Planning
Introduction
In any business or organisational context, before undertaking any action, managers need to decide in advance what is to be done, how it is to be done, when it is to be done, and by whom it is to be done. This process of thinking before doing is known as Planning.
Planning is a fundamental function of management. It is the base upon which all other functions (organising, staffing, directing, controlling) are built. It bridges the gap from where we are to where we want to go.
It is a systematic activity which determines when and how the future activities would be carried out.
Concept
Planning is the process of deciding in advance what to do, how to do it, when to do it, and who is to do it. It involves setting objectives, developing premises, identifying and evaluating alternative courses of action, selecting the best alternative, and formulating derivative plans.
Essentially, planning is looking ahead. It is thinking before acting. It is a mental exercise that requires imagination, foresight, and sound judgement.
The concept of planning revolves around:
1. What to do: Defining the objectives or goals.
2. How to do it: Determining the course of action or strategy.
3. When to do it: Scheduling the activities.
4. Who is to do it: Assigning responsibilities.
Planning provides a framework for future actions and helps in making decisions today that will affect the future state of the organisation.
Example 1. A shoe manufacturing company in Agra wants to increase its market share by 15% in the next two years. They decide to launch a new range of affordable sandals targeting young adults and plan marketing campaigns through social media. Which management function does this entire process represent?
Answer:
This entire process represents Planning. It involves setting a future objective (increase market share), deciding how to achieve it (launch new product, social media marketing), and implicitly deciding when and who will do it.
Importance Of Planning
Planning offers several significant benefits to an organisation:
1. Planning provides Direction: By stating in advance how work is to be done, planning provides direction for action. If there were no planning, employees would be working in different directions, leading to chaos.
2. Planning reduces the Risk of Uncertainty: Planning enables managers to look ahead and anticipate changes. Although the future is uncertain, planning helps the manager to cope with uncertainty by anticipating changes and developing appropriate plans to deal with them.
3. Planning reduces Overlapping and Wasteful Activities: Planning serves as the basis of coordinating the activities and efforts of different divisions, departments, and individuals. It helps avoid confusion and misunderstanding, ensuring clarity in action.
4. Planning Promotes Innovative Ideas: Planning is the first function of management and involves thinking in advance. It encourages managers to think differently and creatively, leading to innovative ideas and methods of doing work.
5. Planning Facilitates Decision Making: Planning involves setting goals and evaluating alternative courses of action to achieve them. This process helps managers make rational decisions by considering all possible options and selecting the best one.
6. Planning Establishes Standards for Controlling: Planning provides the standards against which actual performance is measured. If performance is not in line with planned standards, corrective action can be taken. Thus, planning makes control possible.
Example 2. A startup wants to launch a new online grocery platform in Bengaluru. Before launching, they conduct market research, analyse competitors, estimate demand, and outline their operational steps. How does this exercise benefit the startup?
Answer:
This planning exercise benefits the startup in multiple ways: it helps them provide direction for their actions, reduce the risk of uncertainty by anticipating market reactions and competition, facilitate decision making about their strategy, and allows them to establish standards for controlling their progress against their launch plan.
Features Of Planning
The main features or characteristics of planning are:
1. Planning Contributes to Objectives: Planning is purposeful. It is directed towards achieving the objectives of the enterprise. Plans are always formulated with some objectives in mind.
2. Planning is Primary Function of Management: Planning is the basic function of management. No other function can be performed without planning. It precedes organising, staffing, directing, and controlling.
3. Planning is Pervasive: Planning is required at all levels of management (top, middle, and lower) and in all departments (production, finance, marketing, personnel). The scope of planning may differ, but planning is done by everyone.
4. Planning is Futuristic: Planning is looking ahead. It is done for the future. Its purpose is to bridge the gap between where we are today and where we want to be in the future.
5. Planning Involves Decision Making: Planning involves choosing from various alternatives. If there is only one possible course of action, planning is not required. The need for planning arises only when multiple alternatives exist.
6. Planning is a Mental Exercise: Planning requires application of mind involving foresight, intelligent imagination and sound judgement. It is not a guess work but a rational thinking process.
7. Planning is Continuous: Planning is a continuous process. Plans are prepared for a specific period, and at the end of that period, new plans are drawn up on the basis of new requirements and future conditions. There is a continuous planning cycle.
Limitations Of Planning
Despite its importance, planning has certain limitations:
1. Planning Leads to Rigidity: In a well-defined plan, the course of action is predetermined. This may reduce flexibility and ability to adjust to changing circumstances quickly. It can stifle individual initiative and creativity.
2. Planning May Not Work in a Dynamic Environment: The business environment is dynamic, constantly changing. Planning is based on assumptions about the future, and if these assumptions do not hold true, the plan may fail. Predicting the future with certainty is impossible.
3. Planning Reduces Creativity: Planning is done by top management, and others in the organisation merely implement these plans. This may reduce their own initiative and creativity as they are bound by the plans laid down.
4. Planning Involves Huge Costs: Planning is an expensive process in terms of time and money. Collection of information, analysis, and evaluation of alternatives involve considerable costs.
5. Planning is a Time-Consuming Process: Planning takes a lot of time, especially when developing premises, identifying and evaluating alternatives. Sometimes, there might not be enough time to plan thoroughly, or the opportunity may pass by the time planning is complete.
6. Planning Does Not Guarantee Success: The success of a plan depends on its proper implementation. Planning merely provides a base; it is not a guarantee of success. Sometimes, external factors beyond the control of the management may lead to failure even with sound planning.
Example 3. A mobile phone company planned to launch a new model with specific features based on market trends observed last year. However, just before the launch, a competitor introduced a phone with significantly advanced technology at a lower price. The company's launch plan became less effective. Which limitation of planning is highlighted here?
Answer:
This highlights the limitation that Planning May Not Work in a Dynamic Environment. The rapid change in technology and competitor actions made the initial plan less effective because the environment changed unexpectedly.
Planning Process
Planning is a systematic process involving a series of steps. These steps are generally followed in sequence, although in practice, there might be some overlap or iteration.
The typical steps in the planning process are:
1. Setting Objectives: This is the first and most crucial step. Objectives are the goals that the organisation wants to achieve. They should be specific, measurable, achievable, relevant, and time-bound (SMART). Objectives are set for the entire organisation and for each department or unit within it.
2. Developing Premises: Planning is done for the future, which is uncertain. Planning premises are the assumptions about the future conditions upon which the plan will be based. These include assumptions about interest rates, government policies, competitor behaviour, demand trends, etc. Selecting accurate premises is vital for effective planning.
3. Identifying Alternatives: Based on the objectives and premises, the manager needs to identify various possible courses of action or alternatives to achieve the objectives. There is usually more than one way to achieve a goal.
4. Evaluating Alternatives: Each identified alternative is evaluated based on its feasibility, profitability, cost, risk, and consequences. A detailed analysis of the pros and cons of each alternative is done.
5. Selecting an Alternative: After evaluating all alternatives, the most suitable one is selected. The choice is usually based on the criteria set during the evaluation phase (e.g., maximum profit with minimum risk). Sometimes, a combination of alternatives might be chosen.
6. Implementing the Plan: This step involves putting the selected plan into action. It requires assigning responsibilities, allocating resources, and coordinating activities. This is where the plan is converted into concrete action.
7. Follow-up Action: Planning does not end with the implementation. It is essential to monitor the plan, review its progress, and collect feedback. This helps in ensuring that the plan is proceeding as expected and in making necessary adjustments or changes if needed. Follow-up ensures the plan is effective.
Example 4. A confectionery company in Mumbai wants to introduce a new line of sugar-free sweets. They first decide their target sales volume for the first year. Then, they forecast sugar prices, competition, and consumer health consciousness. Next, they list options like using natural sweeteners, artificial sweeteners, or a blend. They analyse the cost and market acceptance for each option and pick the blend. They then start production and marketing. Finally, they track sales monthly to see if the target is met. Identify the steps of the planning process illustrated in this example.
Answer:
1. Setting Objectives: Deciding the target sales volume for the first year.
2. Developing Premises: Forecasting sugar prices, competition, and consumer health consciousness.
3. Identifying Alternatives: Listing options like using natural sweeteners, artificial sweeteners, or a blend.
4. Evaluating Alternatives: Analysing the cost and market acceptance for each option.
5. Selecting an Alternative: Picking the blend.
6. Implementing the Plan: Starting production and marketing.
7. Follow-up Action: Tracking sales monthly to see if the target is met.
Types Of Plans
Plans can be classified into different categories based on various factors like their duration, scope, specificity, and frequency of use. Understanding different types of plans helps managers use the appropriate planning tool for a given situation.
Common types of plans are:
1. Objectives: The desired future state that the organisation strives to achieve. They are the end results towards which all activities are directed. Objectives are specific and provide a direction.
2. Strategy: A comprehensive plan for accomplishing the objectives of the organisation and securing a competitive position. It includes determining long-term objectives, adopting a particular course of action, and allocating resources necessary to achieve the objectives.
3. Policy: General statements that guide decision making. Policies provide a framework for managerial action and ensure consistency. Examples: 'No smoking policy', 'Customer refund policy', 'Policy for employee promotion'.
4. Procedure: Stipulate the exact manner in which any work is to be performed. Procedures are sequential steps to carry out specific activities. Example: Procedure for purchasing raw materials, procedure for handling customer complaints.
5. Method: Provides the prescribed way or manner in which a task has to be performed considering the objective. Methods are more detailed than procedures, specifying how a single step of a procedure is to be carried out. Example: Method of calculating depreciation, method of filling a job application form.
6. Rule: Specific statements that inform what is to be done. Rules do not allow for any discretion. They are rigid and enforce discipline. Example: 'No late entry after 9 AM', 'Customers must wear masks'.
7. Programme: A comprehensive plan that coordinates a set of major activities. It includes objectives, policies, procedures, rules, tasks, budgets, and resources required to carry out a course of action. Examples: Construction of a shopping mall, launching a new product line.
8. Budget: A statement of expected results expressed in numerical terms. It is a quantitative plan. Examples: Sales budget, production budget, cash budget. Budgets are both planning and control devices.
Plans can also be classified based on their usage:
a) Single-Use Plans: Developed for activities that are not likely to be repeated in the future. Examples: Programmes, Budgets.
b) Standing Plans: Used over and over again for recurring activities. Examples: Policies, Procedures, Methods, Rules.
Example 5. A retail chain in India decides to open 50 new stores across Tier-2 cities in the next three years. They formulate detailed steps for selecting locations, recruiting staff, and stocking inventory for each new store. They also implement a strict 'no exchange without bill' guideline for all stores. Identify the types of plans mentioned.
Answer:
- Opening 50 new stores in three years is part of their overall Strategy and involves a Programme for expansion.
- The detailed steps for selecting locations, recruiting staff, etc., represent Procedures.
- The 'no exchange without bill' guideline is a Rule or a specific type of Policy.
Coordination — The Essence Of Management
While planning is a distinct function, its effective execution, and the overall success of management, rely heavily on Coordination. Coordination is the process of synchronising the activities of different individuals and departments in an organisation so that their efforts contribute to the common objective.
Coordination is not a separate function of management, but rather the force that binds all other functions. It is the essence of management because it is needed at all levels of management and in all managerial functions.
Characteristics Of Coordination
The fundamental characteristics of coordination are:
1. Coordination Integrates Group Efforts: It is concerned with harmonising individual efforts into a common thread of purpose. It converts scattered efforts into a unified group action.
2. Coordination Ensures Unity of Action: It is the process of tying together the activities of various departments so that they are performed with unity of action. It acts as a binding force among departments and ensures that all action is aimed at achieving organisational goals.
3. Coordination is a Continuous Process: Coordination is not a one-time activity. It is a continuous process that starts at the planning stage and continues through the controlling stage. It is an ongoing activity.
4. Coordination is an All-Pervasive Function: Coordination is required at all levels of management (top, middle, lower) and in all departments. It is needed everywhere that group effort is required.
5. Coordination is the Responsibility of All Managers: Top management needs to coordinate overall plans and policies. Middle-level management coordinates the activities of different sections. Lower-level management coordinates the activities of workers. Thus, every manager is responsible for coordination.
6. Coordination is a Deliberate Function: Coordination is not achieved spontaneously; it is a conscious effort on the part of managers. It requires careful planning and execution to ensure proper integration of efforts.
Importance Of Coordination
Coordination is important due to the following reasons:
1. Growth in Size: As an organisation grows in size, the number of people employed also increases. All individuals may have different working styles and objectives. Coordination is needed to integrate these varied efforts and ensure they work towards common goals.
2. Functional Differentiation: In an organisation, there are different departments (e.g., production, marketing, finance, HR). Each department works towards its own objectives but needs to coordinate with other departments to achieve overall organisational goals. Lack of coordination can lead to conflicts between departments.
3. Specialisation: Modern organisations have high degrees of specialisation. Specialists are highly skilled but may view problems from their own perspective. Coordination is needed to reconcile the efforts of various specialists towards achieving common objectives, preventing conflicts arising from differing viewpoints.
Example 6. In a large textile company, the production department aims to produce high volumes to reduce per-unit cost. The sales department, however, requires frequent changes in product designs based on market trends. The finance department wants to keep inventory low. How can the management ensure these departments work together effectively?
Answer:
This situation requires Coordination. Management needs to coordinate the activities of the production, sales, and finance departments to ensure their potentially conflicting goals are harmonised towards the overall objective of profitability and market competitiveness. This illustrates the importance of coordination due to Functional Differentiation and Specialisation.
Management In The Twenty-First Century
Management in the 21st century operates in a rapidly changing and complex environment. Key factors shaping modern management include globalisation, technological advancements, increased competition, ethical and social responsibility concerns, and a diverse workforce.
For planning, this means:
1. Embracing Flexibility: Planning must become more flexible to adapt to rapid changes in the environment (as noted under limitations). Rigid, long-term plans may not be effective.
2. Focus on Innovation: Planning needs to incorporate strategies for continuous innovation to stay competitive in a technology-driven global market.
3. Contingency Planning: Developing alternative plans (contingency plans) for different possible future scenarios is becoming increasingly important due to uncertainty.
4. Strategic Thinking: Planning at all levels requires a more strategic perspective, considering long-term implications and the global landscape.
5. Ethical and Social Considerations: Plans must increasingly incorporate ethical guidelines, social responsibility, and sustainability goals, reflecting changing societal values.
6. Utilising Technology: Managers are using advanced software and data analytics tools for more accurate forecasting and detailed planning.
Overall, management in the 21st century demands a more agile, innovative, and socially conscious approach to planning and all other management functions.