DECISION MAKING AND THE

PLANNING PROCESS

MEANING OF PLANNING
Planning

is a familiar everyday activity.

Individual and organizations both need plan.
Planning is the first function of
management. It is a basic process we use
to select our goals and to determine how
best to achieve them.
Planning is to find out a suitable course of
action to achieve objectives before taking
action. In other words, Planning is deciding
in advance what is to be done. It is a
projected course of action. It is a design for
tomorrows action.

MEANING OF PLANNING
According

to Koontz & ODonnell, Planning

is deciding in advance what to do, how to
do and when is to do it. Planning bridges
the gap between where we are to, where
we want to go. It makes possible things to
occur which would not otherwise occur.

MEANING OF PLANNING
Managers

at all levels require planning.

Planning is every managers job.

Upper level managers usually plan for the entire

organization and they cover a longer time in
advance.
Lower level managers planned for their own
department or branches and they cover a shorter
time in advance.

Planning

is a process that does not end.

When a plan is agreed upon, plans are to be
implemented. A plan may sound very high,
but it will not carry any meaning or result, if
it is not implemented.

CHARACTERISTICS OF PLANNING
Planning is goal-oriented: Planning is made to
achieve desired objective of business. The goals
established should have general acceptance
otherwise individual efforts & energies will go
misguided and misdirected. Planning identifies the
action that would lead to desired goals quickly &
economically.
Planning is looking ahead: Planning is done for
future. It requires peeping in future, analyzing it
and predicting it. Thus planning is based on
forecasting. It is a mental predisposition for things
to happen in future.

CHARACTERISTICS OF PLANNING
Planning is an intellectual process: Planning is
a mental exercise involving creative thinking, sound
judgments and imagination. It is not a mere
guesswork but a rotational thinking. A manager can
prepare sound plans only if he has sound
judgments, foresight and imagination.
Planning is the primary function of
management: Planning lays foundation for other
functions of management. It serves as a guide for
organizing, staffing, directing and controlling. All
the functions of management are performed within
the framework of plans laid out. Therefore planning
is the basic or fundamental function of
management.

CHARACTERISTICS OF PLANNING

Planning is a Continuous Process: Planning is a

never ending function due to the dynamic business

environment. Plans are also prepared for specific
period of time and at the end of that period, plans
are subjected to revaluation and review in the light
of new requirements and changing conditions.
Planning never comes into end till the enterprise
exists issues, problems may keep cropping up and
they have to be tackled by planning effectively.
Planning is all Pervasive: It is required at all
levels of management and in all departments of
enterprise. Of course, the scope of planning may
differ from one level to another.

CHARACTERISTICS OF PLANNING
The top level may be more concerned about
planning the organization as a whole whereas the
middle level may be more specific in departmental
plans and the lower level plans implementation of
the same.
Planning is designed for efficiency: Planning
leads to accomplishment of objectives at the
minimum possible cost. It avoids wastage of
resources and ensures adequate and optimum
utilization of resources. A plan is worthless or
useless if it does not value the cost incurred on it.
Therefore planning must lead to saving of time,
effort and money. Planning leads to proper
utilization of men, money, materials, methods and
machines.

CLASSIFICATION OF PLANNING
At a general level, there are three kinds of
organizational plans:
1. Strategic Plans: A general plan outlining
decisions of resource allocation, priorities and
action steps necessary to reach strategic goals.
This plan covers a longer span of time. This
involves upper level management.
2. Tactical Plans: A plan aimed at achieving tactical
goals and developed to implement parts of a
strategic plan. These plans involve upper and
middle level management, and compared with
strategic plans, have a somewhat shorter time
horizon.

CLASSIFICATION OF PLANNING
Operational Plan: These plans focuses on
carrying out tactical plans to achieve operational
goals.
These are developed by middle and lover level
managers, and these plans have a short term
focus and relatively narrow in scope.
According to the time frame of plan, Planning can be
classified as1. Short Range Plan: A plan that generally covers
upto a year or less than a year.
2. Long Range Plan: A plan that covers more than
a year and above.
3.

CLASSIFICATION OF OPERATIONAL PLAN

1.

2.

3.

Single use plan: A plan which can be used for a

single time only is known as single use plan. It is
a plan which is developed to carry out a course of
action that is not likely to be repeated in the
future.
Standing plan: These plans are used again and
again and the plan does not loose its effectiveness
because of its repetitive use.
Goal: A plan expressed in terms of results to be
achieved is known as goal.

ADVANTAGES OF PLANNING
1.

2.

Planning minimizes uncertainties: Business is

full of uncertainties. There are risks of various
types due to uncertainties. Planning helps in
reducing uncertainties of future as it involves
anticipation of future events. Although future
cannot be predicted with cent percent accuracy
but planning helps management to anticipate
future and prepare for risks by necessary
provisions to meet unexpected turn of events.
Planning facilitates coordination: Planning
revolves around organizational goals. All activities
are directed towards common goals. There is an
integrated effort throughout the enterprise in
various departments and groups. It leads to better
co-ordination.

ADVANTAGES OF PLANNING
3.

4.

Planning improves employees morale:

Planning creates an atmosphere of order and
discipline in organization. Employees know in
advance what is expected of them and therefore
conformity can be achieved easily. This
encourages employees to show their best and also
earn reward for the same. Planning creates a
healthy attitude towards work environment which
helps in boosting employees moral and efficiency.
Planning helps in achieving wealth: Effective
planning secures economy since it leads to orderly
allocation of resources to various operations. It
also facilitates optimum utilization of resources
which brings economy in operations. It also avoids
wastage of resources by selecting most
appropriate use that will contribute to the
objective of enterprise.

ADVANTAGES OF PLANNING
5.

6.

Planning facilitates controlling: Planning

facilitates existence of certain planned goals and
standard of performance. It provides basis of
controlling. We cannot think of an effective system
of controlling without existence of well thought
out plans.
Planning encourages innovation: In the
process of planning, managers have the
opportunities of suggesting ways and means of
improving performance. Planning is basically a
decision making function which involves creative
thinking and imagination that ultimately leads to
innovation of methods and operations for growth
and prosperity of the enterprise.

DISADVANTAGES OF PLANNING
Internal Limitations: There are several
limitations of planning. Some of them are inherit in
the process of planning like rigidity and other arise
due to shortcoming of the techniques of planning
and in the planners themselves.
1. Time consuming: Planning is a time consuming
process because it involves collection of
information, its analysis and interpretation
thereof. This entire process takes a lot of time
specially where there are a number of alternatives
available. Therefore planning is not suitable during
emergency or crisis when quick decisions are
required.

DISADVANTAGES OF PLANNING
Expensive: Collection, analysis and evaluation of
different information, facts and alternatives
involves a lot of expense in terms of time, effort
and money. According to Koontz and ODonell,
Expenses on planning should never exceed the
estimated benefits from planning.
External limitations of Planning:
Political Climate- Change of government from
Congress to some other political party, etc.
Labor Union- Strikes, lockouts
Technological changes- Modern techniques and
equipments, computerization.
Policies of competitors
Natural Calamities- Earthquakes and floods.
Changes in demand and prices
2.

BARRIERS TO GOAL SETTING AND PLANNING

As part of managing the goal-setting and planning
processes, managers must understand the barriers
that can disrupt them. Managers must also know
how to overcome the barriers. Major barriers are Inappropriate goals
Improper reward system
Dynamic and complex environment
Reluctance to establish goals
Resistance to change
Constraints

OVERCOMING THE BARRIERS

Understanding the purposes of goals and planning
Communication and participation
Consistency, revision and updating
Effective reward system.

Thank You