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Basic Concept of Planning

Planning is an intellectual process, the conscious determination of courses of action, the basing of decision on purpose, facts and considered estimates. It means planning refers to the following acts: Formulating goals Identifying activities to be undertaken to attain these goals Choosing the means and allocating the resources to attain the goals Estimating the results. Basic questions which are to be answered by the plan are: 1. Why a particular action is necessary? ( Goal orientation) 2. What is to be done? ( Different stages of activities) 3. When to do? ( Framing the time) 4. Where to do? ( place where the activities will be undertaken) 5. Who will do? ( fixing responsibility) 6. How will it be done? ( process or techniques to be followed) Planning can be formal Specific goals covering the period is defined Goals are written and shared among the organizational members Specific action programmes are incorporated Planning can be informal Nothing is written down Little or no share of goals with others in the organization Often done in small businesses where the owner-manager has a vision of where he or she wants the business to go and how to get there. More common in smaller organizations Relationship between Planning and Decision making Decision making is required for setting goal and goal setting is the basic factor of plan Decision making is the catalyst that drives planning. Deciding best plan for attaining goal Alternative selection requires decision Support for implementing plan Evaluation of planning Planning process Being aware of opportunities The market competition Customer wants Our strength and weakness Setting objectives/ goals Where we want to be What and when we want to accomplish Traditional goal setting and management by objectives ( setting goal jointly and reward are allocated on the basis of progress.

Analysis of environmental forces Internal and external environmental forces Identifying alternatives Most promising alternatives to attain our goals Comparing alternatives in light of goals sought Alternative which gives best chance of meeting goals at the lowest cost and high profit Choosing an alternative Selecting one which we can pursue Formulating supporting plans Such as- buy equipment, outsourcing or recruiting staffs etc. Budgeting Budgeting as; volume and price of sales, operating expenses Types of Plan Strategic plans Strategic plans are plans that apply to the entire organization, establish the organizations overall goals, and seek to position the organization in terms of its environment. It determines the general outline of resource allocation , priorities and action steps necessary to reach strategic goal. Operational plans Operational plans (sometimes referred to as tactical plans) are plans that specify the details of how the overall goals are to be achieved. (monthly, weekly, and day-to-day plans) Strategic plan includes the formulation of goals where as operational plan define ways to achieve the goal. Long-term plans those plans with a time frame beyond three years - Managers of organizations in complex , volatile environment face a special dilemma. Such organizations probably needs the longer time horizon so, they prepare long term plan. - They constantly monitor the environment Short-term plans those plans covering one year or less. - Useful for day to day operation - It can be action plan ( a plan used to operationalize any other kind of plan) and reaction plan ( a plan developed to react to an unforeseen situation - intermediate term - Any time period in between long term and short term plan. - Useful to middle level managers. Specific plans are plans that are clearly defined and which leave no room for interpretation. They have clearly defined objectives. Theres no ambiguity and no problem with misunderstanding.

For example, a manager who seeks to increase her firms sales by 10 percent over a given 12-month period might establish specific procedures, budget allocations, and schedules of activities to reach that objectives. The drawbacks of specific plans are that they require clarity and a sense of predictability that often do not exist. Directional plans are flexible plans that set out general guidelines. When uncertainty is high and managers must be flexible in order to respond to unexpected changes, directional plans are preferable. They provide focus but dont lock managers into specific goals or courses of action. Instead of detailing a specific plan to cut costs by 4 percent and increase revenues by 6 percent in the next six months, managers might formulate a directional plan for improving profits by 5 to 10 percent over the next six months. A single-use plan is a one-time plan specifically designed to meet the needs of a unique situation. - Developed to carry out a course of action not likely to be carried out in the future Standing plans are ongoing plans that provide guidance for activities performed repeatedly. - Developed for activities that recur regularly over a time and it specifies the organizations general response to a problems or situation. Standing plans include policies, rules, and procedures.

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