The Process Of Planning

We have stated earlier that planning is a process consisting of certain steps or series of sequential activities. There is no generally accepted or standard format of the planning process. Different authors have their own ways of conceptualising the planning process. Let us discuss one of the conceptual schemes of the process of planning.

 



i)      Planning to plan : Planning does not just occur on its own or with the issue of an order from the chief executive. It has to be properly and carefully decided upon and planned. The management of the organisation has to inject a culture of planning at all the levels of management by highlighting the imperatives and virtues of planning as also the philosophies and techniques embedded in it. It has to educate the managers in various departments by arranging training programmes and conferences on the methodology of planning so as to improve their competence to plan. The required planning system has to be designed and activated. This is especially so with regard to a new organisation.

 

ii)    Appraisal of internal situation : In this step, top management in collaboration with other managers, have to make an analysis of the current state of affairs with the organisation; its existing plans, processes, activities, performance levels, achievements and problems. It is essential to review in detail the specific strengths and weaknesses of the organisation in its sphere of operations. For example, products and services it supplies, financial position, manpower and managerial resources, competitive position, profitability levels, market image, manufacturing and other facilities, R&D advantages, capital structure, and so on. Management has also to make forecasts and projections of the likely future position and trends of the organisation’s activities in all the above areas.

 

iii)   Appraisal of the external environment : Top management of the organisation is vitally concerned with the analysis of external environmental conditions for planning purposes. This facilitates them in understanding the elements and events in the world outside the organisation which affect its present and future functioning. Appraisal of environmental trends in economic, social, technological and other means of relevance for the organisation is to be continuous process. Not only the present but also the likely future trends have to be appraised through systematic scanning and forecasting mechanisms. This will enable the organisation to identify the present and future opportunities and threats in the various external elements with which the organisation is directly concerned.

 

iv)   Definition of key areas and issues for planning : The appraisal of internal and external environmental conditions gives to the management an idea about what tentative planning the organisation needs. Managers have to ask themselves whether, in the light of external appraisal, the existing businesses, products, markets, processes and practices are relevant, and which aspects of them have to be retained, strengthened, refined and modified. The analysis also may reveal the need for new directions to strengthen the competitive position of the organisation, and to bring about a better alignment between the organisation and the external environment. It may also unearth the possibilities of going into new businesses, new technologies, new products and new markets. An important outcome of the above appraisal is identification of possible measures necessary to cope with environmental opportunities and threats, which are likely to help or hinder, as the case may be, the performance and progress of the organisation.

 

v)     Development of alternative plans for evaluation and choice : In this stage, managers have to apply their creative and innovative skills to generate alternative plans, missions, objectives, strategies, policies and programmes, etc., on the basis of assessment of planning needs. They are generally of corporate-wide and long-range in character, ranging from 5 to 10 years ahead, depending on circumstances. Development of alternative plans calls for an intensive thinking and search on the part of managers. For example, a business enterprise has several options to increase its economic power and profitability by increasing the sales of its existing products in the existing markets, by exploring new markets, by going in for new products, by acquiring outside enterprises and so on. The objective of improving its economic power could be achieved by one or a combination of some of the above alternative strategies.

An important part of this stage is the evaluation of alternative plans by reference to their comparative merits and demerits whereupon choices have to be made from among the alternatives on the basis of certain predetermined selection criteria. The choices are the decisions of managers which will chart the long-range directions of the organisation for a specified period of time.

 

vi)   Formulation of medium range and short-range plans : The long-range set of organisational plans provide the basis for formulation of more specific medium range and short-range plans. Medium-range plans have a time span of more than one year but upto three years in general. Short-range plans have a duration of one year or less. Medium-range plans and short-range plans are progressively more specific than long-range plans. Short-range plans are also called operational plans and the process of formulating them is called ‘Operational Planning. Medium range plans and short-range plans are generally formulated in such functional management areas like manufacturing, marketing, purchase, personnel, finance, R&D and so on. They are further de-composed into more detailed sectional and unit plans valid for basic units of operations in the organisation.

 

vii)  Arrangements for implementation of plans : Effective implementation of plans and decisions is the crux of the planning process. Since plans are implemented by managers and others at various levels of the organisation, it is essential for top management to enlist their co-operation, participation and commitment for the purpose. Authority and accountability have to be pinpointed specifically among the various managers for implementation of plans, for acquiring and allocation of resources and tasks, for making day-to-day decisions and taking initiatives and for activating the communication system in the organisation.

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