UNIT 2

PLANNING

Nature and process of planningIntellectual process - deciding in advance what needs to

be done based upon collection, study and analysis of facts. Selection of best alternative from available ones.

Primary function – it is a primary activity to other managerial functions of organizing, staffing, directing, motivating, coordinating, communicating and controlling.

Focus on goals – plans begin with goal setting, developing policies, procedures and strategies to achieve the goals.

Pervasive – it spreads across all management levels i.e. top come up with strategic plans, middle with operational plans and lower with basic team level plans.

Decision making – plans target goals and decision making guides as to which plans to choose from to achieve goals.

Nature and process of planning• Flexible – it should be able to adapt to the

changing business environment.• Continuous process – plans are always

changing and being revised as per the changing environment.

• Future oriented – plans forecast future requirements as per demands.

Types of PlansStanding Plans:These are used for a long time period over and over

again for issues that occur again and again.They include;Objectives – business goals and related goals at all

levels of the organization.Two approaches to setting objectives;Traditional – here goals are set at top level for those

at low level. But this approach is more authoritative and fails to motivate employees.

Modern (Management By Objective) MBO – here organizational objective is converted into a personal objective of the employee which leads to better performance by the employee.

Types of PlansPolicies – they lay down broad limits for executive

action.Kinds of policies are;Originated – made by managers guide subordinates

how to act in a given situation.External/imposed - when government imposes a

condition that certain percent of profit has to used for CSR.

Functional – meant for different functions like financial policy, marketing policy, production policy etc.

Policies at different levels – basic policies used by top managers, general policies used by middle managers and departmental policies used by departmental managers.

Types of PlansProcedures – steps for performing activities.Methods – they provide details about a

particular operation to be carried out. Rules – to operate in a particular way rules are

made. They are used to control all the operations and resources of the organization.

Strategies – an action plan which sets the direction or future course of action the organization will take or the way in which it will go.

Types of strategies;

Types of PlansMaster – to enter a new market with the objective of

getting a 15% market share.Program – to achieve master strategy extensive

advertising and selling strategies would be framed.Minor/sub-strategies – to capture market an

advertising agency would be appointed as a minor strategy.

Benefits of standing plans:Efficiency – routine decisions are promptly taken

using these plans.Delegation of authority – this is done through well laid

down rules and procedures. Strategy and methods help employees take fast decisions.

Types of PlansControl – methods and procedures are

designed to bring about control to the operational activities of the organization.

Co-ordination – the efforts of every individual in the organization are blended with each other through methods, policies and procedures. But standing plans prevent innovation and increases resistance to change.

Types of PlansSingle Use Plans:They are used only in specific situation for taking

care of specific matters.Types of such plans are;Program – program for increasing sales by 20%

would require number of small plans to be formed.

It is a laid down course of action to achieve goals.Budget – it is a monetary/quantitative expression

of business plans.Types of budgets;

Types of PlansAccording to time:Long term budget – for long term planning of

business by the top management.Short term budget – meant for one or two years Current budgets – these are for weeks or

months.

According to functions:Functional/subsidiary budgets – these are

related to different functions like sales, purchase, cash and finance.

Types of PlansMaster budget – various functional budgets

are integrated into a master budget.

According to flexibility :Fixed budget – they are prepared for a given

level of activity and it never changes.Flexible budget – they consists of series of

budgets for different levels of activity.