4.12 Planning

Features & Importance of Planning

  1. What is Planning?
    Planning is deciding what is to be done in the future. It involves anticipation (speculation/guess) of future course of events and deciding the best course of action.
  2. What are the features of planning?
    1. Planning focuses on achieving objectives.
    2. Planning is a primary function of management.
    3. Planning is pervasive (at all levels of management)
    4. Planning is continuous.
    5. Planning is futuristic.
    6. Planning involves decision making.
    7. Planning is a mental exercise. It is mental rather than physical.
      1. Foresight
      2. Intelligent imagination
      3. Sound judgement.
  3. What is the importance of planning?
    1. Planning provides directions.
    2. Planning reduces the risk of uncertainty
    3. Planning reduces overlapping and wasteful activities.
    4. Planning promotes innovative ideas.
      1. during the planning meeting, Peter suggested adding camera function to NOKIA’s new phone.
      2. This idea was accepted by many because it was very innovative.
    5. Planning facilitates decision making.
      1. Finally Boss agreed to make a new version of NOKIA with camera function.
    6. Planning establishes standards for controlling.
      1. NOKIA 1200 was finally launched with camera function.
      2. The planning team evaluated the demand from sale point of view.
  4. What are the limitations of planning?
    1. Planning leads to rigidity.
      1. Employees have to work under strict orders. They enjoy less freedom at workplace.
    2. Planning may not work in a dynamic environment.
      1. NOKIA decided to make a new phone with camera.
      2. When it started the production, Apple came up with WIFI feature.
      3. Planning manager Peter wanted to add WIFI to NOKIA 1200 but Boss disagreed.
    3. Planning reduces creativity.
      1. Although Boss agreed with camera feature, he is not ready to agree with Wifi feature.
      2. He is not creative. Or, he does not want too much creative idea. He is rigid.
    4. Planning involves huge cost.
      1. Board-room meeting. $ 1000.
      2. Discussions with professional experts. $ 500
      3. Preliminary investigation. Peter will be sent to the US to study the demand and functions of Wifi. Cost – $ 20,000
      4. Planning consumes a lot of time.
      5. Planning does not guarantee success.
    5. Natural calamities
    6. Change in government policies
    7. Strategies of competitors.
    8. Change in technology.
    9. Change in fashion and tastes (demand or trends)

Planning – Steps

  1. Setting objectives.
    1. Boss wants to make a new NOKIA phone.
    2. It should be the best with new features.
  2.  Developing Premises.
  3. Identifying alternative course of action.
    1. With Camera.
    2. With Bluetooth.
    3. With Wifi
    4. With all the above
    1. Evaluating alternative courses.
    2. Selecting an alternative.
    3. Implementing the plan
  4. Follow-up action
    1. Periodically review the existing plan – Review the performance of NOKIA 1200 in the market.
    2. Check their relevance – See if there is great demand for NOKIA 1200.
    3. Check their effectiveness –
    4. Monitor constantly
    5. Modify deficiency –
  5. What are the two kinds of plans?
    1. Standing plans : These plans are those which are used again and again whenever a particular situation arises. They are also known as multi-use plans or repeated use plans.
      1. NOKIA produced N 1200 with camera feature. Here, the camera feature was their strategy.
      2. Later, when NOKIA planned N 2000, they fitted dual camera feature.
      3. In both these cases, NOKIA repeated a strategy, ie., camera feature.
      4. Standing plans are prepared by the top level management (Jack and his team)
      5. If NOKIA found that N 2000 didn’t sell as many as N 1200, the company can easily find out problems.
    2. Single use plans (Specific plans).
      1. Single use plans are used for once.
      2. It is to achieve a particular goal.
      3. For a short duration.
      4. They become obsolete (outdated) after achievement.
      5. They are prepared by middle and operational levels of planning.

Elements of Planning

  1. Objectives – “NOKIA is going to launch a new phone with camera feature. The company hopes to sell millions of camera phones worldwide and thus become the number one phone company in the world.”
    1. Objectives are the ends (goals) which the management seeks to achieve within a given time period. “We are going to make a new NOKIA phone with camera feature.”
    2. Set by top level management.
    3. Different departments may have their own objectives.
    4. Objectives define the future state of the affairs. “NOKIA 1200 will sell 1 Million sets in America in March and will become America’s most favored phone.”
  2. Strategy – “NOKIA has a strategy to achieve its objective (camera phone). Using various strategies, the company will achieve its objective.”
  3. What are the three dimensions of strategy?
    1. Determining long-term objectives.
    2. Adopting a particular course of action.
    3. Allocating resources necessary to achieve these objectives.
  4. What are the major strategic decisions of a company?
    1. Will the organization remain in the same line of business? (Bharti airtel decided to fight the competition all alone)
    2. Will the organization tie with another company? (iDEA and Vodafone decided to merge to fight competition)
    3. Will the company rise as the biggest company? (Example – Jio rose like the biggest cellular company)
  5. Marketing strategy
    1. Who are the customers? (Worldwide)
    2. What is the demand for the product? (High demand because cameras cost very high and the phone is cheap. The customer gets a phone at $75 with features like phone + camera + calculator + torch + calendar + notepad)
    3. Which channel of distribution to use? (International agents and international wholesalers)
    4. What is the pricing strategy? (NOKIA will keep the price low to boost sale. The company will not get much profit but it will become popular)
  6. Policy
  7. Procedures
  8. Methods
  9. Rules
  10. What is Budget?
    Budget is a statement of expected results expressed in numerical terms over a specific period of time.

    1. What are the advantages of budgets?
      1. Facilitate comparison of actual results with planned results.
      2. Budgets also serve as control device for measuring actual performances.
      3. Budgets inject clarity, direction and purpose in plans.
    2. What are some important budgets used in an organization?
      1. Sales budget
      2. Production Budget
      3. Cash Budget
      4. Revenue and Expense budget.
  11. What is a Program?
    A program is a combination of objectives, policies, rules, tasks and other elements which are designed to get a systematic working in the organization.

    1. What are the features of a program?
      1. Program establishes sequence (step-by-step approach)
    2. What are some kind of programs?
      1. Sales promotion program.
      2. Training program.
      3. Production program.
  12. What are the differences between policies and objectives
  13. What are the differences between policies and strategies
  14. What are the differences between policies and procedures?
  15. What are the differences between procedures and rules?
  16. What are the differences between rules and methods?

Biju John is an educational writer, educator and the author of OM - The Otherwise Men. He gives live classes on Skype and Facebook. You can attend his 3 Day Classes (English & Business Studies) in Delhi, Bangalore, Qatar and Dubai. His Contact number is 91 9810740061.

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