Perspective Management_2

What is planning?

• Planning involves selecting mission and objectives as well as the actions to achieve them, which requires decision making, that is choosing a course of action from among alternatives.
• Planning strongly implies managerial innovations.
• Planning bridges the gap of from where we are to where we want to go.
Close relationship of planning and Controlling

Types of planning
• Mission or purpose
• Objectives or goals
• Strategies
• Policies
• Procedures
• Rules
• Programs
• Budgets

• Mission or purpose: The basic purpose or function or tasks of an enterprise or agency or any part of it.
E.g. The purpose of business generally is the production and
distribution of goods and services.
The purpose of courts is interpretation of the laws and their
applications.
The purpose of University is teaching, research, and providing
services to community.

• Some writers distinguish between mission and purpose. A business may have a social purpose of producing and distributing goods and services, it can accomplish this by fulfilling a mission of producing certain line of products.
E.g.: Reliance petrochemicals ltd has a mission of searching oil, to produce, refine, and market petroleum and petroleum products.
In the year 1960s the mission of National Aeronautics space Administration (NASA) was to get a person to a moon before the Russians.
• In some businesses or enterprises, the purpose or a mission often regarded as Synergy.
E.g. Many conglomerates have regarded their mission as Synergy.
• Objectives or goals: Objectives or goals are the end towards which an activity is aimed, they represented not only the end point of planning but also the ends towards which organizing, staffing, leading and controlling are aimed.
• Strategies: the determination of basic long term objective of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals.
• Policies: Policies are general statements or understandings that guide or channel thinking in decision making. Not all policies are statements, they are often merely implied from the actions of managers.
E.g.: The president of the company may strictly follow the practice of promoting from within, the practice many then be Interpreted as policy and carefully followed by subordinates.
policies of hiring only university trained engineers, encouraging employee suggestions for improved cooperation, promoting from within, setting competitive prices etc.
• Procedures: Procedures are the plans that establish a required method of handling future activities. They are chronological sequences of required actions. They are guides to actions, rather than to thinking, and they detail the exact manner in which certain activities must be accomplished.
E.g. In a manufacturing company, the procedures for handling orders may involve the sales department (For the original order), the finance department (for acknowledgement of receipt of funds and for customer credit approval), the accounting department (for recording the transaction), the production department (for the order to produce the goods or the authority to release them from stock), and the shipping department( for determination of shipping means and routes)
• Rules: Rules spell out specific required action or non actions, allowing no discretion. The essence of rule is that it reflects a managerial decision that a certain action must or must not be taken. Rules are different from policies in that policies are meant to guide decision making by marking of areas in which managers can use their discretion, while rules allow no discretion in their application.
Eg. “No smoking” is Rule that allows no deviation from stated course of action.
• Programs: Programs are complex of goals, policies, procedures, rules, task, assignment, steps to be taken, resource to be employed, and other elements necessary to carry out the given course of action.
• Budgets: A budget is a statement of expected results expressed in numerical terms. It may be called a quantified plan. The financial operating budget is also called a profit plan. A budget may be expressed in financial terms, in terms of labor hours, unit of product, or machine hours, or in any other numerically measurable terms.
• The budget is necessary for control, but it cannot serve as a sensible standard of control unless it reflects plan.

Steps in Planning
• Being aware of the opportunities: It precedes actual planning and is therefore not strictly apart of the planning process, an awareness of opportunities in the external environment as well as within the organization is real starting point for planning.
• Establishing objectives: Objectives specify the expected results and indicate the end point of what is to be accomplished by the network of strategies, policies, procedures, rules, budgets, and programs.
• Developing premises: Premises are the assumptions about the environment in which the plan is to be carried out. It is important for all the managers involved in planning to agree on the premises.
• Principle of planning premises: the more thoroughly the individuals charged with planning premises, the more coordinated enterprise planning will be.
• Forecasting is important in premising: What kind of markets will there be? What prices? What products? What technical developments? What costs? What wage rates? What tax rates and policies? What new plants? What policies with respect to dividends? What political or social Environment? How will expansion be financed? What are the long term trends?
• Determining alternative course: the fourth step in planning is to search for and examine alternative courses of action, especially those not immediately apparent. There is seldom any plan for which reasonable objectives do not exist and quite often an alternative that is not so obvious proves to be the best.
• Evaluating alternative course: After seeking out alternative courses and examining their strong and week points, the next step is evaluate the alternatives by in the light of premises and goals.
• Selecting a course: this is the point at which the plan is adopted, the real point of decision making.
• Formulating Derivative plan: Derivative plans are almost invariably required to support the basic plan.
• Quantifying Plans By budgeting: After all decisions are made and plans are set, the final step in giving them meaning, that is Quantifying them by converting them into budgets. The overall budget of an enterprise represents the sum total of income and expenses, with the resultant profit or surplus, and the budgets of the major balance sheet items such as cash and capital expenditure.

Long-Range Planning
• Long-Range planning is that activity in a company which sets long-term goals for the firm and then proceeds to formulate specific plans for attaining these goals.
• Long term plan is directed towards the achievement of long-term objectives.
• Long range programs are also formulated as a part of long range planning for which the master strategy is generally formulated.
• It serves as a bridge between current operations and activities and a perceived future mission.
• Long range planning represents the futurity of present decisions, particularly because it is the plan which enables to formulate objectives and goals today for the result to be attained five or ten years later.

How to build a long range plan?
• Companies prepare there plans on the basis of their budgets.
• Some companies prepare an incremental budget, on the basis of which plan is prepared.
• Proper plan must be comprehensive and systematic program guide which cover all elements of business which is integrated into a balanced and synchronized program for the whole operation, for the given long period of time.
• Planning must include activities for expected tangible results on all fronts of the business operation.
• There is a possibility for serious deviations to plans if they are not backed by appropriate forecasts.
• The basic concern of any planner is to reduce risks and uncertainty in his planning.

Forecasting for long range planning
• It is difficult to make long term forecast with ant degree of accuracy.
• Economic factors like world trade, internationalization of business, population trends, general trade cycle, PLC, income pattern, standard of living, technological development, innovations, political changes and many other factors effect forecasting.


How to reduce dangers in long term planning
• The most important responsibility of the planner is that he must be clear about his objective.
• Plan must be considered as preview of things to come, actions should be taken only when there is a distinct advantage in doing it.
• There should be a clear cut distinction between plans, programs, and commitments.
• The planner must spell out the long range program only in necessary details.
• Long term plan should provide sound basis today’s decisions for future action.
• Provisions must be made to integrate short range and medium range plans, to achieve long range plans.
• Provisions must be set for continuous evaluation.
• Every plan must be backed by an appropriate strategy.