UNIT - 4

PLANNING

Business Studies- XII

TOPICS COVERED : PLANIING

MAIN CONTENTS After going through this unit, the student/learner

would be able to :

 Concept, Importance Understand the concept of planning

and Limitations Describe the importance of planning
Understand the limitations of planning
 Planning process Describe the steps in the process of planning
 Single use and Develop an understanding of single use and
standing plans, standing plans
Objectives Strategy, Describe objectives, policies, strategy,
Policy, Procedure, procedure, method, rule, budget and programme
Method, Rule, Budget as types of plans
and Programme
PLANNING : MEANING
“PLANNING IS THINKING BEFORE HAND”
PLANNING : DEFINITION

“Planning
is
deciding in advance
 what to do,

 how to do it,

 when to do it ,

and
 who is to do it .”
- Koontz and O’Donnell
PLANNING : DEFINITION

PLANNING
can also be defined as
o“Setting objectives for a given time period,

oFormulating various courses of action to achieve them,

&
oThen selecting the best possible alternative from among
the various courses of action available."
FEATURES OF PLANNING

 Planning Focuses on Achieving Objectives

 Planning is a Primary Function of Management
 Planning is Pervasive
 Planning is Continuous
 Planning is Futuristic
 Planning Involves Decision Making
 Planning is a Mental Exercise
FEATURES OF PLANNING
 1. PLANNING FOCUSES ON ACHIEVING OBJECTIVES

 Every organization is set up

with a GENERAL PURPOOSE

 ACTIVITIES are undertaken to

achieve GENERAL goals

 Again SPECIFIC GOALS are

set out for each activities
{Thus, planning is purposeful}
FEATURES OF PLANNING
 2. PLANNING IS A PRIMARY FUNCTION OF MANAGEMENT

 Base for all other functions of management

 All are performed within the framework of plans
{Thus, planning precedes other functions of management}

JUST FOR YOU

The various functions of management are
interrelated & equally important.

However, planning provides the basis of all

other functions
FEATURES OF PLANNING
 3. PLANNING IS PERVASIVE
 It is required at ALL LEVELS of management
as well as
in ALL DEPARTMENTS of the organization.
 It is not the exclusive function of TOP MANAGEMENT nor of any
PARTICULAR DEPARTMENT.

PLEASE LOOK HERE

{Scope of planning differs at different levels}
Top Management undertakes
[planning for the organization as a whole}
Middle Management does
{Departmental planning}
At the Lower Level
{Day to day operational planning is done by the supervisors}
FEATURES OF PLANNING
 4. PLANNING IS CONTINUOUS
 Plans are prepared for a specific period of time
{for a month, a quarter, or a year}
 At the end of each period there is a need for a NEW PLAN to be drawn
on the basis of
New requirements & Future conditions
{Thus, planning is a continuous process}

PLEASE DON’T SKIP ME

{continuity of planning is related with
the planning cycle}
Planning cycle refers that a plan
is framed
it is implemented &
is followed by another plan, and so on.
FEATURES OF PLANNING
 5. PLANNING IS FUTURISTIC
 The purpose of planning is to meet future events effectively to the best
advantage of the organization.
 Hence, it essentially involves looking ahead and preparing for the
future.
 That is why it implies :-
peeping into the future
analyzing it and
predicting it

I AM WAITING FOR YOU

{Planning is forward looking function & based
on Forecasting}
Through forecasting
Future events & conditions are anticipated
and plans are drawn accordingly
FEATURES OF PLANNING
 6. PLANNING INVOLVES DECISION MAKING
 Planning essentially involves choice from among various alternatives &
activities.
 It presupposes the existence of alternatives.
 It, thus, involves
thorough examination & evaluation of each alternatives &
choosing the most appropriate one.

I AM HERE
{When the need of planning arises ?}

If there is only one possible course of action, there is no

need of planning because there is no choice

Therefore,
the need of planning arises only when alternatives are
available.
FEATURES OF PLANNING
 7. PLANNING IS A MENTAL EXERCISE
 Planning requires application of the mind involving
Foresight
Intelligent imagination &
Sound judgement.
 It requires logical and systematic thinking rather than guess work or
wishful thinking.

PLEASE DON’T FORGET ME

{Thinking / Doing activity ?}
Planning is basically
an intellectual activity of
thinking rather than doing,
because
it determines the action to be taken.
IMPORTANCE OF PLANNING
 Planning Provides Direction
 Planning Reduces the Risk of Uncertainty
 Planning Reduces Overlapping & Wasteful Activities
 Planning Promotes Innovative Ideas
 Planning Facilitates Decision Making
 Planning Establishes Standard for Controlling
IMPORTANCE OF PLANNING
 1. PLANNING PROVIDES DIRECTION
 By stating in advance HOW WORK IS TO BE DONE
planning provides DIRECTION for ACTION.
 Through well defined goals under planning, employees are aware of
- what the organization has to do &
- what they must do to achieve those goals

YOU MUST KNOW

Through planning departments and
individuals in the organization are able to work
in COORDINATION.

 If there was no planning employees would be

working in different directions & the
organization would not be able to achieve its
desired goals.
IMPORTANCE OF PLANNING

 2. PLANNING REDUCES THE RISK OF UNCERTAINTY

 Planning is an activity which enables a manager
-to look ahead &
-anticipate changes
 By deciding advance the task to be performed , planning
shows the WAY TO DEAL with CHANGES & UNCERTAIN EVENTS.

DO YOU KNOW ?
Changes or events cannot be
eliminated

But they can be anticipated &

Managerial responses to them

can be developed
IMPORTANCE OF PLANNING
 3. PLANNING REDUCES OVERLAPPING & WASTEFUL ACTIVITIES
 Planning serves as the basis of
- Coordination the activities & efforts of different
- Divisions, Department & Individuals
 It helps in avoiding CONFUSIONS & MISUNDERSTANDING .
 It also ensures clarity in thought and action and, hence, minimizes
USELESS AND REDUNDANT activities.

JUST FOR YOU

Because of planning, work is carried
out smoothly without interruptions.

It also makes easier to detect

inefficiencies and take corrective
measures to deal with them.
IMPORTANCE OF PLANNING
 4. PLANNING PROMOTES INNOVATIVE IDEAS
 Since planning is the FIRST FUNCTION OF MANAGEMENT
NEW IDEAS can take the shape of CONCRETE PLANS
 It is the most challenging activity for the management as it guides all
future actions leading to growth and prosperity of business
IMPORTANCE OF PLANNING
 5. PLANNING FACILITATES DECISION MAKING
 Planning helps the manager to look into the future and
make a choice from amongst various course of action.
 The manager has to evaluate each alternative & select most viable
proposition.

PLEASE LOOK HERE

Planning involves
setting targets &
predicting future conditions,
THUS, helping in taking rational
decision.
IMPORTANCE OF PLANNING
 6.PLANNING ESTABLISHES STANDARD FOR CONTROLLING
 Planning provides the basis for controlling AS
it involves setting standards
against which the actual performance is
measured & compared under controlling and
if there is any deviation corrective action is taken.

PLEASE DON’T SKIP ME

 We can say that planning is a prerequisite for
controlling.

 If there are no goals and standards, then

finding deviations which are a part of
controlling would not be possible.

 The nature of corrective action required

depends upon the extent of deviations from the
standard.
LIMITATIONS
 Planning Leads to Rigidity
 Planning may not works in a Dynamic Environment
 Planning Reduces Creativity
 Planning involves Huge Costs
 Planning is a Time Consuming Process
 Planning does not Guarantee Success
LIMITATIONS
 1. PLANNING LEADS TO RIGIDITY
 Plans are drawn up with SPECIFIC GOALS to be achieved
within a SPECIFIC TIME frame.
 These plans then decide the FUTURE COURSE OF ACTION.
 Managers are NOT IN A POSITION TO CHANGE it.
 This kind of plans may create difficulty.

I AM WAITING FOR YOU

{what to do about planning?}
Managers need to be given some
flexibility to be able to COPE with the
changed cicumstances.

Otherwise it may not turn out to be in the

interest of the organization.
LIMITATIONS
 2. PLANNING MAY NOT WORKS IN A DYNAMIC ENVIRONMENT
 Plans are based on the forecasting of BUSINESS ENVIRONMENT.
 Business environment is dynamic {nothing is constant} which makes it
difficult to accurately assess future trends.
 Therefore, planning cannot foresee everything and there may be
obstacles to effective planning.

I AM HERE
The environment consists of a number of dimensions
Economic
Political
Physical
Legal
Social
The organization has to constantly adapt itself to
changes in the environment.
LIMITATIONS
 3. PLANNING REDUCES CREATIVITY
 Plans are DRAWN UP by the TOP MANAGEMENT and rest of the
members just IMPLEMENT them.
 As a consequence, Middle Management and Other Decision Makers
are neither allowed to deviate from plans nor are they permitted to act
their own.
 Thus, much of the initiative or creativity gets lost or reduced.

PLEASE DON’T DON’T FORGET ME

Most of the time, employees do not even
ATTEMPT to formulate plans.

They only carry out orders.

Thus, planning in a way reduces creativity

since people tend to think along the same
lines as others.
LIMITATIONS
 4. PLANNING INVOLVES HUGE COSTS
 When plans are drawn up huge costs are involved in their formulation.
 The costs may in terms of TIME & MONEY .
 For example, checking accuracy of facts may involve lot of time &
money.

YOU MUST KNOW

The costs incurred sometimes may not
justify the benefits derived from the
plans.

There are a number of INCIDENTAL

COSTS as well, like
Boardroom Meetings
Discussion with Professional experts &
Preliminary Investigations to find out
the viability of plans
LIMITATIONS
 5. PLANNING IS A TIME CONSUMING PROCESS
 Sometimes plans to be drawn up take so much of time
that there is not much time left
for their implementation.
 Because of its long process, it cannot face sudden emergencies.
LIMITATIONS
 6.PLANNING DOES NOT GUARANTEE SUCCESS
 Usually, managers have a tendency to rely on PREVIOSLY TRIED &
TESTED successful plans.
 But it is not always true that just because a plan has WORKED
BEFORE it will work again.
 Besides, there are so MANY OTHER FACTORS to be considered.
 This kind of complacency and FALSE SENSE OF SECURITY may actually
lead to FAILURE INSTEAD OF SUCCESS.

DO YOU KNOW ?
The success of an enterprise is possible only
when plans are properly drawn up and
implemented.

Any plan needs to be translated into action

or
it becomes meaningless.
 1. Setting Objectives

2. Developing Premises
P
R
P 3. Identifying Alternative Courses of Action
O
L
C
A
E 4. Evaluating Alternative Courses
N
S
N
S
I 5. Selecting an Alternative
N
G
6. Implementing a Plan

7. Follow up Action
PLANNING PROCESS
 1. SETTING OBJECTIVES
 The first and foremost step of planning process is setting objectives.
{Objectives or goals specify what the organization wants to achieve}
 Objectives may be set for the whole organization and each department
and unit within the organization.
 How all departments would contribute to the organizational goals is the
plan that is to be drawn.
JUST FOR YOU
{OBJECTIVES}
Objectives should be stated for all departments, units and
employees.
Departments/units then need to set their own objectives
within the broad framework of the organization’s philosophy.
{ROLE OF MANAGERS}
Managers must contribute ideas and participate in the
objectives setting process.
They must also understand how their actions contribute to
achieving objectives.
PLANNING PROCESS
 2. DEVELOPING PREMISES
 Planning is concerned with the FUTURE which is UNCERTAIN.
 Every planner is bound to use CONJECTURE about what might happen
in future.
 Therefore, the manager is required to make certain assumptions about
the future {These assumptions are called premises}.

PLEASE LOOK HERE

Assumptions are the base material upon which plans
are to be drawn .
The base material may be in the form of
 Forecasts
 Existing plans
Any past information about policies
All managers involved in planning should be familiar
with and use the same assumptions.
PLANNING PROCESS
 3. IDENTIFYING ALTERNATIVE COURSES OF ACTION
 Once OBJECTIVES are set & ASSUMPTIONS are made.
 The next step would be ACT UPON THEM.
 There may be MANY WAYS to act and achieve objectives.
 Now the planners are required to IDENTIFIED VARIOUS ALTERNATIVES.

PLEASE DON’T SKIP ME

The course of action which may be taken could be
either ROUTINE or INNOVATIVE.
 A innovative course may be adopted by involving
more people & sharing their ideas .
IF THE PROJECT IS IMPORTANT, then more
alternatives should be generated & thoroughly
discussed amongst the members of the
organization.
PLANNING PROCESS
 4. EVALUATING ALTERNATIVE COURSES
 At this step pros and cons of each alternative is to be analyzed.
 Each course will have many variables which have to be weighted
against each other.
 The positive and negative aspects of each proposal need to be
evaluated in the light of the objective to be achieved.

I AM WAITING FOR YOU

To evaluate the financial plans, it is very
common to use the RISK-RETURN TRADE-
OFF
The more risky the investment , the higher
the return it is likely to give
 To evaluate such proposals detailed
calculations of
EARNINGS, EARNING PER SHARE,
INTEREST, TAXES AND DIVIDENDS are
made and decisions taken
PLANNING PROCESS
 5. SELECTING AN ALTERNATIVE
 This is the POINT OF REAL DECISION MAKING.
 The best plan has to be adopted and implemented.
 The ideal plan, of course, would be the most feasible, profitable and
with least negative consequences.

I AM HERE
Most plans are not always be subjected to a
MATHEMATICAL analysis.
In such cases, subjectivity and the manager’s
experience, judgement and at times, intuition
play an important part in selecting the most
viable alternative.
SOMETIMES A COMBINATION OF PLANS may
be selected instead of one best course.
PLANNING PROCESS
 6. IMPLEMENTING THE PLAN
 This is the step where OTHER MANAGERIAL FUNCTIONS also come into
the picture.
 The step is concerned with putting the plan into action ,i.e., DOING
WHAT IS REQUIRED.

PLEASE DON’T FORGET ME

If there is a plan to increase
production then
-More labour
-More machinery
will be required.

This step would also involve

organizing for labour and purchase
of machinery.
PLANNING PROCESS
 7. FOLLOW -UP ACTION
 At this step, it is ensured that plans are being implemented according
to schedule.
 To monitor the plans is equally important to ensure that objectives are
achieved.

YOU MUST KNOW

The moment there appears to be changes in the assumptions
on which the plans are based, there should be corresponding
changes in the plans also.
TYPES OF PLANS
 PLANS can be classified into several types depending on
USE
&
the LENGTH OF THE PLANNING PERIOD

 TYPES OF PLANS
1. NEITHER STANDING NOR SINGLE-USED PLANS
2. STANDING PLAN
3. SINGLE-USE PLAN
TYPES OF PLANS
 NEITHER STANDING NOR SINGLE-USED PLANS
It refers to a plan which usually is not classified as single-use or
standing plan.
 FEATURES
 It is general plan prepared by the top management .
 It is generally related to RESOURCE ALLOCATION & SERVE AS A GUIDE
FOR OVERALL PLANNING.

 IT INCLUDES
 Objectives

 Strategy
TYPES OF PLANS
 STANDING PLANS
It refers to a plan which is used for activities that occur regularly
over a period of time.
 FEATURES
 It is designed to ensure that internal operations of an organization run
smoothly .
 It is such a plan greatly enhance efficiency in routine decision-making.
 It is usually developed once but is modified from time to time to meet
business needs as required.
 IT INCLUDES
 Policies

 Procedures

 Methods

 Rules
TYPES OF PLANS
 SINGLE- USE PLANS
It refers to a plan that is developed for a one time event or project.
 FEATURES
 It is developed for Non-recurring situations
 It may span a week or a month
 It consists of details, including the names of employees who are
responsible for doing the work and contributing the single use plan.

 IT INCLUDES
 Budgets
 Programmes
 Projects
STANDING V/S SINGLE USE PLANS

BASIS OF STANDING PLANS SINGLE USE PLANS

DIFFERENCE
1. MEANING It refers to a plan which is used It refers to a plan which is
for activities that occur regularly developed for a one -time event
over a period of time. or project.

2. PERIOD It is usually developed once and It may span a week or a month.

modified time to time as per
requirement.

3. OBJECT To enhance efficiency in routine To manage certain specific event

decision-making. successfully.
4. TYPES Policy, Procedure, Method Budget and Programme
And Rule

NOTE : Objectives & strategy are not classified as single-use or standing plans
TYPES OF PLANS

1 .
Objectives

2. Strategy

3. Policy

4. Procedure

5. Method
6. Rule

7. Programme

8. Budget
TYPES OF PLANS
 1. OBJECTIVES
 Objectives are the end points which the management seek to
achieve.
 Objectives need to be expresses in a specific terms that is quantified
and is to be achieved within a given period.
 Objectives are usually set by top management of the organization
and focus on board and general issues
 For example, an organization may have objective of increasing sales
by 10%.
DO YOU KNOW ?
Objectives serve as a guide for OVERALL BUSINESS
PLANNING
All other managerial activities are directed towards
achieving objectives
Different departments or units in the organization
may have their own objectives
TYPES OF PLANS
 2. STRATEGY
 A strategy is a comprehensive plan for accomplishing an
organization’s objectives take business environment into
consideration.
 It provides the broad contours of an organization’s business and
defines the organization’s direction and scope in the long-run.
 It includes determining Long-term objectives, Adopting a particular
course of action, and Allocating resources necessary to achieve the
objectives.

JUST FOR YOU

{Major Strategic Decisions}
Whether the organization will continue to be in the same line of business
Combine new lines of activities with the existing business
Seek to acquire a top position in the same line of business
TYPES OF PLANS
 3. POLICIES
 Policies are general statements that guide thinking or channelize
energies towards a particular direction.
 Policies define the board parameters with which a manager may
function.
 The manager may use his/her discretion to interpret and apply a
policy.
 For example, the company may have a Recruitment Policy, Pricing
Policy within which objectives are set and decisions are made.

PLEASE LOOK HERE

{Policies ranging from Major co’s policies to Minor policies}
 Major company policies are for all to know
Customers, Clients, Competitors, etc.
Minor policies are applicable to
Insiders and contain minute details of information vital to the employees
of an organization
TYPES OF PLANS
 4. PROCEDURES
 Procedure is a set of specified steps to be followed to carry out a
particular activity. {They detail the exact manner in which any work to
be performed.}
 A procedure is specified in a chronological order .

 They are generally meant for insiders to follow.

 For example, there may be a procedure for requisitioning supplies

before production.
PLEASE DON’T SKIP ME
The sequence of steps or actions to be taken are generally to
enforce a policy and attain pre-determined objectives.

Policies and procedures are interlinked with each other.

Procedures are steps to be carried out within a broad policy

framework.
TYPES OF PLANS
 5. METHOD
 Method refers to that plan which determines how different activities
of a procedure are performed.
 Selection of proper method saves TIME, MONEY AND EFFORT and
increases efficiency.

I AM WAITING FOR YOU

The method may vary from task to task .
For imparting training to employees at various levels
different methods can be adopted, such as:

For higher level management Orientation

Programmes, Lectures and Seminars can be organized

For supervisory level, On-the-Job Training methods

and Work Oriented methods are appropriate.
TYPES OF PLANS
 6. RULE
 RULE refers to the plan that tells us what is to be done and what is
not to be done in a particular situation.
 They do not allow any flexibility or discretion.

 Whatever is written in the rules has to be followed without any

second thought.
 For example, ‘No Smoking in the Factory’ is a rule and applicable to
everybody and it must be followed.

I AM HERE
Rules are usually the simplest type of plans
because there is no compromise or change unless a
policy decision is taken.
TYPES OF PLANS
 7. PROGRAMME
 Programmes are detailed statements about a project which outlines
the OBJECTIVES, POLICIES, PROCEDURES, RULES, TASKS, HUMAN
and PHYSYCAL RESOURCES required and the BUDGET to implement
any course of action.
 The programmes can be of different types, such as, Production
Programme, Training Programme, Sales Promotion Programme, etc.

PLEASE DON’T FORGET ME

Programmes will include the entire gamut of activities as
well as the organization’s policy and how it will contribute
to the overall business plan.

The minutes details are worked out ,i.e., Procedures,

Rules, Budgets, within the broad policy framework.
TYPES OF PLANS
 8. BUDGET
 A budget is a statement of expected results expressed in
numerical terms.
 It is a plan which quantifies future facts and figures.

 For example, a sales budget may forecast the sales of different

products in each area for a particular month.

YOU MUST KNOW

{Budget as Control Device}
Since budget represents all items in NUMBERS, it becomes easier
to compare actual figures with expected figures and take corrective
action subsequently.
Thus, a budget is also a CONTROL DEVICE from which deviations can
be taken care of.
{Cash Budget as a Tool in the Management of Cash}
It helps the management of cash to Plan & Control the use of cash
The Cash Position is determined by the Cash Budget, i.e.,
CASH INFLOWS – CASH OUTFLOWS = Surplus/Deficiency
UNIT 4

PLANNING

-; THE END ;-