance which are essential for the performance of control
function.

5. Encourages Innovation and Creativity : Planning is basically the

deciding function of management. It helps innovative and creative
thinking among the managers because many new ideas come to the
mind of a manager when he is planning. It creates a forward looking
attitude among the managers.

6. Improves Motivation : A good planning system ensures

participation of all managers which improves their motivation. It
improves the motivation of workers also because they know clearly
what is expected of them. Moreover, planning serves as a good
training device for future managers.

7. Improves Competitive Strength : Effective planning gives a

competitive edge to the enterprise over other enterprises that do not
have planning or have ineffective planning. This is because planning
may involve expansion of capacity, changes in work methods,
changes in quality, anticipation tastes and fashion of people and
technological changes, etc.

8. Achieves Better Coordination : Planning secures unity of direction

towards the organizational objectives. All the activities are directed
towards the common goals. There is an integrated effort throughout
the enterprise. It will also help in avoiding duplication of efforts.
Thus, there will be better coordination in the organization.

Limitations of Planning : Sometimes, planning fails to achieve the

expected results. There are many causes of failure of planning in practice.
These are discussed below :

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1. Lack of reliable data : There may be lack of reliable facts and
figures over which plans may be based. Planning loses its value if
reliable information is not available or if the planner fails to utilize
the reliable information. In order to make planning successful, the
planner must determine the reliability of facts and figures and must
base his plans on reliable information only.

2. Lack of initiative : Planning is a forward looking process. If a

manager has a tendency to follow rather than lead, he will not be
able to make good plans. Therefore, the planner must take the
required initiative. He should be an active planner and should take
adequate follow up measure to see that plans are understood and
implemented properly.

3. Costly process : Planning is time consuming and expensive process.

This may delay action in certain cases. But it is also true that if
sufficient time is not given to the planning process, the plans so
produced may prove to be unrealistic. Similarly, planning involves
costs of gathering and analyzing information and evaluation of
various alternatives. If the management is not willing to spend on
planning, the results may not be good.

4. Rigidity in organizational working : Internal inflexibility in the

organization may compel the planners to make rigid plans. This may
deter the managers from taking initiative and doing innovative
thinking. So the planners must have sufficient discretion and
flexibility in the enterprise. They should not always be required to
follow the procedures rigidly.

5. Non-acceptability of change : Resistance to change is another

factor which puts limits on planning. It is a commonly experienced

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 phenomenon in the business world. Sometimes, planners themselves
do not like change and on other occasions they do not think it
desirable to bring change as it makes the planning process
ineffective.

6. External limitations : The effectiveness of planning is sometimes

limited because of external factors which are beyond the control of
the planners. External strategies are very difficult to predict. Sudden
break-out of war, government control, natural havocs and many
other factors are beyond the control of management. This makes the
execution of plans very difficult.

7. Psychological barriers : Psychological factors also limit the scope

of planning. Some people consider present more important than
future because present is certain. Such persons are psychologically
opposed to planning. But it should not be forgotten that dynamic
mangers always look ahead. Long-range wellbeing of the enterprise
cannot be achieved unless proper planning is done for future.

4.6 MEASURES TO OVERCOME LIMITATIONS OF PLANNING

Some people say that planning is a mere ritual in the fast changing
environment. This is not a correct assessment on managerial planning.
Planning may be associated with certain difficulties such as non-availability
of data, lethargy on the part of the planners, rigidity of procedures,
resistance to change and changes in external environment. But these
problems can be overcome by taking the following steps :

1. Setting Clear-cut Objectives : The existence of clear-cut objectives

is necessary for efficient planning. Objectives should not only be
understandable but rational also. The overall objectives of the

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 enterprise must be the guiding pillars for determining the objectives
of various departments. This would help in having coordinated
planning in the enterprise.

2. Management Information System : An efficient system of

management information should be installed so that all relevant facts
and figures are made available to the mangers before they perform
the planning function. Availability of right type of information will
help in overcoming the problems of complete understanding of the
objectives and resistance to change on the part of the subordinates.

3. Carefully Premising : The planning premises constitute a

framework within which planning is done. They are the assumptions
of what is likely to happen in future. Planning always requires some
assumptions to be made regarding future happenings. In other words,
it is a prerequisite to determine future settings such as marketing,
pricing, Government policy, tax structure, business cycle, etc. before
giving the final shape to the overall business plan. Due weightage
should be given to the relevant factors at the time of premising. It
may be pointed out that the premises which may be of strategic
significance to one enterprise may not be of equal significance to
another because of size, nature of business, nature of market, etc.

4. Business Forecasting : Business is greatly influenced by economic,

social, political and international environment. The management
must have a mechanism of forecasting changes in such environment.
Good forecasts will contribute to the effectiveness of planning.

5. Dynamic Managers : The persons concerned with the task of

planning should be dynamic in outlook. They must take the required
initiative to make business forecasts and develop planning premises.

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 A manager should always keep in mind that planning is looking
ahead and he is making plans for future which is highly uncertain.

6. Flexibility : Some element of flexibility must be introduced in the

planning process because modern business operates in an
environment which keeps on changing. For achieving effective
results, there should always be a scope to make necessary addition,
deletion, or alternation in the plans as is demanded by the
circumstances.

7. Availability of Resources : Determination and evaluation of

alternatives should be done in the light of resources available to the
management. Alternatives are always present in any decision
problem. But their relative plus and minus points are to be evaluated
in the light of the resources available. The alternative which is
chosen should not only be concerned with the objectives of the
enterprise, but also capable of being accomplished with the help of
the given resources.

8. Cost-Benefit Analysis : The planners must undertake cost-benefit

analysis to ensure that the benefits of planning are more than the cost
involved in it. This necessarily calls for establishing measurable
goals, clear insight to the alternative courses of action available,
premising reasonable and formulation of derivative plans keeping in
view the fact that environment is fast changing.

4.7 BASIC PRINCIPLES OF PLANNING

The important principles of planning are as follows:

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1. Principle of contribution to objective : The purpose of plans and
their components is to develop and facilitate the realization of
organizational aims and objectives. Long-range plans should be
interwoven with medium-range plans which, in turn, should be
meshed with short-range ones in order to accomplish organizational
objectives more effectively and economically.

2. Principle of limiting factors : Planning must take the limiting

factors (manpower, money, machines, materials, and management)
into account by concentrating on them when developing alternative
plans, strategies, policies, procedures and standards.

3. Principle of pervasiveness of planning : Planning is found at all

levels of management. Strategic planning or long-range planning is
related to top management, while intermediate and short-range
planning is the concern of middle and operative management
respectively.

4 Principle of navigational change : This principle requires that

managers should periodically check on events and redraw plans to
maintain a course towards a desired goal. It is the duty of the
navigator to check constantly, whether his ship is following the right
direction in the vast ocean to reach the distinction as scheduled. In
the same way, a manager should check his plans to ensure that these
are processing as required. He should change the direction of his
plans if he faces unexpected events. It is useful if plans contain an
element of flexibility. It is the responsibility of the manager, to adapt
and change the direction of plans, to meet the challenge of
constantly changing environment that could not be foreseen.

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 5. Principle of flexibility : Flexibility should be built into
organizational plans. Possibility of error in forecasting and decision-
making and future uncertainties is the two common factors which
call for flexibility in managerial planning. The principal of flexibility
states the management should be able to change an existing plan
because of changes in environment, without due cost or delay, so
that activities keep moving towards established goals. Thus, an
unexpected slump in demand for a product will require change in
sales plan as well ass production plan. Change in these plans can be
introduced, only when these possess the characteristics of flexibility.
Adapting plans to suit future uncertainties or changing environment
is easier if flexibility is an important consideration while planning.

4.8 CATEGORIES AND LEVELS OF PLANNING

Planning can be classified on different bases which are discussed below :

1. Strategic and Functional Planning : In strategic or corporate

planning, the top management determines the general objectives of
the enterprise and the steps necessary to accomplish them in the light
of resources currently available and likely to be available in the
future. Functional planning, on the other hand, is planning that
covers functional areas like production, marketing, finance and
purchasing.

2. Long-range and short-range planning : Long-range planning sets

long-term goals of the enterprise and then proceeds to formulate
specific plans for attaining these goals. It involves an attempt to
anticipate, analyze and make decisions about basic problems and
issues which have significance reaching well beyond the present

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 operating horizon of the enterprise. Short-range planning, on the
other hand, is concerned with the determination of short-term
activities to accomplish long-term with the determination of short-
term activities to accomplish long-term objectives. Short range
planning relates to a relatively short period and has to be consistent
with the long-range plans. Operational plans are generally related to
short periods.

3. Adhoc and Standing Planning : Adhoc planning committees may

be constituted for certain specific matters, as for instance, for project
planning. But standing plans are designed to be used over and over
again. They include organizational structure, standard procedures,
standard methods etc.

4. Administrative and Operational Planning : Administrative

planning is done by the middle level management which provides
the foundation for operative plans. Operative planning, on the other
hand, is done by the lower level mangers to put the administrative
plans into action.

5. Physical Planning : It is concerned with the physical location and

arrangement of building and equipment.

6. Formal and Informal Planning : Various types of planning

discussed above are of formal nature. They are carried on
systematically by the management. They specify in black and white
the specific goals and the steps to achieve them. They also facilitate
the installation of internal control systems. Informal planning, on the
other hand, is mere thinking by some individuals which may become
the basis of formal planning in future.

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LEVELS OF PLANNING

In management theory it is usual to consider that there are three basic level
of planning, though in practice there may be more than three levels of
management and to an extent there will be some overlapping of planning
operations. The three level of planning are as under :

1. Top Level Planning : Also known as overall or strategic planning,

top level planning is done by the top management, i.e. board of
directors or governing body. It encompasses the long-range
objectives and policies of organization and is concerned with
corporate results rather than sectional objective. Top level planning
is entirely long-range and is inextricably linked with long-term
objectives. It might be called the 'what' of planning.

2. Second Level Planning : Also known as tactical planning, it is done

by middle level mangers or department heads. It is concerned with
'how' of planning. It deals with deployment of resources to the best
advantage. It is concerned mainly, but not exclusively, with long-
range planning, but its nature is such that the time spans are usually
shorter than those of strategic planning. This is because its attentions
are usually devoted to the step by step attainment of the
organization’s main objectives. It is, in fact, oriented to functions
and departments rather than to the organization as a whole.

3. Third Level Planning : Also known as operational or activity

planning, it is the concern of department managers and supervisors.
It is confined to putting into effect the tactical or departmental plans.
It is usually for short-term and may be revised quite often to be in
tune with the tactical planning.

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4.9 ESSENTIAL STEPS IN PLANNING

Planning is a process which embraces a number of steps to be taken. It is an

intellectual exercise and a conscious determination of courses of action.
Therefore, it requires a serious thought on numerous factors necessary to be
considered in making plans. Facts are collected and analyzed and the best
out of all is chosen and adopted. The planning process, valid for one
organization and for one plan, may not be valid for all other organizations
or all types of plans, because various factors that go into planning process
may differ from organization to organization or plan to plan. For example,
planning process for a large organization may not be the same as for a small
organization. The steps generally involved in planning are as follows :

1. Establishing Verifiable Goals or Set of Goals to be Achieved :

The first step in planning is to determine the enterprise objectives.
These are most often set by upper level or top managers, usually
after a number of possible objectives have been carefully considered.
There are many types of objectives managers may select: a desired
sales volume or growth rate, the development of a new product or
service, or even a more abstract goal such as becoming more active
in the community. The type of goal selected will depend on number
of factors: the basic mission of the organization, the values its
managers hold, and the actual and potential ability of the
organization.

2. Establishing Planning Premises : The second step in

planning is to establish planning premises, i.e. certain assumptions
about the future on the basis of which the plan will be intimately
formulated. Planning premises are vital to the success of planning as

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 they supply economic conditions, production costs and prices,
probable competitive behaviour, capital and material availability,
governmental control and so on.

3. Deciding the planning period : Once upper-level managers have

selected the basic long-term goals and the planning premises, the
next task is to decide the period of the plan. Business varies
considerably in their planning periods. In some instances plans are
made for a year only while in others they span decades. In each case,
however, there is always some logic in selecting a particular time
range for planning. Companies generally base their period on a
future that can reasonably be anticipated. Other factors which
influence the choice of a period are as follows: : (a) lead time in
development and commercialization of a new product; (b) time
required to recover capital investments or the pay back period; and
(c) length of commitments already made.

4. Findings Alternative Courses of Action : The fourth step is

planning is to search for and examining alternative courses of action.
For instance, technical know-how may be secured by engaging a
foreign technician or by training staff abroad. Similarly, products
may be sold directly to the consumer by the company's salesmen or
through exclusive agencies. There is seldom a plan for which
reasonable alternatives do not exit, and quite often an alternative that
is not obvious proves to be the best.

5. Evaluating and Selecting a Course of Action : Having sought

alternative courses, the fifth step is to evaluate them in the light of
the premises and goals and to select the best course or courses of
action. This is done with the help of quantitative techniques and
operations research.

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 6. Developing Derivative plans : Once the plan has been formulated,
its broad goals must be translated into day-to-day operations of the
organization. Middle and lower-level managers must draw up the
appropriate plans, programmes and budgets for their sub-units.
These are described as derivative plans. In developing these
derivative plans, lower-level managers take steps similar to those
taken by upper-level managers – selecting realistic goals, assessing
their sub-units particular strength and weaknesses and analyzing
those parts of the environment that can affect them.

7. Measuring and Controlling the Progress :Obviously, it is foolish

to let a plan run its course without monitoring its progress. Hence the
process of controlling is a critical part of any plan. Managers need to
check the progress of their plans so that they can (a) take whatever
remedial action is necessary to make the plan work, or (b) change
the original plan if it is unrealistic.

2.10 SUMMARY

Planning has a primacy over other management functions and is a pervasive

element in organizations. It involves the major activities such as setting
objectives, determining policies and making decisions. Planning is a higher
order mental process requiring the use of intellectual faculties, imagination,
foresight and sound judgement. By planning managers minimize
uncertainty and help focus the sight of their organization on its goals.

2.11 SELF ASSESSMENT QUESTIONS :

1. "Managerial planning seeks to achieve a coordinated structure of

operations". Comment.

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2. "Without planning an enterprise would soon disintegrate, its actions would
be as random as leaves scampering before an autumn wind, and its
employee as confused as ants in an upturned ant hill". Comment

3. What do you understand by planning? Define its objectives and assess its
importance. What should be done to overcome its limitations?

4. "Planning involves a choice between alternative courses of action".

Comment briefly.

5. Describe in detail the steps involved in the planning process.

2.12 SUGGESTED READINGS

1. Kootnz & O'Donnell, Principles of Management.

2 J.S. Chandan, Management Concepts and Strategies.

6. Arun Kumar and R. Sharma, Principles of Business Management.

7. Sherlerkar and Sherlerkar, Principles of Management

8. B.P. Singh, Business Management and Organizations

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