module-ii-a.-planning-b.-decision-making-ppt-1.pdf

Principal of management

1. BBA(N)301 Principles of Management
Module: II
a.Planninga.Planning
b.Decision Making

2. Planning -Meaning and Concept
•Planningisessentialineverywalkoflife.
•Ineveryhumanactivity,thereisanelementof
planning.
•Yourparentsplanthehouseholdandother
expenditure,expenditure,
theyalsoplanthedailyhouseholdchores,
ateacherplanstheteachingwork,
you,asastudent,planyourstudiesand
thefarmerplanshisagriculturalactivities.

3. Planning -Meaning and Concept
•Inthebusinessfield,theneedforplanningisall
themorebecauseofvariousfactorssuchas
fluctuationsindemand,
growingcompetition,
introductionofnewproducts,introductionofnewproducts,
scarcityofresources,
changingtechnology,
changeinprices,
governmentpolicy,etc.

4. Planning -Meaning and Concept
•Intheabsenceofaplan,anenterprisewouldbe
likeashipwithoutarudder.
•Organisationalactivitywithoutaplanislikelyto
beineffective,withoutachievingsuccess.
•Hence,planningisamustforbusinessHence,planningisamustforbusiness
organisations.

5. Planning -Meaning and Concept
•Anorganizationcanbesuccessfulineffective
utilizationofitshumanfinancialandmaterial
resourcesonlywhenitsmanagementdecidesin
advanceitsobjectives,&methodsofachieving
them.
Withoutitpurposiveandcoordinatedeffortisnot•Withoutitpurposiveandcoordinatedeffortisnot
possible,andwhatresultsarechaos,confusion
andwastageofresources.

6. Planning -Meaning and Concept
•Businessplanningshouldbeawayormodeoflife
essentialtomaintainthehealthofanenterprise.
•Itdemandsafirmdeterminationandconviction
toplanconstantlyandsystematicallyandbusiness
planningmustbeanintegralpartofthe
Management.Management.
•Today,planningisconsideredasastrategicareaof
managementinthecontextofglobalizationof
businessoperations-aprocessofidentifyingthe
strengthsandweaknessesofanorganizationand
correlatingthemwithopportunitiesavailablein
thebusinessworld.

7. Planning -Meaning and Concept
•Planningisthemostbasicofallthemanagerial
functions-thefirstManagementfunctiontobe
performedintheprocessofmanagement-
necessaryfordischargingallothermanagement
functions.
•Planningconcentratesonsettingandachieving•Planningconcentratesonsettingandachieving
objectivesofanorganisation.
•Planningisthedeterminationofcoursesof
actionstoachievethedesiredresults.
•Itgovernssurvival,growthandprosperityofany
organisationincompetitiveandever-changing
environment.

8. Planning -Meaning and Concept
•Planninginvolvesdeterminationofobjectivesof
thebusiness,formationofprogrammesand
coursesofactionfortheirattainment,
developmentofschedulesandtimingsofaction
andassignmentofresponsibilitiesfortheir
implementation.implementation.
•Effectiveplanningfacilitatesearlyachievementof
objectives.
•Planningthusprecedesalleffortsandaction,asit
istheplansandprogrammesthatdeterminethe
kindofdecisionsandactivitiesrequiredforthe
attainmentofthedesiredgoals.

9. Planning -Meaning and Concept
•Planningexistsinallenterprisesirrespectiveof
theirsize.
•Planningisrequiredforallorganizationsandalso
foreveryleveloforganisation.
•Itisnotanexclusiveresponsibilityofthetop•Itisnotanexclusiveresponsibilityofthetop
managementbutisperformedbyeachmanager
ateverylevelinanenterprise.
•Fromthemanagingdirectordowntothefirst-line
supervisors—allplaninanorganisation,
althoughthebreadthandscopevarywiththe
levelofthehierarchy.

10. Planning -Meaning and Concept
•Planningisaprerequisiteofeverymanagement
function,whetheritisorganising,staffing,directing
orcontrolling.
•Allthesefunctionshavetobeprecededbyasystem
ofefficientplanningotherwisethepersons
concernedwithexecutingthemwillfinditdifficulttoconcernedwithexecutingthemwillfinditdifficultto
performthemsystematicallyandefficiently.
•Whileperformingtheorganisationfunction,thetop
managementhastoevolvetheconceptofproper
flowofauthority,responsibilityamongthesuperiors
andthesubordinatesandalsotheextentof
delegationofauthority.

11. Planning -Meaning and Concept
•Understaffing,thetopmanagementhasto
determinepoliciesandprogrammesinrespectof
recruitment,selection,placement,trainingetc.
•Thedirectionfunctioncanbeperformed
efficiently,ifthesystemsofcommunicationand
motivationareplannedproperly.motivationareplannedproperly.
•Intheabsenceofplanning,itwillbeimpossibleto
decidewhatactivitiesarerequired,howthey
shouldbecombinedintojobsanddepartments,
whowillberesponsibleforwhatkindofdecisions
andactions,andhowvariousdecisionsand
activitiesaretobecoordinated.

12. Planning -Meaning and Concept
•And,intheabsenceoforganizing,involvingthe
abovemanagerialactivities,staffingcannot
proceed,anddirectingcannotbeexercised.
•Planningisalsoanessentialprerequisiteforthe
performanceofcontrolfunction,asitprovides
criteriaforevaluatingperformance.criteriaforevaluatingperformance.
•Theperformanceofthecontrolfunctionislargely
dependentupontheeffectivenessofplanning.
•Thedesigningofcontrolsystemstartswiththe
formationofvariousplans.
•Planningprecedesallmanagerialfunctions,andit
iscloselyrelatedtocontrolling.

13. Planning -Meaning and Concept
•Planningisdecidinginadvancewhattodo,how
andwhentodoitandwhoistodoit.
•Thesearethedifferentaspectsofplanning
process.
•Themainprincipleofplanningisthatadequate•Themainprincipleofplanningisthatadequate
planningmusttakeplacebeforedoingthe
physicaleffortstoeffectivelyaccomplishagoal.
•Itrequiresadifficultmentalexercise,akeen
foresight,analyticalmindandbroadbased
knowledgeoffacts.

14. Planning -Meaning and Concept
•Inplanning,themanagermustbeableto
manipulateabstractideasandanticipatethe
impactofanypossibleoutcomeswhichmayaffect
theenterprise.
•Planningisahigherordermentalprocess
requiringtheuseofintellectualfaculties,requiringtheuseofintellectualfaculties,
imagination,foresightandsoundjudgement.
•Itinvolvesboththoughtandcommunication.

15. Planning -Meaning and Concept
•Therearetwoessentialaspectsofplanning.
•Merely,selectinggoalsandtargetstoreach,isnot
planning.
•Thatisonlyonephaseoftheprocess.
•Othernecessaryphaseinvolvesselectingor•Othernecessaryphaseinvolvesselectingor
designingappropriatetechniquesandprocedures
thatwillbeinstrumentalinarrivingatthegoals.
•Onewithouttheotherdoesnotprovideaplan.

16. Planning -Meaning and Concept
•Planningbridgesthegapbetweenwhereweare
andwherewewanttogo.
•Planningisasystematicattempttodecidea
particularcourseofactionforthefuture;itleads
todeterminationofobjectivesofthegroup
activityandthestepsnecessarytoachievethem.activityandthestepsnecessarytoachievethem.
•Itinvolvesanticipatingfuturerequirementsand
challenges.
•Italsoinvolvessequencingfutureresourcesand
actionstominimisethedelayandwastewhich
couldariseifeventswereallowedtotaketheir
naturalpaceandchronologicalorder.

17. Planning -Meaning and Concept
•Toplanistoproduceaschemeforfutureaction;to
bringaboutspecifiedresults,atspecifiedcost,ina
specifiedperiodoftime.
•Thus,itisaprocessofthinkingbeforedoing.
•Itisdeliberateattempttoinfluence,exploit,bring
about,andcontrolsthenature,direction,extent,about,andcontrolsthenature,direction,extent,
speedandeffectsofchange.
•Itmayevenattemptdeliberatelytocreatechange.
•Planningisadeliberateandconsciouseffortdoneto
formulatethedesignandorderlysequenceactions
throughwhichitisexpectedtoreachtheobjectives.

18. Planning -Meaning and Concept
•Growthandprosperityofanorganization
dependsuponitssuccessfulplanning.
•Planninghelpsthemanagertoshapethe
organization’sfuture.
•Itbringsrationalityintotheorganizationand•Itbringsrationalityintotheorganizationand
ensuresthemostefficientuseofscarceresources.
•Itdepictsaframeworkwithinwhichother
managementfunctionswilloperate.

19. Planning -Meaning and Concept
•Aplanisacommitmenttoparticularcourseof
actionwhereasplanningisanactivityconsisting
ofaprocess.
•Planningisnotanactivity;itisaprocesswhich
involvesselectionfromamongmanyalternatives.
•Itthuspresupposestheexistenceofoneormore
alternativecoursesofaction.
•Itisanendeavourtoapplyforesighttohuman
activity,andisbasedonknowledgeandresearch.

20. Planning -Meaning and Concept
•Theconceptofachievingdesiredresultsthrough
plannedactionhasdevelopedtoasophisticated
level,whereitisnolongersufficienttomanage
through‘adhoc’decisionsifthegreatest
sufficientpossiblelevelofefficiencyintheuseof
resourcesistobeachieved.resourcesistobeachieved.
•Planningmustnowbeviewedasaseriesoflogical
interrelatedprocedureswhichcanbeevolved,
taught,expandedandoverlappedforavarietyof
differentmanagementpurposes.

21. Planning -Meaning and Concept
•Planninginbusinessisanongoingprocess
becausechangesinbusinessenvironmentare
continuous.
•Abusinessenterpriseisanopen,adaptivesocial
subsystemlivinginadynamicworld,always
tryingtoadaptitselftotheeverchangingtryingtoadaptitselftotheeverchanging
conditionsofdemand,supply,prices,
competition,technology,governmentpoliciesetc.

22. Planning -Meaning and Concept
•Aplanisbasedonreliableinformationandnoton
emotionsandfeelings.
•Itreflectsvision,foresightandwisdom.
•Itisablueprintofaction.
•Thus,planninginvolvesthinkingandanalysisof•Thus,planninginvolvesthinkingandanalysisof
information,arrivingatcertainassumptionsin
connectionwithwhatislikelytohappeninthe
futureandthenformulatingtheactivities
requiredtoachievedesiredresultsorgoalsor
objectives.

23. Planning -Meaning and Concept
•Theplannermustbeabletolookintothefuture
andconceptualizetheproposedpatternof
activities.
•AManagerdesirestoprovidestabilitytohis
effortsbyconsideringmanycomplicatedfuture
variables,sincethefutureinvolveschangeandvariables,sincethefutureinvolveschangeand
uncertainty.
•Moreover,planningisnecessarytoachieveresults
throughtheeffortsofothers.

24. Planning -Meaning and Concept
•Sinceplanningisacontinuousandneverending
activity,mostmanagersre-examineplans
regularlywithaviewtomodifyoradjustthem
promptlyinthelightofthenewsituationsor
conditions.
Managerialplanningdrawsupablueprintof•Managerialplanningdrawsupablueprintof
activitiestobeundertaken.

25. Planning -Meaning and Concept
•Itisconsciouslychoosingoutofseveralgiven
alternativeofthe
–objectivestobeachieved,
–policiestobefollowed,
–rulesandmethodstobeadopted,and
–ascertaininginadvancetheprogrammes,–ascertaininginadvancetheprogrammes,
proceduresandbudgets
sothattheymayserveasaguidetotheactionyet
tobeundertaken.
•Planningincreasesthedegreeofsuccessand
establishesco-ordinatedeffortinthe
organisation.

26. Planning -Meaning and Concept
•Agoodorganisationalplanminimizesrisk,reduces
uncertaintiessurroundingbusinessconditionsand
itclassifiestheconsequencesofrelatedaction.
•Itmakesthemanagersfuture-orientedandtheir
decisionsco-ordinated.
•Goodplanningmakestheorganisationsreach
theirobjectives.
•Planwillhelpthemanagerstoorganisepeople
andresourceseffectively.
•Plansdevelopconfidenceinmanagers.

27. Planning -Meaning and Concept
•Planningis,thus,
–thefirststepinthemanagementprocess
–concernedwiththeestablishmentofobjectives
andgoalstobeattainedinthefuture
–inthelightofananalysisofpresentlimitations
forattainingsuchgoalsforattainingsuchgoals
–withaviewtotheirremovalordeduction,
–anticipationofthefutureenvironmentalfactors
andtheirimpactanddesigningthecourseof
actionand
–programmesforattainingsuchpreselected
goals.

28. ImportantCharacteristics of Planning
1.Planningislookingintothefuture.
2.Planninginvolvespre-determinedlineofaction.
3.Planningdiscoversthebestalternativeoutof
availablemanyalternatives.
4.Planningrequiresconsiderabletimefor
implementation.implementation.
5.Planningisacontinuousprocess.
6.Planning’sobjectistoachievepre-determined
objectivesinabetterway.
7.Planningintegratesvariousactivitiesof
organisation.

29. ImportantCharacteristics of Planning
8.Planningisdoneforaspecificperiod.
9.Planningnotonlyselectstheobjectivesbutalso
developspolicies,programmesandproceduresto
achievetheobjectives.
10.Planningisrequiredatalllevelsofmanagement.
11.Planningisaninter-dependentprocesswhich11.Planningisaninter-dependentprocesswhich
co-ordinatesthevariousbusinessactivities.
12.Planningdirectsthemembersofthe
organisation.
13.Growthandprosperityofanyorganisation
dependsuponplanning.

30. Components of Planning/Planning Techniques
•Planningconsistsofseveral
individualplansorcomponentsof
planning,whichareusuallybound
together.
i. Forecasting
ii. Objectivesii. Objectives
iii. Policies
iv. Programmes
v. Strategies
vi. Schedules
vii. Procedures
viii. Rules
ix. Budgets

31. Components of Planning/Planning Techniques
•i.Forecasting:
–Forecastingbecomesanintegralpartoftheplanningprocess.
–Itisapredictionoffutureeventsandconditions.
–It,therefore,includesboththeassessmentofthefutureandtheprovision
forit.
–Ithelpstoreducetheuncertaintiesthatsurroundmanagement,decision
making.
•ii.Objectives:•ii.Objectives:
–Objectivesaretheendstowardwhichactivityisaimed—theyaretheresults
tobeachieved.
–Corporateobjectivesareframedfortheorganisationasawhole.
–Inconsonancewiththeseobjectives,departmentalobjectivesareframed.
–Theyrepresenttheendtowardwhichorganising,staffing,leadingand
controllingareaimed.
–Organisationcangrowwithoutanydifficultyifithaswell-definedobjectives.
–Theseobjectivesshouldbeclearlydefinedandcommunicatedthroughout
theorganisation.
–Suchobjectivesmustberealistic.

32. Components of Planning/Planning Techniques
•iii.Policies:
–Objectivesdeterminethe‘what-to-do’aspectforthepersonsintheorganisation,
whilepoliciestell‘how-to-do’aspect.
–So,policiesactasguidestothinkingandactionofsubordinatesintheorganisations.
–Itshouldbeclearlyprescribedandunderstandablebyall.
–Weshouldpurchaseourrawmaterialsfromthelocaldealersonly.Thiscanbea
policystatementofthepurchasedepartment.Allpromotionsshouldbefromwithin
theorganisation.Allbillsmustbecollectedwithin30days.Theseareexamplesof
policystatements.Theyprovetobesolutionsforrecurringproblems.
•iv.Programmes:•iv.Programmes:
–Itreferstothecourseofactionofworktobecarriedoutinpropersequenceforthe
purposeofachievingspecificobjectives.
–Programmeisthecompositeofmanysmallplans,whereeachplancontributesto
theobjectiveoftheoverallplancalledprogramme.
–Salescampaignwiththeobjectiveofincreasingsalesby25%isaprogramme.Itis
madeupofseveralsmallplans—promotionthroughadvertising,promotion
throughsalesmen,promotionthroughdealers,promotionthroughdirectmailing.
–Eachsmallplancontributestooverallobjectiveoftheprogramme.

33. Components of Planning/Planning Techniques
•v.Strategies:
–Strategymeanstacticalplanningincompetitiveenvironment.
–Itisspecifictypeofplanforachievingorganisationalgoals.
–Weshouldplannotinisolation,butinkeepingwiththeforces
ofexternalenvironment—oursuppliers,ourcustomers,
governmentandcompetitors.
–Astrategicapproachtowardsplanningisnecessary.Eventhe–Astrategicapproachtowardsplanningisnecessary.Eventhe
processofselectingoneoutofseveralalternativesavailableisa
strategicprocess.
•vi.Schedules:
–Fixingatimesequenceforeveryoperationisknownas
schedules.
–Normallyitformspartofprogrammingapartofactionplan.

34. Components of Planning/Planning Techniques
•vii.Procedures:
–Policystatementsarebroadguidelines.
–Forimplementingthemadetailedstep-by-steproutineis
necessary.Itiscalledprocedure.
–Proceduresareplansthatestablisharequiredmethodof
handlingfutureactivities.
–Theyareguidestoaction,theydetailtheexactmannerinwhich
certainactivitiesmustbeaccomplished.certainactivitiesmustbeaccomplished.
–Theyarechronologicalsequencesofrequiredactions.
–Weshouldcollectourbillswithin30daysisapolicystatement.
Nowitisforthosewhoexecutethispolicytosetaprocedure
foritsimplementation.Whoshallwritetothedebtor?How?
Howmanytimes?Whatisthefinalaction?Whoshallapproach
himpersonallyforcollection?Thesearetheproceduralaspects.
–Proceduresaredifferentfordifferentlevelsintheorganisation.
–Theyalsochangefromdepartment-to-department,andfrom
policy-to-policy.

35. Components of Planning/Planning Techniques
•viii.Rules:
–Rulesspelloutspecificrequiredactionsornon-actions.
–Theyareusuallythesimplesttypeofplan.Itisthesimplestpossible
versionoftheplanasitdirectsaparticularactivityinaparticularway,
andpreventsusdoingaparticularactivityinaparticularway.
–Procedureandrulesaredifferentinthesensethatprocedureisa
routinizedstep-by-steparrangement,whereasrulehasnoorder.‘Donot
smokeinfactorypremises’isarule,but‘howtorequisitiongoodsfrom
thestores’isaprocedure.
•ix.Budgets:
•Budgetisalsoaplanwhereestimatedresultsareshownintermsofmoneyor
anyothernumericallymeasurableterm.
•Abudgetisastatementofexpectedresultsexpressedinnumericalterm.
•Abudgetmaybeexpressedeitherinfinancialtermsorintermsoflabour-hours,
unitsofproduct,machinehours.
•Ithelpstheorganisationtocontroltheactionbycomparingbudgetaryand
actualresults.
•Thoughitisalsoatoolofcontrolbudgetfailsasacontroldeviceifthereisno
plantocomparetheactualresultsagainsttheestimatedfigures.

36. Definitions of Planning by Different Authors
•‘Planningisdecidingthebestalternativetoperform
differentmanagerialoperationsforachieving
pre-determinedgoals.’–HenryFayol
•“Planningischalkingoutplanofaction,i.e.,theresult
envisagedinthelineofactiontobefollowed,thestagesto
gothroughandthemethodstouse.Itisakindoffuture
picture,whereinproximateeventsareoutlinedwithsome
distinctness,whilstremoteeventsappearprogressivelyless
picture,whereinproximateeventsareoutlinedwithsome
distinctness,whilstremoteeventsappearprogressivelyless
distinct.”–HenryFayol
•PeterDruckerdefined“planningisthecontinuousprocess
ofmakingpresententrepreneurialdecisionssystematically
andwithbestpossibleknowledgetheirfuturity,organizing
systematicallytheeffortsneededtocarryoutthese
decisionsandmeasuringtheresultsofthesedecisions
againsttheexpectationthroughorganisedsystematic
feedback.”

37. Definitions of Planning by Different Authors
•InthewordsofAlfredandBatty,“Planningisathinking
process,theorganisedforesight,thevisionbasedonfacts
andexperiencethatisrequiredforintelligentaction.”
•BillyE.GoetzsaysthatPlanningisfundamentallyaprocess
ofchoosingandthat,“aplanningproblemarisesonlywhen
analternativecoursesofactionisdiscovered”.
•“Planningisaprocesswherebymanagersselectgoals•“Planningisaprocesswherebymanagersselectgoals
chooseactionstoattainthosegoals,allocateresponsibility
forimplementingactionstospecificindividualsorunits,
measurethesuccessofactionsbycomparingactualresults
againstthegoals,andrevisedplansaccordingly.”–Charles
WLHill,StevenMeshane.
•‘Planningis,inessence,theexerciseofforesight.’-
[HamiltonChurch]

38. Definitions of Planning by Different Authors
•‘Planningisanintellectualdecision-makingprocessin
whichcreativethinkingandimaginationareessen-tial.’–
[HaynesandMassie]
•
‘Planningisanabilitytovisualizeafutureprocessandits
results.’–[J.PBarger]
•GeorgeTerryhasdefinedplanningintermsoffuturecourse
ofactioni.e.,“planningistheselectionandrelatingoffactsofactioni.e.,“planningistheselectionandrelatingoffacts
andmakingandusingofassumptionsregardingthefuture
inthevisualisationandformalisationofproposedactivities
believednecessarytoachievedesiredresult.”
•“Planningisselectinginformationandmakingassumptions
regardingthefuturetoformulatedactivitiesnecessaryto
achieveorganizationalobjectives.”–TerryandFranklin.

39. Definitions of Planning by Different Authors
•JamesL.Pierce,amanagementexpertandVice-president
ofA.B.DickandCompany,looksatplanninginanotherway.
Tohim,planning“referstotheconstructionofanoperating
programme,comprehensiveenoughtocoverallphasesof
operationsanddetailedenoughthatspecificattentionmay
begiventoitsfulfilmentincontrollablesegments”.
•AccordingtoKillen,“Planningistheprocessofdecidingin•AccordingtoKillen,“Planningistheprocessofdecidingin
advancewhatistobedone,whoistodoit,howitistobe
doneandwhenitistobedone”.Itisthedeterminationofa
courseofactiontoachievethedesiredresults.Itbridges
thegapfrom‘whereweare’to‘wherewewanttogo’.It
makesitpossibleforthingstooccurwhichwouldnot
otherwisehappen.

40. Definitions of Planning by Different Authors
•InthewordsofKoontzandO’Donnell,“planningisdecidingin
advancewhattodo,howtodoit,whentodoit,andwhois
todoit.Planningbridgesthegapfromwherewearetohere
wewanttogo.”KoontzandO’Donnelldescribeplanningas
“theselectionfromamongalternativesforfuturecourseof
actionfortheenterpriseasawholeandeachdepartment
withinit.”
•AccordingtoKoontz,O’DonnellandWeihrich,“Planningisan
intellectuallydemandingprocess;itrequirestheconscious
•AccordingtoKoontz,O’DonnellandWeihrich,“Planningisan
intellectuallydemandingprocess;itrequirestheconscious
determinationofcoursesofactionandthebasingof
decisionsonpurpose,knowledgeandconsideredestimates.”
Planningisamentalprocessrequiringtheuseofintellectual
faculties,imagination,foresightandsoundjudgement.
•
“Planningisfundamentallyamentalpredispositiontodo
thingsinanoverlyway,tothinkbeforeandtoactinthelight
ofthefactratherthanofguesses.”–L.F.Urwick
.

41. Definitions of Planning by Different Authors
•McFarlandhasdefinedPlanningas“aconceptofexecutive
actionthatembodiestheskillsofanticipating,influencing
andcontrollingthenatureanddirectionofchange.”
•‘Planningistheselectionofobjectives,policies,
procedures,andprogrammesfromamongalternatives.’–
M.S.Hurley
•RichardN.FarmerandBarryM.Richmanareoftheopinion
that-“theplanningfunctiondeterminesorganizational
objectivesandpolicies,programs,schedules,procedures
andmethodsforachievingthem.”Planningisessentiallya
decision-makingsince,itinvolveschoosingamong
alternativesanditalsoincludesinnovation.Planningisthe
processofmakingdecisiononanyphaseoforganised
activity.”

42. Definitions of Planning by Different Authors
•RichardT.Cassaptlyputsitthus-“Aplanisastatementbya
personwhatheintendstodoacertainthingbyacertain
means.Planningistheprocessbywhichhedevelopsthat
statement”.
•AccordingtoTheoHaimann,“planningisthefunctionthat
determinesinadvancewhatshouldbedone.Itconsistsof
selectingtheenterpriseobjectivespolices,programmes,
proceduresandothermeansofachievingtheseobjectives.”proceduresandothermeansofachievingtheseobjectives.”
•
“Theprocessofplanningcoversawiderangeofactivities,all
thewayfrominitiallysensingthatsomethingneedsdoingto
firmlydecidingwhodoes,what,when.Itismorethanlogicor
imaginationorjudgment.Itisacombinationofallthosethat
culminateinadecision-adecisionaboutwhatshouldbe
done.Thedecisionphaseofplanningissoimportantthatwe
canusetheexpressiondecisionmakingasasynonymof
planning.”–WilliamH.NewmanandCharlesE.SummerJr.

43. Analysis of the Definitions reveal that
i. Planning is concerned with future and its essence
is looking ahead;
ii. It involves thinking and analysis of information;
iii. It involves a predetermined course of action;
iv. It is concerned with the establishment of
objectives to be attained in the future;objectives to be attained in the future;
v. It is fundamentally a problem of choosing after a
careful study of alternative courses;
vi. It involves decision-making;
vii. Its objectives is to achieve better results;
viii. It is a continuous and integrated process.

44. For proper planning, the following points should be
decided in advance:
1.Whatwillbedone
2.Whatresourceswillberequired
3.Howitwillbedone
4.Whereitistobedone
5.Whowilldoit5.Whowilldoit
6.Whenitwillbedone

45. For proper planning, the following points should be
decided in advance:
•Whatwillbedone–Whataretheobjectivesof
businessintheshortandinthelongrun?
•Whatresourceswillberequired–Thisinvolves
estimationoftheavailableandpotentialresources,
estimationofresourcesrequiredfortheachievement
ofobjectives,andfillingthegapbetweenthetwo,ifofobjectives,andfillingthegapbetweenthetwo,if
any.
•Howitwillbedone–Thisinvolvestwothings–(i)
determinationoftasks,activities,projects,
programmes,etc.,requiredfortheattainmentof
objectives,and(ii)formulationofstrategies,policies,
procedures,methods,standardandbudgetsforthe
abovepurpose.

46. For proper planning, the following points should be
decided in advance:
•Whowilldoit–Itinvolvesassignmentof
responsibilitiestovariousmanagersrelatingto
contributionstheyareexpectedtomakeforthe
attainmentofenterpriseobjectives.Thisis
precededbythebreakingdownofthetotal
enterpriseobjectivesintosegmentalobjectives,enterpriseobjectivesintosegmentalobjectives,
resultingintodivisional,departmental,sectional
andindividualobjectives.
•Whenitwillbedone–Itinvolvesdetermination
ofthetimingandsequence,ifany,forthe
performanceofvariousactivitiesandexecutionof
variousprojectsandtheirparts.

47. Process of Planning -Steps Involved
1.GatheringInformation
2.IdentifyingandStudyingVitalFactorsAffecting
theCompany’sGrowthandEfficiency
3.LayingDownPlanObjectives
4.DeterminingandEvaluationofActionPatterns4.DeterminingandEvaluationofActionPatterns
5.SelectionofaCourseofAction
6.SettingupofaTimetable

48. Process of Planning -Steps Involved
1.GatheringInformation:
•Thefirststepinplanningisthegatheringof
information,i.e.,relevantfactsandfigures.
•Infact,beforeobjectivesareformulatedandways
andmeanstoachievethemaredeveloped,itisandmeanstoachievethemaredeveloped,itis
importantforthemanagertohaverelevant
information.

49. Process of Planning -Steps Involved
1.GatheringInformation:
•Acompanyconstantlyasksitselfquestionslike:
i.Whoareourcustomers?
ii.Why?
iii.Underwhatcircumstancesdoesacustomeriii.Underwhatcircumstancesdoesacustomer
becomeanon-customer?
iv.Whatarethefunctionsandvaluesofour
producttoourcustomers?
v.Whatisourmainstrength?
vi.Arewemakingtheproductorsellingit?

50. Process of Planning -Steps Involved
1.GatheringInformation:
•Answerstosuchquestionsprovidevital
informationbasedonwhichthecompanysets
itselfrealisticobjectivesandseeksthemost
promisingcoursesofactiontoachievethem.
•McGraw-Hillwhichisinthepublishingbusiness,•McGraw-Hillwhichisinthepublishingbusiness,
forinstance,maydecidetopublishfiction.But
beforeitcanplanitsactivities,itwouldneed
specificinformationsuchasthereadinghabit,the
buyingcapacity,thelevelofeducation,etc.ofits
customers.

51. Process of Planning -Steps Involved
2.IdentifyingandStudyingVitalFactorsAffecting
theCompany’sGrowthandEfficiency:
•Acompanyhavinginformationmaynotbeableto
planitsfutureactivitiesunlessitidentifiesand
makesacarefulstudyofthefactorswhichmay
limitacompany’sgrowthandefficiency.limitacompany’sgrowthandefficiency.
•Infact,anorganisationwhichbehavesinscientific
planningdoesinvolveitselfinsuchanexercise.
•Itconstantlyseekstofindoutitsstrengthsand
weaknesses,wheretheopportunitiesexistand
whatcouldberegardedaspotentialthreatstothe
company’ssurvivalandgrowth.

52. Process of Planning -Steps Involved
3.LayingDownPlanObjectives:
•Objective-formulationisthethirdlogicalstepin
theplanningprocess.
•Objectivesspecifytheendresultswhicha
planseekstoachieveanddetermineastowhatisplanseekstoachieveanddetermineastowhatis
tobeachievedbythecomplexofpolicies,rules,
programmesandprocedures.
•Objectivesshouldbeformulatedateverylevel.
Fromthecorporateobjectivesemergetheunit-
levelobjectives.

53. Process of Planning -Steps Involved
4.DeterminingandEvaluationofActionPatterns:
•Thenextstepinplanningobviouslyistofindout
thevariouscoursesofactionthatareavailablefor
theaccomplishmentoftheplanobjectives.
•Ofcourse,severalalternativesmaybeavailableto
realisetheplanbutwhatisimportantistonarrowrealisetheplanbutwhatisimportantistonarrow
downthenumberofalternativesavailableand
thentoselectthemostpromisingcoursesof
action.
•Hereinliesthetaskofevaluatingthecoursesof
actionagainsttheplanobjectivesandthe
planningassumptionsbeforethefinalchoiceis
made.

54. Process of Planning -Steps Involved
5.SelectionofaCourseofAction:
•Thefifthstepinplanningistoselectthebest
courseofaction.
•Theevaluationofvariouscoursesofactionwould
revealthatofthedifferentalternativesavailable,revealthatofthedifferentalternativesavailable,
oneortwoprovetobethemostsuitableforthe
accomplishmentoftheplanobjectives.

55. Process of Planning -Steps Involved
6.SettingupofaTimetable:
•Settingupofatimetableisasimportantasany
otherstepinplanning.
•Today,anenterpriseoperatesinanenvironment
whichishighlydynamicandchanging.Thus,whenwhichishighlydynamicandchanging.Thus,when
thefutureisuncertain,itisimportantto
determineinadvancetheplanperiod.
•Noplanperiodshouldbelongerthanwhatis
economicallydesirable.Theplanperiodshould
notbetooshort,either.

56. Process of Planning -Steps Involved
6.SettingupofaTimetable:
•Hence,themanagermustensurethattheplan
periodislongenoughtoenforce,throughaseries
ofactions,thefulfilmentofcommitments
involvedinadecision.
•Theplanperiodmusttakeintoaccountcertain
factorssuchas-factorssuchas-
–(i)leadtime,
–(ii)lengthoftimerequiredtorecoverthecapitalfunds
investedinplantandequipmentandintraining
personnel,
–(iii)expectedfutureavailabilityofcustomers,and
–(iv)expectedfutureavailabilityofrawmaterialsand
components.

57. Types of Planning
•The process of planning may be classified into
different categories on the following basis:
(i) Nature of Planning:
a. Formal planning.
b. Informal planning.
(ii) Duration of planning:
a. Short term planning.a. Short term planning.
b. Long term planning.
(iii) Levels of Management:
a. Strategic planning.
b. Intermediate planning.
c. Operational planning.
(iv) Use:
a. Standing plans
b. Single-use plans.

58. Types of Planning Based on Nature of Planning
a.FormalPlanning:Planningisformalwhenitis
reducedtowriting.Whenthenumbersofactionsare
largeitisgoodtohaveaformalplansinceitwillhelp
adequatecontrol.Thetermformalmeansofficialand
recognised.
Advantages:
1.ProperCooperationamongemployees,
2.UnityofAction,
3.Economy,3.Economy,
4.Propercoordinationandcontrol,
5.Choosingtherightobjectives,and
6.Futureplan.
b.InformalPlanning:Aninformalplanisone,whichis
notinwriting,butitisconceivedinthemindofthe
manager.Informalplanningwillbeeffectivewhenthe
numberofactionsislessandactionshavetobe
takeninshortperiod.

59. Types of Planning Based on Duration of Planning
a.ShorttermPlanning:Shorttermplanningisthe
planningwhichcoverslessthantwoyears.
•Itmustbeformulatedinamannerconsistent
withlong-termplans.
•Itisconsideredastacticalplanning.
•Short-termplansareconcernedwithimmediate•Short-termplansareconcernedwithimmediate
future;ittakesintoaccounttheavailable
resourcesonlyandisconcernedwiththecurrent
operationsofthebusiness.
•Thesemayincludeplansconcerninginventory
planningandcontrol,employeetraining,work
methodsetc.

60. Types of Planning Based on Duration of Planning
a.ShorttermPlanning:
Advantages:
1.Itcanbeeasilyadjustable.
2.Changescanbemadeandincorporated.
3.EasytoGauge.3.EasytoGauge.
4.Onlylittleresourcesrequired.
Disadvantages:
1.Veryshortperiod–leftoverthingswillbe
more.
2.Difficulttomobilizetheresources.
3.Communicationcyclemaynotbecompleted.

61. Types of Planning Based on Duration of Planning
b.Long-TermPlanning:Long-termplanningusually
converseaperiodofmorethanfiveyears,mostly
betweenfiveandfifteenyears.
•Itdealswithbroadertechnologicalandcompetitive
aspectsoftheorganisationaswellasallocationof
resourcesoverarelativelylongtimeperiod.Long-
termplanningisconsideredasstrategicplanning.termplanningisconsideredasstrategicplanning.
•Short-termplanningcoverstheperiodof1-2years,
whilelongtermplanningcovers5-15years.
•Inbetweentheremaybemedium-termplans.
Usually,mediumtermplansarefocusingonbetween
twoandfiveyears.Thesemayincludeplanfor
purchaseofmaterials,production,labour,overhead
expensesandsoon.

62. Types of Planning Based on Duration of Planning
b. Long-Term Planning:
Advantages:
1. Sufficient time to plan and implement.
2. Effective control.
3. Adjustment and changes may be made gradually.
4. Periodic evaluation is possible.4. Periodic evaluation is possible.
5. Thrust areas can be identified easily.
6. Weakness can be spotted and rectified then and there.
Disadvantages:
1. Prediction is difficult.
2. Full of uncertainties.
3. Objectives and Targets may not be achieved in full.
4. More resources required.

63. Types of Planning Based on Levels of Management
a.StrategicPlanning:
•Thestrategicplanningistheprocessof
determiningoverallobjectivesofthe
organisationandthepoliciesandstrategies
adoptedtoachievethoseobjectives.
•Itisconductedbythetopmanagement,which
includechiefexecutiveofficer,president,vice-
presidents,GeneralMangeretc.
•Itisalongrangeplanningandmaycoveratime
periodofupto10years.

64. Types of Planning Based on Levels of Management
a.StrategicPlanning:
•Itbasicallydealswiththetotalassessmentofthe
organisation’scapabilities,itsstrengthsandits
weaknessesandanobjectiveevaluationofthe
dynamicenvironment.
•Theplanningalsodeterminesthedirectionthe•Theplanningalsodeterminesthedirectionthe
companywillbetakinginachievingthesegoals.
•Eventhoughplanningatalllevelsisimportant,
sincealllevelsareintegratedintoone,the
strategicplanningrequirescloserobservation
sinceitestablishesthedirectionofthe
organisation.

65. Types of Planning Based on Levels of Management
b.IntermediatePlanning:
•Intermediateplanningcovertimeframesofabout6
monthsto2yearsandiscontemplatedbymiddle
management,whichincludesfunctionalmanagers,
departmentheadsandproductlinemangers.
•Theyalsohavethetaskofpolishingthetop
management’sstrategicplans.
•Theyalsohavethetaskofpolishingthetop
management’sstrategicplans.
•Themiddlemanagementwillhaveacriticallookat
theresourcesavailableandtheywilldeterminethe
mosteffectiveandefficientmixofhuman,financial
andmaterialfactors.
•Theyrefinethebroadstrategicplansintomore
workableandrealisticplans.

66. Types of Planning Based on Levels of Management
c.OperationalPlanning:
•Operationalplanningdealswithonlycurrent
activities.Itkeepsthebusinessrunning.
•Theseplansaretheresponsibilityofthelower
managementandareconductedbyunitsupervisors,
foremenetc.
•Theseareshort-rangeplanscoveringatimespan•Theseareshort-rangeplanscoveringatimespan
fromoneweektooneyear.
•Thesearemorespecificandtheydeterminehowa
specificjobistobecompletedinthebestpossible
way.
•Mostoperationalplansaredividedintofunctional
areassuchasproduction,finance,marketing,
personneletc.

67. Types of Planning Based on Use
a.StandingPlan:
•Standingplanisone,whichisdesignedtobe
usedoverandoveragain.
•Objectives,policiesprocedures,methods,rules
andstrategiesareincludedinstandingplans.andstrategiesareincludedinstandingplans.
•Itsnatureismechanical.Ithelpsexecutivesto
reducetheirworkload.
•Standingplanisalsocalledroutineplan.
Standingorroutineplanisgenerallylongrange.

68. Types of Planning Based on Use
b.SingleUsePlan:
•Singleuseplanisone,whichsetsacourseof
actionforaparticularsetofcircumstancesandis
useduponcetheparticulargoalisachieved.
•Theymayincludeprogramme,budgets,projectsTheymayincludeprogramme,budgets,projects
andschedules.
•Itisalsocalledspecificplanning.
•Singleuseplanisshortrange.

69. Principles of Planning
•Justaseachsystematicknowledgeisbased
onsomeimportantprinciples,similarly
managementandmanagerialfunctionsare
alsodependuponsomeprinciplesof
planning.planning.
•Managementspecialistshavepropagated
someprinciplesofplanning,whichmaymake
planningveryeffective,onbeingadopted.

70. Principles of Planning
1.PrincipleofContributiontoObjectives:Each
institutionorenterprisehassomepredetermined
objectivesandgoals.Accordingtothis
principle,everyplanandsub-planshouldmake
positivecontributionstowardsachievingthe
objectivesandgoalsoftheinstitution.objectivesandgoalsoftheinstitution.
2.PrincipleofPlanningPromises:Theplanningis
relatedtothefutureandforthefuture,andthere
areseveralassumptions.Hence,whileformulating
plans,complete,clearandreliableknowledge
shouldbecollectedandforecastsshouldbewell
prepared.

71. Principles of Planning
3.PrincipleofEfficiency:Theefficiencyofplanning
dependsontheresults.Maximumresultsshouldbe
obtainedfromminimumcostandeffort.Ifthisdoes
notbecomepossible,orthegoalsarenotefficiently
achieved,itmayberegardedastheinefficiencyof
planning.
4.PrincipleofPrimacy:Thetargetsandthegoalsare
thefirstactivity.Withoutplanning,noother
functionsofmanagementgetproperdirection,nor
doestheirefficientandeffectiveperformance
becomepossible.Hence,planningistheimportant
andprimaryfunctionofmanagement.

72. Principles of Planning
5.PrincipleofFlexibility:Plansshouldbeflexible.Flexibility
meanstochangeaccordingtoneed.Flexibleplansmaybe
revised,inaccordancewiththechangedrequirementsand
thelossesmaybeavertedorminimized.So,planning
shouldbesuchwhichmaybechangedandrevised,
accordingtothecircumstances.Thisprincipleisusedfor
long-termplanning.
6.PrincipleofNavigationalChange:Justasasailoris
attentivetowardstakinghisboattothedestination,by
payingregularattentiontothespeed,direction,and
balanceoftheboat,eachmoment,similarly,themanagers
shouldgoontestingtheplans,duringthecourseoftheir
implementationsandrequiredchangesandimprovements
shouldbeacontinuousprocess.

73. Principles of Planning
7.PrincipleofCommitment: Thisprinciple
determinesthe‘Timeperiod‘ofplanning.
Planningshouldnecessarilybeatleastforthat
period,whichisrequiredforfulfilling
commitmentsmadewithitsemployees,suppliers,
debtors,andtheconsumers,etc.debtors,andtheconsumers,etc.
8.PrincipleofPervasiveness:Planningisa
pervasiveactivity,whichisrequiredatalllevels
ofbusinessmanagement.Hence,planningshould
beinaccordancewiththeneedsofalllevelsof
Management.

74. Principles of Planning
9.PrincipleofFramework:Policiesmeanthosegeneral
principleswhichgovernthefunctionsofthe
organizationfortheachievementofitsobjectives.
Thepoliciesoftheinstitutionshouldbe
unambiguous,simple,soundandjustified,tomakeits
planningeffective.
10.PrincipleofTiming:Whiledeterminingthe
objectivesfortheinstitution,thetimelimitfor
achievingvariousobjectivesmayalsobewell
determined.Plans,subplans,andprogramsshould
alsobepreparedforachievingtheobjectives.Their
timelimitsshouldalsobeessentiallydetermined.

75. Principles of Planning
11.PrincipleofAlternative:Thesuccessof
planningdependsuponthecorrectdecisiontaken.
Hence,beforetakingdecisions,variousalternatives
shouldbediscoveredandnecessaryinformation
shouldbegatheredaboutthem,andthenthebest
alternativeshouldbeselected.Thebestalternative,
whichmaycontributetowardsachievingthe
determinedobjectivesindecidedtime,atthelowestdeterminedobjectivesindecidedtime,atthelowest
cost,beselected.
12.PrincipleofLimitingFactor:Whileselectingthe
bestalternativesmanagersshouldidentifythefactors
havingonlylimitedachievementsofthedesired
goals.Suitablesolutionstocriticalfactorsshouldbe
found.

76. Principles of Planning
13.PrincipleofCompetitiveStrategies:Ifany
competitiveinstitutionexists,thentheplanning
activitiesandtechniquesofotherInstitutionsshould
alsobekeptinview.Bydoingso,successinbusiness,
amongthecompetition,maybeensured.
14.PrincipleofCooperation:Thesuccessofplanning14.PrincipleofCooperation:Thesuccessofplanning
dependsuponthecooperationofthewhole
organization.Hence,inPlanningformulation,
sufficientcooperationoftheexecutives,managers,
andsubordinatesofvariouslevelsshouldbe
obtained,sothatplansmaybeexecutedefficiently
andunnecessaryhurdlesmayberemovedtoget
desiredresults.

77. Advantages of Planning
1.PrimacyofPlanning:Eventhoughthereareother
managerialfunctionssuchasorganising,staffing,directing
andcontrollingwhichhelpstoachievetheorganisational
goals,planningprecedesallothermanagerialfunctions.It
establishesobjectivesnecessaryforallgroupeffort.
2.HelptoManagement:Sincetheplanningisafuturecourse
ofaction,mangersareabletodefinetheirobjectivesandofaction,mangersareabletodefinetheirobjectivesand
getdirection.Alsoitcreatesaunityofpurpose.
3.EffectiveUtilisationofResources:Properplanninghelpsin
properandeffectiveutilisationofresources.Resourcesare
identifiedforoptimumutilitythroughplanning.Sowasteof
resourceswillnotresultandtherebyidletimeforworkers
anddowntimeformachineswillbereduced.

78. Advantages of Planning
4.MinimumCost:Planninghelpstominimisecost
byprovidinggreaterutilisationoftheavailable
resources.Allkindsofwastageofmen,materials,
moneyandmachinesarepreventedwiththehelp
ofplanning.Thisleadstoresultinminimumcost
ofoperations.ofoperations.
5.TohelpinMotivation:Allemployeesofthe
organisationcanfeelthatwehavetakenthisplan,
iftheplansarecommunicatedtothem.Inthis
casethesenseofbelongingnessofemployees
increasesandthereforetheywillbehighly
motivated.

79. Advantages of Planning
•6.ToOffsetUncertaintyandChange:Theremaybe
continuouschangeintheenvironmentand
organisationhastoworkwithinandwiththese
changes.Thechangeisreflectedinbothtangibleand
intangibleforms.Tangiblechangesareintheformof
changesintechnology,marketforces,and
governmentregulations.Intangiblechangesreflectin
changesinattitudes,values,culturesetc.Inordertochangesinattitudes,values,culturesetc.Inorderto
copeupwiththerequirementsofsuchchanges,
organisationmustplanaheadforitsfuturecourseof
action,whichisbasicallyprovidedbyplanning
process.Planningdoesnotstopchangesinthe
environment,butgearstheorganisationtotake
suitableactionssothatitissuccessfulinachievingits
objectives.

80. Advantages of Planning
7.HelpinCoordination:Properplanningismadeby
unifyingallareasanddepartmentsofthe
organisation.Itleadstocoordination,andharmony
amongthedepartmentsisachieved.
8.FacilitatesControl:Planningprovidesperformance
standardsandstandardsformeasuringtheprogress
oftheorganisations.Thereforemanagementcan
comparetheactualperformancewiththestandards.
oftheorganisations.Thereforemanagementcan
comparetheactualperformancewiththestandards.
Managercancontrolactionbylookingatdifferent
deviations,ifany.
9.FacilitatesDecision-making:Planningprovidesa
frameworkfordecision-making.Sincetheplanning
providesforfeedback,periodicevaluation,and
indicationforanydeviation,correctiveactioncanbe
takenwhichleadstobetterdecision-making.

81. Advantages of Planning
10.EncouragesInnovationandCreativity:Itbrings
aboutrationalityinmanagerialapproachand
improvementinexecutivethinking.Agood
planningprocesswillprovideavenuesfor
individualparticipationandwillencouragean
atmosphereandwillstimulatemanagerstoatmosphereandwillstimulatemanagersto
achievemore.
11.ImprovesCompetitiveStrength:Sincethe
operationsareplannedinadvance,companycan
takeitsactionconcretely.Itimprovesthe
competitivestrengthoftheorganisation.

82. Advantages of Planning to an Organisation
1.FacingComplexitiesofModernBusiness:Thebusinessis
becomingmoreandmorecomplex.Thereisaglobalisation
ofbusiness,competitionisincreasing,andconstantneed
forcreativityandmanymoreissuescropupindaytoday
working.Thereisaconstantneedtoplanthethingstoface
complexsituations.Planninghelpsasatoolinanticipating
emergingbusinesssituationsandsuggestingwaystotake
advantagefromit.advantagefromit.
2.ForewarnagainstBusinessFailures:Businessfailuresmay
beduetowrongandunscientificplanning.Abadplanning
maycausewastageofresourcesandlossofopportunities.
Thebusinessmayfailtofacecompetitionfromefficiently
rununits.Theindicationsoffuturefailureswillbevisible
fromthecurrentsituation.Betterplanningandproper
implementationwillbeabletosavethebusinessfrom
failures.

83. Advantages of Planning to an Organisation
3.AttentiononObjectives:Planninghelpsinclearly
layingdownobjectivesoftheorganisation.The
wholeattentionofmanagementisgiventowards
theachievementofthoseobjectives.Therecanbe
prioritiesinobjectives,importantobjectivestobe
takenupfirstandotherstobefollowedafter
them.
takenupfirstandotherstobefollowedafter
them.
4.MinimisingUncertainties:Planningisalways
doneforthefuture.Planningisaneffortto
foreseethefutureandplanthethingsinabest
possibleway.Planningcertainlyminimisesfuture
uncertaintiesbybasingitsdecisionsonpast
experiencesandpresentsituations.

84. Advantages of Planning to an Organisation
5.BetterUtilisationofResources:Alltheresourcesare
firstidentifiedandthenoperationsareplanned.All
resourcesareputtobestpossibleuses.
6.EconomyinOperations: Theobjectivesare
determinedfirstandthenbestpossiblecourseof
actionisselectedforachievingtheseobjectives.Theactionisselectedforachievingtheseobjectives.The
operationsselected,beingbetteramongpossible
alternatives,thereisaneconomyinoperations.The
methodoftrialanderrorisavoidedandresources
arenotwastedinmakingchoices.Theeconomyis
possibleinalldepartmentswhetherproduction,
sales,purchases,finances,etc.

85. Advantages of Planning to an Organisation
7.BetterCo-Ordination:Theobjectivesoftheorganisation
beingcommon,alleffortsaremadetoachievethese
objectivesbyaconcertedeffortofall.Theduplicationin
effortsisavoided.Planningwillleadtobetterco-ordination
intheorganisationwhichwillultimatelyleadtobetter
results.
8.EncouragesInnovationsandCreativity:Abetterplanning
systemshouldencouragemanagerstodevisenewwaysof
doingthethings.Ithelpsinnovativeandcreativethinking
amongmanagersbecausetheywillthinkofmanynew
thingswhileplanning.Itisaprocesswhichwillprovide
awarenessforindividualparticipationandwillencourage
anatmosphereoffranknesswhichwillhelpinachieving
betterresults.

86. Advantages of Planning to an Organisation
9.ManagementbyExceptionPossible:Management
byexceptionmeansthatmanagementshouldnotbe
involvedineachandeveryactivity.Ifthethingsare
goingwellthenthereshouldbenothingtoworryand
managementshouldinterveneonlywhenthingsare
notgoingasperplanning.Managersaregivenmore
timeforplanningtheactivitiesratherthanwastingtimeforplanningtheactivitiesratherthanwasting
theirtimeindirectingday-to-daywork.
10.FacilitatesControl:Planningandcontrolare
inseparable.Planninghelpsinsettingobjectivesand
layingdownperformancestandards.Thiswillenable
themanagementtocheckperformanceof
subordinates.Anydeviationscanberectifiedatthe
earliestbytakingremedialmeasures.

87. Limitations of Planning
•Planninghassomelimitations,thoughmostofthe
limitationsarerelatedwiththeuncertaintiesof
thefuture.
•Efficientplanningisnotaneasytask.
•ManagersencountervariousbarriersinmakingManagersencountervariousbarriersinmaking
andimplementingplansdespitetheprimacyof
managementprocess.
•Managersshoulddevelopawarenessofthese
limitations.

88. Limitations of Planning
Themajorlimitationsare:
1.CorporatePlanningisnotIntegratedintotheTotal
ManagementSystem:Thetopmanagementfailsto
identifyandassociateproperlytheformalplanningwith
thecentralconceptoftheorganisation’smission.
2.ThereisaLackofUnderstandingoftheDifferentStepsof
thePlanningProcess:Themanagementmaynotbe
knowledgeableorskilledinunderstandingallstepsofthe
thePlanningProcess:Themanagementmaynotbe
knowledgeableorskilledinunderstandingallstepsofthe
planningrequirements.
3.LackofAccurateInformation:Planningismadebyhaving
informationanddataavailable.Planninginvolves
forecastingandfutureisquiteuncertainandcomplexand
forecastinglosesitsvalueifinformationisnotaccurate.
Sometimes,managersdonotknowhowtousethe
informationefficiently;inthatcaseplanningmaypose
problemsinoperations.

89. Limitations of Planning
Themajorlimitationsare:
4.ManagementatDifferentLevelsintheOrganisationhasnot
ProperlyContributedtoPlanningActivities:Generallyall
strategicplanningaremadeandconductedattopmanagement.
Sometimesmiddlelevelandlowerlevelofmanagement,which
areclosertotheoperation,maynotunderstandallaspectsof
planning.Thiswillaffecttheirfullestcontribution.
5.ResistancetoChange:Mostpeopleresistchangeduetofearof
uncertainty.Planninggivesafalsesenseofsecuritytotheuncertainty.Planninggivesafalsesenseofsecuritytothe
peopleintheorganization.
6.Inflexibility:Planningresultsinrigidityintheinternalworkingof
theorganization.Managersarerequiredtofollowthe
proceduresrigidly.Internalinflexibilitiesthatmaylimitplanning
arerelatedtohumanpsychology,organizationalpoliciesand
procedures,andlong-termcapitalinvestment.Besidethis,
managersareconfrontedwithmuchexternalinflexibility,and
theydonothavecontroloverthem.Thesefactorsaresocial,
legal,technological,etc.

90. Limitations of Planning
Themajorlimitationsare:
7.InadequatePlanning:Therearemanyreasons
whypeoplefailinplanning,bothatthe
formulationlevelaswellasimplementationlevel.
Someofthedrawbacksarelackofcommitmentto
planning,ambiguousobjective,tendencytoplanning,ambiguousobjective,tendencyto
overlookplanningpremises,relianceonpast
happenings,lackofmanagementsupport,lackof
controllingtechniquesandresistancetochange,
etc.Thesefactorsareresponsibleforeither
inadequateplanningorwrongplanninginthe
concernedorganizations.

91. Limitations of Planning
Themajorlimitationsare:
8.TimeandCostFactors:Timeandcostfactorsareconsideredasreal
limitationstoplanning.Thecostofplanningshouldnotbeinexcessofits
contributionandmanagerialjudgementisnecessarytobalancethe
expensesofpreparingtheplansagainstthebenefitsderivedfromthem.
Timeisalimitingfactorforeverymanagerintheorganization,because
enoughtimemaynotbeavailabletogothroughtheentireplanning
process.ThePlanninginvolvescostonthepartoftheorganization.Costs
increaseinplanningifitbecomesmoredetailed.Thus,planningcannot
beundertakenbeyondacertainlimit.Itmustjustifyitscosts.Withbeundertakenbeyondacertainlimit.Itmustjustifyitscosts.With
regardtocost,itshouldnotbe,inanysituation,morethanthevalueof
planningorbenefitsderivedfromit.
•Thesevariousfactorscontributetothelimitationsofplanning
eithermakingplanningineffectiveormakinglesserdegreeof
plannedwork.
•However,itshouldberecognizedandacceptedthatplanningis
essential,andmanagersmusttakestepstomakeitmoreeffective.

92. Strategic Planning –Meaning & Process
•Strategicplanningistheprocessofdocumenting
andestablishingadirectionofabusiness–by
assessingbothwhereyouareandwhereyou’re
going.
•Strategicplanningconsistsofanalyzingthe
businessandsettingrealisticgoalsandobjectives.
•Thisleadstothecreationofaformaldocument
thatlaysoutthecompany’sviewsandgoalsfor
thefuture.

93. Strategic Planning –Meaning & Process
•Thestrategicplangivesyouaplacetorecordyour
mission,vision,andvalues,aswellasyourlong-
termgoalsandtheactionplansyouwilluseto
reachthem.
•Awell-writtenstrategicplancanplayapivotal
roleinanybusiness’sgrowthandsuccessbecauseroleinanybusiness’sgrowthandsuccessbecause
ittellsyouandyouremployeeshowbestto
respondtoopportunitiesandchallenges.
•Thefuturesuccessofabusinessdependson
effectivestrategicplanning.Itisaprocessof
lookingaheadthatshouldinvolvetheentire
business.

94. Strategic Planning –Meaning & Process
Benefits of Strategic Planning
•Thestrategicplanningprocesscantakesome
time,butitisbeneficialforeveryoneinvolved.
•Asthebusinessowner,youwillhaveabetteridea
ofthegoalsandobjectivesyouwanttoofthegoalsandobjectivesyouwantto
accomplishandapathtodothat.
•Foryouremployees,theprocesscanfosteran
increaseinproductivity—contributingtothe
successofthebusiness.

95. Strategic Planning –Meaning & Process
The Strategic Planning Process
•Thestrategicplanningprocesshasthreephases:
discussion,development,andreviewand
updating.
•ThegoalofthestrategicplanningprocessistoThegoalofthestrategicplanningprocessisto
ensureeveryoneinthebusinessisalignedwhenit
comestothebusiness’sgoalsandobjectives,as
wellastocreateaformalstrategicplan
document.

96. The Strategic Planning Process
Discussion Phase
•Thediscussionphaseismeanttogatherasmuch
information,opinions,andinputaspossible.
•Setupascheduledmeetingwiththeemployees
andanyotherstaffinyourbusinesswhowillbeandanyotherstaffinyourbusinesswhowillbe
involvedwithstrategicplanning.
•Makesureyouhaveanagendaandclear
expectationsofwhatyouwanttoaccomplishin
eachmeeting.Thiswillkeepdiscussionsontrack
andhelppreventdistractions.

97. The Strategic Planning Process
Discussion Phase
•Inthefirstfewmeetings,trytoanswerquestions
thatwillhelpyoudefinethebusiness’scurrent
status,suchas,“Wherearewenow?”and
“Whereareourcompetitors?”
•Onceyouhaveagoodideaofwherethebusiness
is,youcanfocusinonspecificdetailsinfuture
meetings.

98. The Strategic Planning Process
Discussion Phase
•Inadditiontoregularmeetingswithyouremployees
atyourbusiness,youcanalsoreachouttovendors,
investors,analysts,andotherpeopleoutsideofyour
companytogatherinformation.
•Externalpeoplewillhaveauniqueperspectiveonnot
onlyyourbusiness,butalsotheindustryyouare
•Externalpeoplewillhaveauniqueperspectiveonnot
onlyyourbusiness,butalsotheindustryyouare
operatingin.
•Gettingtheiropinionsonwheretheythinkthe
industryisgoingandwhattheythinkwillchangein
thefuturecanhelpyouputtogetheryourstrategic
plananddeterminewhereyouwantyourbusinessto
bedowntheroad.

99. The Strategic Planning Process
Discussion Phase
•YoucanalsoconductaSWOTanalysis.
•SWOTstandsforStrengths,Weaknesses,
Opportunities,andThreats.
•WhenyouareconductingaSWOTanalysis,you•WhenyouareconductingaSWOTanalysis,you
andyouremployeeswillexaminewhatyour
businessdoeswell,whereitcanimprove,any
futureopportunitiestopursuethatcouldhelp
facilitategrowthandsuccess,andany
competitorsorexternalfactorsthatcouldprevent
thebusinessfromsucceeding.

100. The Strategic Planning Process
Discussion Phase
•Yourstrengthsshouldbeprettyeasytoidentify.
•Whenyouarediscussingyourbusiness’s
weaknesses,don’tbeafraidtobecandid.
•Everybusinesshasweaknessesandthingstowork•Everybusinesshasweaknessesandthingstowork
on.
•Anyweaknessyouandyouremployeesnote
meansitissomethingyouwillaimtoimproveon
inthefuturewithadetailedinitiativeoutlinedin
thestrategicplan.

101. The Strategic Planning Process
Discussion Phase
•Opportunitiesavailabletoyourbusinessmaybe
prettyclear,whileidentifyingthreatstoyour
businesscanbemoredifficult.
•Speakingwithpeopleoutsideofthecompany
shouldgiveyouagoodideaofwheretheindustryshouldgiveyouagoodideaofwheretheindustry
couldbeheadingandifthereareanymajor
competitorsorchallengescoming.
•Ifyoucanidentifyanumberofthreatsand
challengestoyourbusinessearlyon,itputsyouin
abetterpositiontoaddressthemifandwhenyou
encounterthemdowntheroad.

102. The Strategic Planning Process
Development Phase
•Afteryouhavecollectedalloftheinformation,it
istimeforthedevelopmentphase.
•Thisiswhenyouwillstartputtingtogetheryour
business’sstrategicplan.business’sstrategicplan.
•Astrategicplanconsistsoffivekeycomponents:a
visionstatement,amissionstatement,goalsand
objectives,anactionplan,anddetailsonhow
oftenthestrategicplanwillbereviewedand
updated.

103. The Strategic Planning Process
Development Phase
•Decidewithyouremployeeswhatyouwilluseto
createthestrategicplan.Areyougoingto
purchasesoftwaretohelpyoucreateandhouse
theplan?Orareyougoingtocreatetheplan
yourselfandsaveitinthecloudforeasieraccess?yourselfandsaveitinthecloudforeasieraccess?
•Whenyouarecreatinggoalsandobjectivesfor
yourbusiness,makesuretheyarerealisticand
measurable.
•Workwithyouremployeestocreategoalsand
objectivesforatleastthenextonetothreeyears.
Anddiscusshowthesegoalsandobjectiveswill
bemeasuredandtracked.

104. The Strategic Planning Process
Development Phase
•Forexample,ifyouhaveagoalofincreasingsales
by10%inthenextyear,youcantrackthisby
measuringsalenumbers.
•EquallyimportantishavinganactionplantoEquallyimportantishavinganactionplanto
achievethesegoalsandobjectives.Ifyouare
tryingtoincreaseyoursalesby10%inayear,you
canpursuemoremarketingandsocialmedia
outreachaspartofyouractionplan.
•Ifanactionplandoesn’thelpyourbusiness
achieveitsgoals,theplanneedstoberewritten.

105. The Strategic Planning Process
Review and Updating Phase
•Acriticalpartofthestrategicplanshouldaddress
howoftenitwillbereviewedandupdated.
•Designatesomeonetoberesponsiblefor
reviewing,updating,andsharinganychangesreviewing,updating,andsharinganychanges
withtherestofthecompany.
•Makesureeveryoneinthebusinessisawareof
thechangesandhowtheyaffecttheoverall
strategicplan.

106. The Strategic Planning Process
Review and Updating Phase
•Thestrategicplanismeanttobeafluiddocument;
don’tfallintothetrapofcreatingthedocumentand
lettingitsitonashelfforyears.
•Ifyoudevelopedmeaningfulobjectivesandaction
plans,theyshouldhelpwithregularlycheckingthe
strategicplan.Forexample,ifyouractionplanstrategicplan.Forexample,ifyouractionplan
requiresyoutoputinsalesnumberseveryquarterto
trackrevenue,youcouldtakethattimetoreviewthe
restoftheplan.
•Youcanalsosetanalerttocheckthestrategicplan
onaregularbasis.Whetheritiseveryfewmonths,
everyquarter,oreveryyear,arecurringalertcanhelp
youreviewandupdatethedocument.

107. The Strategic Planning Process
Review and Updating Phase
•Whenyouarereviewingyourstrategicplan,you
mayfindthatyouarenotontracktomeetan
objectiveorgoalthatyoupreviouslysetup.
•Don’tpanic.Reassessthesituationand,ifyouDon’tpanic.Reassessthesituationand,ifyou
needto,discusstheissueswithyouremployees.
•Figureoutwhatwentwrongandwhyyour
businessisn’tonpace;maybethegoalwastoo
ambitiousornotrealistic.
•Changethegoalorobjectiveandupdatethe
actionplantohelpyougetbackontrack.

108. The Strategic Planning Process
Review and Updating Phase
•Youalsomayfindthatyourbusinesshasmeta
goalorobjectiveearlierthanyouthoughtyou
would.
•Ifso,youcancreateanewgoalorobjectivetoIfso,youcancreateanewgoalorobjectiveto
worktoward,ortrytomaintaintheprogressyou
havealreadymade.
•Discusstheideaswithyouremployeestosee
whattheythinkispossible.

109. Management by Objective (MBO) –Peter Drucker
•Managementbyobjectives(MBO),also
knownasmanagementbyresults(MBR),was
firstpopularizedbyPeterDruckerinhis1954
book–ThePracticeofManagement.
•Managementbyobjectivesistheprocessof
definingspecificobjectiveswithinandefiningspecificobjectiveswithinan
organizationthatmanagementcanconveyto
organisationmembers,thendecidinghowto
achieveeachobjectiveinsequence.

110. Management by Objective (MBO) –Peter Drucker
•Thisprocessallowsmanagerstotakework
thatneedstobedoneonestepatatimeto
allowforacalm,yetproductivework
environment.
•Thisprocessalsohelpsorganizationmembers
toseetheiraccomplishmentsastheyachievetoseetheiraccomplishmentsastheyachieve
eachobjective,whichreinforcesapositive
workenvironmentandasenseof
achievement.

111. Management by Objective (MBO) –Peter Drucker
•AnimportantpartofMBOisthemeasurement
andcomparisonofanemployee's
actualperformancewiththestandardsset.
•Ideally,whenemployeesthemselveshavebeen
involvedwiththegoal-settingandchoosingthe
courseofactiontobefollowedbythem,theyare
morelikelytofulfilltheirresponsibilities.morelikelytofulfilltheirresponsibilities.
•Thesystemofmanagementbyobjectivescanbe
describedasaprocesswherebythesuperiorand
subordinatejointlyidentifycommongoals,define
eachindividual'smajorareasofresponsibilityin
termsoftheresultsexpectedofhimorher,and
usethesemeasuresasguidesforoperatingthe
unitandassessingthecontributionofeachofits
members.

112. Management by Objective (MBO) –Peter Drucker
•MBOwaspopularizedbycompanieslike
Hewlett-Packard,whoclaimeditledtotheir
success.
•Manyothercorporationspraisethe
effectiveness of MBO,
includingXerox,DuPont,Intel,andcountlessincludingXerox,DuPont,Intel,andcountless
others.
•CompaniesthatuseMBOoftenreportgreater
salesratesandproductivenesswithinthe
organization.

113. Management by Objective (MBO) –Peter Drucker
•MBOistheprocessofemployers/supervisors
attemptingtomanagetheirsubordinatesby
introducingasetofspecificgoalsthatboth
theemployeeandthecompanystriveto
achieveinthenearfuture,andworkingto
meetthosegoalsaccordingly.meetthosegoalsaccordingly.
•Toensurecontinuingtoprioritizeproductivity,
managerscanutilizetheconceptofMBO,a
processthatcallsforworkersofalllevelsto
worktogethertoreachacommongoal.

114. Five steps to MBO
1.Revieworganizationalgoal
2.Setworkerobjective
3.Monitorprogress
4.Evaluation
5.Givereward5.Givereward

115. Five steps to MBO
1.Revieworganizationalgoal:
•IntheMBOparadigm,managersdetermine
themissionandthestrategicgoalsofthe
enterprise.
•Thegoalssetbytop-levelmanagersarebased•Thegoalssetbytop-levelmanagersarebased
onananalysisofwhatcanandshouldbe
accomplishedbytheorganizationwithina
specificperiodoftime.
•Anorganizationorbusinessmustfindspecific
goalstoaimforin.

116. Five steps to MBO
2.Setworkerobjective:
•ThemnemonicS.M.A.R.T.isassociatedwiththe
processofsettingobjectives."SMART"objectives
are:
•Specific-
Targetaspecificareafor
improvement.
•Measurable-
Quantifyorsuggestanindicator
•Measurable-
Quantifyorsuggestanindicator
ofprogress.
•Assignable-
Specifywhowilldoit.
•Realistic-
Statewhatresultscanrealisticallybe
achieved,givenavailableresources.•Time-bound-
Specifywhentheresult(s)can
beachieved.

117. Five steps to MBO
2.Setworkerobjective:
•Objectivescanbesetinalldomainsofactivities,
suchasproduction,marketing,services,sales,
R&D,humanresources,finance,andinformation
systems.
•Someobjectivesarecollective,andsomecanbe
goalsforeachindividualworker.goalsforeachindividualworker.
•Bothmakethetaskathandseemattainableand
enabletheworkerstovisualizewhatneedstobe
doneandhow.
•Managersneedtocalltheteamtogetherand
discusstheirSMARTgoalstoensureeveryoneis
onthesamepageandunderstandstheirpartin
theoverallobjectivesoftheorganization.

118. Five steps to MBO
3.Monitorprogress:
•Frequentreviewsandinteractionsbetween
superiorsandsubordinateshelpsin
monitoringtheprogress.
•Objectivesneedquantifyingandmonitoring.•Objectivesneedquantifyingandmonitoring.
•Reliablemanagementinformationsystemsare
neededtoestablishrelevantobjectivesand
monitortheir"reachratio"inanobjective
way.

119. Five steps to MBO
4.Evaluation:
•AnimportantpartofMBOisthe
measurementandcomparisonof
anemployee'sactualperformancewiththe
standardsset.
•MBOisagoal-directedapproachto
performanceappraisalinwhichemployees
andmanagerstogethersetgoalsforthe
upcomingevaluationperiod.
•Aratingisthendonebydecidingwhether
thesegoalsaremet.

120. Five steps to MBO
5.Givereward:
•Everytimeagoalhasbeenmet,theworkeris
givenarewardtoacknowledgethe
achievement.
•Payincentives(bonuses)areoftenlinkedto•Payincentives(bonuses)areoftenlinkedto
resultsinreachingtheobjectives.

121. Management by Objective (MBO) –Peter Drucker
•TheprincipleofMBOisforemployeestohave
aclearunderstandingoftheirrolesandthe
responsibilitiesexpectedofthem,sotheycan
understandhowtheiractivitiesrelatetothe
achievementoftheorganization'sgoals.
MBOalsoplacesimportanceonfulfillingthe•MBOalsoplacesimportanceonfulfillingthe
personalgoalsofeachemployee.

122. Benefits of MBO
•Motivation–Involvingemployeesinthe
wholeprocessofgoalsettingandincreasing
employeeempowerment.Thisincreases
employeejobsatisfactionandcommitment.
•Bettercommunicationandcoordination–
FrequentreviewsandinteractionsbetweenFrequentreviewsandinteractionsbetween
superiorsandsubordinateshelptomaintain
harmoniousrelationshipswithinthe
organizationandalsotosolveproblems.
•Clarityofgoals.

123. Benefits of MBO
•Subordinatestendtohaveahigher
commitmenttoobjectivesastheysetfor
themselvesthanthoseimposedonthemby
anotherperson.
•Managerscanensurethatobjectivesofthe
subordinatesarelinkedtotheorganization'ssubordinatesarelinkedtotheorganization's
objectives.
•Commongoalforwholeorganizationmeansit
isaunifying,directiveprincipleof
management.

124. Requirements for Implementation of MBO
1.TopManagementSupportandCommitment :It
isessentialthatMBOshouldhavethesupport
andcommitmentofthetopmanagement.
Withoutthissupport,MBOcanneverbea
success.Thesuperiorsmustbewillingto
relinquishandsharetheauthoritywiththe
subordinates.Theyshouldconsiderthe
subordinatesaspartoftheteamfordecision
subordinates.Theyshouldconsiderthe
subordinatesaspartoftheteamfordecision
making.
2.ClearGoalSetting:Theobjectivesshouldbe
clearlyformulated,mustberealisticand
achievable.Theyshouldbeclearlyunderstoodby
allconcerned.Thetargetsshouldneitherbevery
highnorverylow.

125. Requirements for Implementation of MBO
3.ParticipativeGoalSetting:Theobjectivesandgoals
shouldbesetwiththeactiveparticipationofthe
subordinates.Thereshouldbeeffectivetwoway
communicationbetweenthesuperiorandthe
subordinatesforsettingthegoals,andfordiscussing
thesubordinates’problems.Theseobjectivesmustbe
properlycommunicatedandclearlyunderstoodand
acceptedbyall.MBOworksbestwhenthegoalsareacceptedbyall.MBOworksbestwhenthegoalsare
willinglyaccepted.
4.OverallPhilosophyofManagement:MBOshouldbe
treatedasanoverallphilosophyofmanagementand
theentireorganization.Itshouldnotbesimplya
performanceappraisaltechniqueoradivisional
process.Itshouldchangeandreplacealltheold
systemsratherthanjustbeingaddedtothem.

126. Requirements for Implementation of MBO
5.DecentralizationofAuthority:MBOwillnotbe
effectiveifthemanagerisnotwillingtodelegate
sufficientauthoritytothesubordinates.The
subordinates,whohavebeengivenchallenging
assignmentsthroughdiscussionwiththe
superior,mustbegivenadequateauthorityto
accomplishtheirgoals.Otherwisetheywillnot
bewillingtoacceptnewassignmentsandthey
accomplishtheirgoals.Otherwisetheywillnot
bewillingtoacceptnewassignmentsandthey
willresistthesettingofclearlydefinedgoals.
6.RevisionandModificationGoals:Thegoalsmust
becontinuouslyreviewedandmodified,asthe
changedconditionsrequire,toavoidinflexibility.
Thereviewtechniqueshouldbesuchthatall
deviationsarecaughtearlyandcorrected.

127. Requirements for Implementation of MBO
7.OrientationandTrainingofExecutives:Asthephilosophy
ofMBOistobeimplementedbytheexecutives,theymust
begivenformaltraininginunderstandingthebasisaswell
asthecontentsoftheprogramme.Theymustbe
adequatelyorientedaboutthevalueofMBO.Theyshould
betrainedinhowtosetthegoals,themethodsandtools
toachievethesegoals,methodsofreviewsandevaluation
ofperformanceandprovisiontoincludeanyfeedbackthat
maybegiven.maybegiven.
8.IntegrationofMBOProgramme :MBOcannotbe
implementedasanisolatedprogramme.Itshouldbe
acceptedasastyleofmanagingandshouldbesynthesized
withtheorganizationalclimate.Allpersonnelinvolved
shouldhaveaclearunderstandingoftheirrole,authority
andtheirexpectations.Thesystemshouldbeabsorbed
whollybyalldepartmentsandmembersofthe
organization.

128. Planning Premises –Meaning
•Planningismadeforthefuture.
•Futureisuncertainandthemanagement
makescertainassumptionsaboutthefuture.
•Theassumptionsarenottobebasedon
hunchorguesswork.Itshouldbedevelopedhunchorguesswork.Itshouldbedeveloped
throughscientificforecastingoffutureevents.
•Planningpremisesaretheanticipated
environmentinwhichplansareexpectedto
operate.

129. Planning Premises –Meaning
•Planningpremisesincludeassumptionsor
forecastsofthefutureandknownconditionsthat
willaffectthecourseofplans–suchasprevailing
policiesandexistingcompanyplansthatcontrols
thebasicnatureofsupportingplans.
•Theassumptionsderivedfromforecastingand•Theassumptionsderivedfromforecastingand
usedinplanningarecalledasplanningpremises.
•Planningpremisesprovideaframeworkfor
planningandactioninthemidstofuncertainties
inthebusinessenvironment.
•Theyimplynotonlytheassumptionsaboutthe
futurebutalsopredictions.

130. Planning Premises –Meaning
•Planningpremisesconstitutetheframework
withwhichplanningisdone.
•Theyprovidethebedrockuponwhichfuture
courseofactionisbased.
•Tohaveeffectiveplanning,plansmustbe•Tohaveeffectiveplanning,plansmustbe
basedonsoundpremises.
•Thereforepremisesaretobeestablishedon
thebasisofsystematicforecasting.
•Effectiveplanningislargelydependentonthe
correctknowledgeandchoiceofplanning
premises.

131. Planning Premises –Meaning
•Theplanningpremisesaretobecorrectly
formulatedwithoutwhichplanningwillbe
withoutproperfoundation.
•Thereareinnumerableforcesandfactorswhich
reactonbusinesseconomy.
•Amanagermustconsidertheseforcesand
factorswhileformulatingpremises.factorswhileformulatingpremises.
•Suchforcesmaybeinternalorexternal.
•Themanagerrecognisesthestrategic,crucialand
limitingfactors.
•Basedonthisthemanagerselectstheproperand
adequatepremisesuponwhichthesuper
structureofplanningareraised.

132. Planning Premises –Types
Planning premises may be classified as:
(a) Internal and external
(b) Tangible and Intangible
(c) Controllable, semi-controllable and
uncontrollableuncontrollable
(d) Constant and variable

133. Planning Premises –Types
(a)InternalandExternalPremises:
•Internalpremisesarethosewhichexistwithin
thebusinessenterprise.Thismayincludemen,
material,moneyandmethods.Competenceof
managerialpersonnelandskilloflabourforceare
someoftheimportantinternalpremises.someoftheimportantinternalpremises.
•Externalpremisescentreroundthemarketsand
derivedfromtheexternalenvironment
surroundingthebusiness.Examples:Product
market,moneymarket,populationgrowth,
governmentpolicies,businesscycles
technologicalchanges.

134. Planning Premises –Types
(b)TangibleandIntangiblePremises:
•Tangiblepremisesarethosewhichcanbe
measuredquantitatively.Theymaybe
quantifiedintermsofmoney,timeandunits
ofproduction.
•Intangiblepremisesarethosewhichcannotbe
measuredquantitatively.Examplesare:
Reputationofthebusiness,Publicrelations,
employeemorale,motivationetc.Planningis
toconsiderbothtangibleandintangible
premises.

135. Planning Premises –Types
(c)Controllable,Semi-Controllableand
UncontrollablePremises:
•Therearecertainfactorswhicharewellwithin
thecontrolofthemanagementtoagreat
extent.Factorslikematerials,moneyand
machinesareareaswheremanagementhasmachinesareareaswheremanagementhas
maximumcontrolovertheirfuture
commitments.Themanagementcandecide
whatpolicies,procedures,rulesandstrategies
aretobefollowedintheorganisationfor
achievingtheobjectives.

136. Planning Premises –Types
(c)Controllable,Semi-ControllableandUncontrollable
Premises:
•Semi-controllablepremisesarethoseassumptions
aboutfuturewhichareunderthepartialcontrolofa
business.Examplesofsuchpremisesaredemandfor
theproduct,Tradeunionrelations.
•Non-controllablepremisesareentirelybeyondthe•Non-controllablepremisesareentirelybeyondthe
scopeofbusinesslikegovernmentpolicy,international
tradeagreements,wars,naturalcalamitiesnew
discoveriesandinventionsetc.Sucheventscannotbe
predictedorcontrolled.Thesefactorsdisturballwell
thought-outcalculations.Allintangiblepremisesalso
fallinthiscategoryashumanbehaviouralsocannotbe
predictedaccurately.

137. Planning Premises –Types
(d)ConstantandVariablePremises:
•Constantpremisesarethosewhichbehaveinsimilar
fashionirrespectiveofactiontaken.Theyaredefinite,well
knownandwell-understood.Thebehaviourofconstant
premisesisnotsubjecttochanges–theseareignoredin
planning.Suchfactorsaremen,machineandmoney.
•Variablepremisesarethosewhichvaryinrelationtothe•Variablepremisesarethosewhichvaryinrelationtothe
courseofaction.Themanagementhastoconsiderthese
factorsinformulatingplansastheirvariationsare
dependentontheactiontakenbythemanagement.These
cannotbecontrolledandpredicted.Forexample,sales
volumeoftheenterprisecanbepartlycontrolledbythe
management.Therearecertainotherfactorswhichaffect
thesalesvolumeoftheenterprisebutarequite
uncontrollable.Forecastinggivesthemanageranideaof
knowledgeoftheirvariations.

138. Forecasting –Meaning
•Allorganisationsoperateintheexternal
environmentwhichisdynamicanduncertain.
•Asthisenvironmentcontainsfactorswhich
affectbusinessoperations,plansshouldbe
madekeepingintoaccounttheimpactof
thesefactorsonbusiness.thesefactorsonbusiness.
•Thebehaviourofthesefactorskeepschanging
astheyoperateinthedynamicenvironment
and,therefore,ithastobeprotectedthrough
forecasts.

139. Forecasting –Meaning
•Plansshouldforecasteventsforefficientworkingof
theorganisation.
•Organisationsshouldanalysetheenvironmentthrough
varioustechniquesofforecasting,identifytheir
strengthsandweaknessesandformulatetheplans.
•Forecastsarebasedonpast.Presentbehaviourof
thesefactorsandtheprobabilityoftheiroccurrencein
futureis,toanextent,anextensionofhowtheyhavefutureis,toanextent,anextensionofhowtheyhave
beenoccurringinthepastandpresent,though
however,unprecedentedchangescanalwaystake
place.
•Forecastingisanusefultoolforplanning.Forinstance,
insalesplanning,ithelpstoestimateandforecast
marketshareofafirm.Firmsmayfinditdifficultto
projectsalesoftheirproduct.Identifyingfuturesales
problemsisnoteasyforcompanies.

140. Forecasting –Meaning
•Forecastingisanimportantaidineffective
andefficientplanning.Ithelpsmanagementin
reducingitsdependenceonchance.
•Forecastingishelpfulinbetterplanningbased
onassumptionsaboutthefuturecourseof
events.events.
•Intheworldofuncertainty,futurecannever
bepredictedperfectly.
•Yet,themarketerortheadministratormust
planandtakedecisionsusinghisjudgement
andestimateaboutfuturedevelopments.

141. Forecasting –Techniques
•Thereareanumberoftechniquesthrough
whichforecastscanbemade.
•Notechniquecanuniversallyapplytoall
businesssituations.
•Thesetechniques,singlyorincombination,
areuseddependinguponthebusinessareuseddependinguponthebusiness
situationswhentheyareused.
•Thetechniquesgenerallyfallintotwo
categories:
•QuantitativeForecasting&
•QualitativeForecasting

142. Forecasting –Techniques
1.QuantitativeForecasting:
•Itappliesmathematicalmodelstopastand
presentinformationtopredictfuture
outcomes.
•Thesetechniquesareusedtohaveaccessto•Thesetechniquesareusedtohaveaccessto
hardorquantifiabledata.
•Someofthequantitativetechniquesaretime
seriesanalysis,regressionmodelsand
econometricmodels.

143. Forecasting –Techniques
2.QualitativeForecasting:
•Itapplieswhendataarenotavailableorvery
littledataareavailable.
•Managersusejudgement,intuition,
knowledgeandskilltomakeeffectiveknowledgeandskilltomakeeffective
forecasts.
•Someofthequalitativetechniquesarejuryof
executiveopinionmethod,salesforce
compositemethodandusers’expectation
method.

144. Decision Making -Meaning and Concept
•Oneofthemostimportantfunctionsofa
manageristotakedecisionsinthe
organization.
•Successorfailureofanorganizationmainly
dependsuponthequalityofdecisionthatthe
managerstakeatalllevels.managerstakeatalllevels.
•Eachmanagerialdecision,whetheritis
concernedwithplanning,organizing,staffing
ordirectingisconcernedwiththeprocessof
decision-making.

145. Decision Making -Meaning and Concept
•Adecisionisacourseofactionwhichis
consciouslychosenfromamongasetof
alternativestoachieveadesiredresult.
•Itmeansthattheneedfordecisionarises
whenvariousalternativesarepresent.
•Hence,inanyorganizationanexecutiveforms
aconclusionbydevelopingvariouscoursesof
actionsinagivensituation.
•Itismadetoachievegoalsintheorganization.
•Todecidemeanstocutoffortocometoa
conclusion.

146. Decision Making -Meaning and Concept
•Decisionmakingisamentalprocess.
•Whethertheproblemislargeorsmallinthe
organization,itisusuallythemanagerwho
hastoconfrontitanddecidewhatactionisto
betaken.
•So,thequalityofmanagers’decisionsisthe
yardstickoftheireffectivenessandvalueto
theorganization.
•Thisindicatesthatmanagersmustnecessarily
developdecisionmakingskills.

147. Decision Making -Types
•Thedecisionstakenbymanagersatvarious
pointsoftimemaybeclassifiedthus:
1.PersonalandOrganizationalDecisions
2.IndividualandGroupDecisions2.IndividualandGroupDecisions
3.ProgrammedandNon-Programmed
Decisions
4.Strategic,AdministrativeandRoutine
Decisions

148. Decision Making -Types
1.PersonalandOrganizationalDecisions:
•Decisionstowatchtelevision,tostudy,orretireearlyare
examplesofpersonaldecisions.Suchdecisionspertainto
managersasindividuals.Theyaffecttheorganisation,inan
indirectway.Personaldecisionscannotbedelegatedand
havealimitedimpact.
•Organisationaldecisionsaremadebymanagers,intheir
officialorformalcapacity.Thesedecisionsareaimedatofficialorformalcapacity.Thesedecisionsareaimedat
furtheringtheinterestsoftheorganisationandcanbe
delegated.Whiletryingtodelivervaluetotheorganisation,
managersareexpectedtokeeptheinterestsofall
stakeholdersinmind–employees,customers,suppliers,
thegeneralpublicetc.Theyneedtotakedecisionscarefully
sothatallstakeholdersbenefitbywhattheydo.(Likeprice
theproductsappropriately,donotresorttounethical
practices,donotselllowqualitygoodsetc.)

149. Decision Making -Types
2.IndividualandGroupDecisions:
•Individualdecisionsaretakenbyasingle
individual.Theyaremostlyroutinedecisions.
•Groupdecisions,ontheotherhandaredecisions
takenbyagroupofindividualsconstitutedfortakenbyagroupofindividualsconstitutedfor
thispurpose(forexample,AdmissionCommittee
ofaCollege,BoardofDirectorsinacompany).
Groupdecisions,comparedtoindividual
decisions,havefarreachingconsequencesand
impactanumberofpersonsanddepartments.
Theyrequireseriousdiscussion,deliberationand
debate.

150. Decision Making -Types
3.ProgrammedandNon-ProgrammedDecisions:
•Aprogrammeddecisionisonethatisroutineandrepetitive.
Rulesandpoliciesareestablishedwellinadvancetosolve
recurringproblemsquickly.Forexampleahospitalestablishes
aprocedureforadmittingnewpatients.Thishelpseveryone
toputthingsinplacequicklyandeasilyevenwhenmany
patientsseekentryintothehospital.Programmeddecisions
leavenoroomfordiscretion.Theyhavetobefollowedina
certainway.Theyaregenerallymadebylowerlevelpersonnelcertainway.Theyaregenerallymadebylowerlevelpersonnel
followingestablishedrulesandprocedures.
•Non-programmeddecisionsdealwithunique/unusual
problems.Suchproblemscropupsuddenlyandthereisno
establishedprocedureorformulatoresolvethem.Deciding
whethertotakeoverasickunit,howtorestructurean
organisationtoimproveefficiency,wheretolocateanew
companywarehouse,areexamplesofnon-pro-grammed
decisions.

151. Decision Making -Types
3.ProgrammedandNon-ProgrammedDecisions:
•Thecommonfeatureinthesenon-programmed
decisionsisthattheyarenovelandnon-recurringand
therearenoreadymadecoursesofactiontoresortto.
Because,non-programmeddecisionsofteninvolve
broad,long-rangeconsequencesfortheorganisation,
theyaremadebyhigher-levelpersonnelonly.
•Managersneedtobecreativewhensolvingthe
infrequentproblem;andsuchsituationshavetobe
treateddenovoeachtimetheyoccur.Non-
programmeddecisionsarequitecommoninsuch
organisationsasresearchanddevelopmentfirms
wheresituationsarepoorlystructuredanddecisions
beingmadearenon-routineandcomplex.

152. Decision Making -Types
4.Strategic,AdministrativeandRoutineDecisions:
•Strategicdecision-makingisatopmanagementresponsibility.
Thesearekey,importantandmostvitaldecisionsaffecting
manypartsofanorganisation.Theyrequiresizeable
allocationofresources.Theyarefuture-orientedwithlong-
termramifications.
•Administrativedecisionsdealwithoperationalissues—dealing
withhowtogetvariousaspectsofstrategicdecisionswithhowtogetvariousaspectsofstrategicdecisions
implementedsmoothlyatvariouslevelsinanorganisation.
Theyaremostlyhandledbymiddlelevelmanagers.
•Routinedecisions,ontheotherhand,arerepetitiveinnature.
Theyrequirelittledeliberationandaregenerallyconcerned
withshort-termcommitments.Theytendtohaveonlyminor
effectsonthewelfareoftheorganisation.Generally,lower-
levelmanagerslookaftersuchmechanicaloroperating
decisions.

153. Process / Steps in Decision-Making
•Inthedecision-makingprocess,stepsnormally
refertoprocesses,proceduresandphaseswhich
areusuallyfollowedforbetterdecision.
•Decision-makingisatypicalformofplanning.
•Itinvolveschoosingthebestalternativeamong
variousalternativesinordertorealizecertainvariousalternativesinordertorealizecertain
objectives.
•Thisprocessconsistsoffourinterrelatedstages,
explorative(searchingfordecisionoccasions),
speculative(identifyingthefactorsaffectingthe
decisionproblem),evaluative(analysisand
weighingalternativecoursesofactionand
selective(choiceofthebestcourseofaction).

154. Process / Steps in Decision-Making
Decision-makingconsistsofthefollowingsteps:
1.Perception:
•Perceptionisastateofawareness.Inanyhuman,
consciousnessarisesoutofperception.Consciousness
givestilttothedecision-makingprocess.Theexecutive
firstperceivesandthenmovesontochooseoneofthe
alternativesandthustakesadecision.Perceptionis,
therefore,animportantandfirststepwithoutwhichtherefore,animportantandfirststepwithoutwhich
decisionsrelatingtoanyoftheproblemsofthe
organisationcannotbetaken.
2.Conception:
•Conceptionmeansdesignsforactionorprogrammefor
action.Conceptionrelatestothatpowerofmindwhich
developsideasoutofwhathasbeenperceived.

155. Process / Steps in Decision-Making
Decision-makingconsistsofthefollowingsteps:
3.Investigation:
•Perceptionisasortoflocationoftheproblemwhereasconceptionisthe
preparationofdesignorprogrammeforsolvingtheproblem.Butonly
perceptionandconceptioncannotofferthesolution.Forsolution
investigationistobecarriedout.Theinvestigationprovidesanequipment
withthehelpofwhichthemanagertriestogoaheadwithadebateeither
inhismindindependentlyorwithhisco-workers.Informationrelevantto
aparticularconceptistobesought,acquiredandthenanalysed.Relative
meritsanddemeritsofdifferentanalysedconceptsshouldbemeasured.
Alternativecourseofactionistobethought,analysedandcomparedto.
meritsanddemeritsofdifferentanalysedconceptsshouldbemeasured.
Alternativecourseofactionistobethought,analysedandcomparedto.
Thisneedsinvestigationwithwhichthemanagershouldbearmed.
4.Deliberation:
•Weighingtheconsequencesofpossiblecoursesofactioniscalled
deliberation.Themanagermayeitherweightherelativemeritsand
demeritsandthefollowingconsequencesinhisownmindorsharehis
mentalexercisewithotherstoequiphimbetter.Thedeliberationsremove
biasandequipthemanagerwithdifferentideasandalternativesandhelp
himinarrivingatadecisionwhichmaysafelybeascribedasgood
decision.

156. Process / Steps in Decision-Making
Decision-makingconsistsofthefollowingsteps:
5.Selection:
•Selectionisanactofthechoicewhichinmanagement
terminologyisknownasdecision.Afterdeliberations
oneofthealternatives,thebestpossibleinthe
circumstances,isselected.
6.Promulgation:
•Perception,conception,investigation,deliberationand
lastlyselectionwillcarryweightonlywhenselected
chosenalternative–thatis,thedecision–isproperly
andtimelycommunicatedtoallthosewhoare
concernedandforwhomthedecisionismeant.Only
properpromulgationwillhelpitsexecution.

157. Significance of Decision-Making
i.Managerswhousearational,intelligent,andsystematic
approacharemorelikelytocomeupwithhighquality
solutionstotheproblemstheyfacethantheoneswho
donotusethisapproach.
ii.Rationaldecision-makershaveaclearunderstandingof
alternativecoursesofactiontoaccomplishagoal
underaparticularsetofcircumstances.underaparticularsetofcircumstances.
iii.Rationaldecision-makingisbasedontheinformation
availablewiththedecision-makersandtheirabilityto
evaluatealternatives.
iv.Rationaldecision-makingaimsatdecidingthebest
solutionbyselectingthealternativethatmost
effectivelyfacilitatesgoalachievement

158. Limitations of Decision-Making
i.Itisverydifficultformanagerstobe
completelyrationalintheirdecision-making
sincedecisionsaretakenkeepingthefuturein
mind,andthefutureisveryuncertain.
ii.Itisverydifficulttodeterminealltheii.Itisverydifficulttodetermineallthe
alternativecoursesofactionthatmightbe
followedtoaccomplishagoal.
iii.Rationaldecision-makingbecomesalmostan
impossibletaskwhenonehastoexploreareas
whichhaveneverbeenventuredintobefore.

159. Limitations of Decision-Making
iv.Inmostcases,allpossiblealternatives
generatedcannotbethoroughlyanalyzed,
evenwithsophisticatedanalyticaltechniques
andcomputers.
v.Eventhoughthedecision-makerstrivestobev.Eventhoughthedecision-makerstrivestobe
completelyrational,sometimeslimitationsof
information,timeandcertainty,curb
rationality.
vi.Sometimes,managersallowtheirrisk-
avoidingtendencytodisrupttheirrational
decision-makingprocess.