Planning is the important and primary function of management. It sets all other functions into action. It is the beginning of process of management. A manager must plan before coming in action. It is concerned in deciding in advance what to do? How to do? When to do? Why to do? Where to do? And who to do? And answering all these questions depends upon intelligence. Planning is a fully mental work.
Planning is the conscious process selecting and developing the best course of action to accomplish an objective. It is the process of deciding in advance what is to be done .it also involves the selection of objectives, policies, procedures and programs from among alternatives. It also includes selecting purposes and objectives of the actions to achieve them. Planning requires decision-making that is choosing from among alternative future course of action.
Planning is thus: -
· Planning is concerned with future and it helps the management to look ahead.
· It involves thinking about organization’s prosperity and helps analysis of information.
· It involves a predetermined course of action.
· It specifies the objectives to be attained in future.
· It is basically a problem of choosing from the alternative courses of action.
· It relates with thinking before doing.
· It involves both decision making and problem solving.
· Its objective is to achieve better results.
1. Planning is a Primary Function of Management:- Planning is a Primary Function of Management. Setting of goals and lines of action precedes the organization, direction, supervision and control. Planning precedes other functions of management. It is primary requisite but all functions are inter-connected.
2. Thinking and intellectual process: - Planning is intellectual process of predetermined thinking. It is a process of deciding about future actions. It includes the process where a number of steps are to be taken to decide the future course of action. Managers consider various courses of action which is necessary to achieve the desired goals and learn about the merits and demerits of every course of action and then finally decide what course of action may suit them best.
3. Planning is a continuous process: - Planning is a continuous process of a manager upon some assumptions. Therefore, the manager has to revise and adjust plans in the changing circumstances. Planning is a continuous process It involves continuous collection, evaluation and selection of data, and scientific investigation and analysis of the possible alternative courses of action and the selection of the best alternative.
4. Pervasiveness of planning: - Planning follows pervasiveness of planning. It is the function of every managerial personnel. The character, nature and scope of planning may change from personnel to personnel. It is universal activity. It is important to all managers in all levels as planning is required in all levels.
5. Based on facts: - Planning is not guess work but highly based on facts, realities, objectives and forecasting.
6. Goal oriented/ future oriented: - Planning is requires achieving objectives because any formulated objectives are meaningless without plans. It identifies actions that would lead to the desired objectives quickly and economically.
7. Coordination: - Planning helps to coordinate various levels of activities .it provides guidelines to do work to all managers and staffs of all levels.
8. Others: - Planning is a selective process. It helps in increasing the efficiency.
IMPORTANCE OF PLANNING
1. Focus on objectives: -Planning is related to the organizational objectives. All the operations are planned to achieve the organizational objectives. Planning facilitates the achievement of objectives It requires the clear definition of objectives so that most appropriate alternative courses of action are chosen.
2. Reduction of Uncertainties/ change: -Future is full of uncertainties. A business organization can operate successfully if it is able to predict the uncertainties. Some of the uncertainties can be predicted by undertaking systematic analysis and systematic forecasting. Thus, planning helps in reduction of uncertainties which may be caused by changes in all micro and macro level of environment.
3. Economical: - Planning assists in reducing the cost of performance by the selection of only one course of action amongst the different courses of. It removes hesitancy, avoids crises, eliminates false steps and protects against improper deviations.
4. Utilization of Resources: -Planning makes effective and proper utilization of all available resources and makes optimum use of all these resources (men , money , machine and material )
5. Effectiveness: -Planning promotes organizational effectiveness which ensures that the organization is in a position to achieve its objective due to increased efficiency.
6. Co-ordination: Plans unify the activities for development of various sub-plans. Various departments work in accordance with the overall plans of the organization. There is harmony in the organization and duplication of efforts are avoided.
7. environmental adaptation: plans are made only after study of the environment which is said to dynamic in nature. Planning anticipates the environmental changes in advance and future events and prepares action based on those anticipations which helps in innovation and improving creativity.
8. control: controlling cannot be performed without planning because it sets standards that are required for the controlling process.
Methods of planning:
Every organization prepare plans and there are various methods of plans
1. Top-down method of planning: this method of planning is generally done for formulation of goals. They are generally made by top level managers and are communicated to middle level managers for implementation.
This method assumes that top level has the skills and knowledge that is required for planning. Mostly used in centralized organizations where authority and responsibility is in the hands of the managers themselves. And it does not allow other level managers in planning process.
2. Bottom-top method of planning: this method of planning is done by middle level and lower level manages. They formulate plans considering operational level. These plans once formulated will be forwarded to the top level managers for approval and implementation.
It is a decentralized approach.
3. Participative method of planning: this method is mixture of top down and down top method where top level provides guidelines for planning to middle and lower level managers and make them plan under the guidelines only.
Middle and lower level management formulate the plans forward them to top level which is reviewed and finalized by the top level.
It provides flexibility in planning
4. Team method: in this method the planning function is said to be performed by a team who are experts in their field. This team functions as a unit and forward the plans to the top authority for review and finalization.
Types of planning
Corporate or strategic plan | Tactical or division plan | Operational or unit plan |
This plan is prepared by the top level management by considering the long term objectives of the organization and strategies to achieve the defined objectives., the strategic plan may concern with product or service, market competition, social responsibility , introduction of technology, goodwill etc. it is based on analysis of future opportunities and threats. | Tactical plan is prepared by the middle level management by considering short term objectives of the organization. It is the sub division of corporate plan. It is prepared to allocate divisional activities like production, finance, marketing, personnel and others. These plays a mediator between corporate or operational rule | This plan is prepared by the lower level management by considering day to day function of the organization. It is consistent with tactical plan. It prepares schedule of each unit of work. It is concentrated in the best use of organizational resources consisting of manpower materials, money, methods and machine. |
Procedures of planning
1. Analyze opportunities: plans are made considering the opportunities and threats available in the surroundings. Here first SWOT analysis is done to find out strength, weakness and opportunities available in the market.
Strength and weakness belong to internal environment and can be controlled by the organization
Opportunity and threat belong to external environment and organization has to adjust to it.
2. Setting objectives: - objectives are the main part of plan. Setting objectives is the first step of formulating plans, the success or failure of plan depends upon the objectives of the organization. To determine the objectives is the first step and most important procedure of making plan
3. Developing planning premises: - after setting the objectives of the organization planning premises is necessary. It is the second step of formulating plans. Premises are the assumptions of internal and external environment of the organization in which plans are to be implemented. It is related to collect and make analysis of information concerning internal and external environment.
4. Determining alternatives: - after developing planning premises the third step of formulating plan is to determine the alternatives. The process of searching and identifying alternatives is known as determining alternatives. There may be so many alternatives. Reasonable alternatives should be selected among them
5. Evaluating alternatives:- after determining alternatives, each and every alternatives must be evaluated separately. After that, it is determined that which alternative has how much advantage and disadvantages. In other words, plans are evaluated in so many factors like cost factors, risk , benefits, facilities etc
6. Choosing one course of action: - after evaluating alternatives one best alternative must be selected. When all the alternatives are evaluated then all the weaknesses and strength of the alternatives are known. After this, best alternative must be selected. It is the most important step of planning.
7. Formulating detail plan of action: - after choosing one course of action, detailed plan must be formulated. Selecting one course of action is the organized plan. After choosing organizational plan, other departmental plan must be formulated. In other words, basic plan must be expanded into functional areas.
8. Preparing budget: every plan once formulated during the process of implementation it requires money. Budget is prepared to find out possible expenditure for implementation of plan and should be approved by the authority
9. Implementation of plan:- Without this step, other procedures of plan remains as a paper work. This step brings all procedures of plan into action.
10. Reviewing the panning process;- the planning procedures is a continuous function up to the attainment of defined objectives. For this purposed, the evaluation of achievement of work according to time is necessary to know about actual performance
Planning premises
It is related to anticipation of environment in the future they can also be called as assumptions of future based on which planning is done
It is related to forecasting future about demographic trends economic and business conditions, political and legal environment govt policy change in technology future market condition availability of resources and social cultural environment
Planning premises can be classified as follows
Internal premises: they exists within the organization and can be in the form of goals policies programs and resources
External premises: they exist outside the organization and can be in form of political economic, socio-cultural and technological forces
Tangible and intangible premises
Tangible premises can be quantitatively measure
Intangible premises cannot be measured quantitatively, they are qualitative character
Controllable and uncontrollable
Internal premises are controllable and can be changed according to need of management
External premises are uncontrollable and management has to adjust according to it.
Decision making
Meaning of decision making
Decision making is a process of selecting the best among the different alternatives. It is the act of making a choice. There are so many alternatives found in the organization and departments. Decision making is defined as the selection of choice of one best alternative. Before making decisions all alternatives should be evaluated from which advantages and disadvantages are known. It helps to make the best decisions. It is also one of the important functions of management. Without other management functions such as planning, Organizing, directing, controlling, staffing can’t be conducted because in this managerial function decision is very important. According to Stephen P. Robbins, “decision making is defines as the selection of a preferred course of action from two or more alternatives.”
Importance of decision making
1. Implementation of managerial function: Without decision making different managerial function such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an employee does, s/he does the work through decision making function. Therefore, we can say that decision is important element to implement the managerial function.
2. Pervasiveness of decision making: the decision is made in all managerial activities and in all functions of the organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is pervasive.
3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance.
4. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning.
5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative.
6. Successful; operation of business: Every individual, departments and organization make the decisions. In this competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct decisions help in successful operation of business.
Steps in decision making
1. Identification of problems: the first step of decision making is identification of problems. First of all, managers must identify the problem. The problem has to be found and defined. Symptoms are identified and problems should be judged, symptoms are not problems. They are warning signs of problems. So, managers should search for symptoms for identification of problems. Such symptoms can be falling of sales, profit etc. It is said that problem identified is half solved is identification of problem should be effective.
2. Analysis of problem: after identification of problems, the problem should be analyzed by the decision maker. It is the assembly of fact and clarifying it. Relevant information must be collected and analyzed according to the complexity and nature of problems.
3. Developing the alternative solution: after identification and analysis of problems different probable solutions have to be developed which is known as developing the alternative solutions. there may be many alternative past experience, expert opinion, discussions etc which may be helpful to develop the alternative
4. Evaluation of best alternative: after developing the alternative solution evaluation of best alternative is done. It is determined that which alternative has how much advantage and disadvantages. in other words, alternatives are evaluated in so many factors like cost factors, risk , benefits, facilities etc. therefore it is very important
5. Selection of best alternative: after evaluating alternative, the best alternative is to be selected from various alternative. After developing alternative, the managers should taste each of them by imagining things that he has already put in effect. He should try to foresee the desirable consequences of adopting each alternative. It is done for best selection. therefore it is very important
6. Implementation of best alternative: after selection of finest alternative, it must be used in the organization effectively. Effectiveness of decisions in achieving the desired goals depends upon its implementation. It they are not implemented effectively then best results can’t be obtained. Therefore proper implementation of best alternative is necessary.
7. Review of implementation: it is the last step of decision making process. When the implementation of best alternative is reviewed, the process of decision making is finished. The result of implementation should be monitored and evaluated through which effectiveness can be measured.
Types of decision making
1. Programmed and non-programmed decisions: Programmed decisions are those which are normally repetitive in nature and are taken as a routine job and responsibilities. These types of decisions are made by middle level management in accordance with some policies, rules and procedures. They have short term impact. For example: – granting a leave to an employee, purchasing office materials etc. non programmed decisions are non-repetitively taken by top executives. They need to collect data and analyze then and forecast the strategic plans
2. Major and minor decisions: among different decisions some decisions are considerably more important than others and are prioritized. They are called major decisions. For example, replacement of man by machine, diversification of product etc. contrary to that, some of the remaining decisions are considerably less important than others and are not so prioritized. They are minor decisions. For example, store of raw materials etc.
3. Routine and strategic decisions: Routine decisions are those decisions which are considered as tactical decisions. They are taken frequently to achieve high degree of efficiency in the organizational activities. For example, parking facilities, lighting and canteen etc. strategic decisions are those which are related to lowering the prices of products, changing the product etc. they take more fund and degree of partials.
4. Organizational and personal decision: Organizational decision is taken by top executives. For official purpose. They affect the organizational activities directly. Authority is also delegated. Personal decisions are concerned to an employee. The executives whenever takes the decisions personally that is known as personal decisions
5. Individual and group decisions: When a single employee is involved in decision making it is called individual decision. They are taken by ole proprietor when the problem is of routine nature. On the other hand when the decision is of group taken in a large organization where important and strategic decisions are taken the it is a group decision
6. Policy and operating decisions: Policy decisions are taken by top level management to change the rules, procedures, organizational structure etc and they have a long tern effect. Operational decisions are taken by low level management which have short term effect and which affect the day to day operation of the organization.
Decision making styles
Depending on the way manager approaches decision making there are various style of deceion making it depends on the way in which a manager thinks. Few managers are logical thinkers, few are rational thinkers.
They always make sure that the information is consistent before making decision. Others are creative and intuitive
Few styles explain about tolerance for ambiguity (the quality of being open to more than one interpretation; inexactness.)Which can be low or high among the managers.
Based on the way of thinking and tolerance for ambiguity, decision making styles of managers can be of four types
1. Directive style: Under this style managers have a rational way of thinking and low tolerance for ambiguity. Here managers are efficient and logical; they need minimum information and assess only few alternatives.
2. Analytical style: under this style managers have a rational way of thinking and high tolerance to ambiguity. There managers want more information before making decision and are careful decision makers
3. Conceptual style: under this type of style intuitive way of thinking is done and high tolerance for ambiguity. Here managers look out for many alternatives. They focus on long run and always try for creative solutions
4. Behavioral style: under this style intuition way of thinking is done and low tolerance to ambiguity. Here they are concerned about their subordinates and always wait for their suggestions and want to be accepted by others.
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