Planning Meaning, Definition, Nature, Purpose

Table of Contents:-

1. Meaning of Planning
2. Definition of Planning
3. Nature of Planning 
4. Objectives of Planning 
5. Process of Planning
6. Principles of Planning

Meaning of Planning

It is one of the fundamental functions of management, dealing with charting out a future course of action and deciding in advance the most suitable actions for the achievement of pre-determined goals. Planning is a future course of action. It is an activity of problem-solving and decision making. Courses of action determine to achieve desired objectives. Thus, planning is systematic thinking about ways and means for the accomplishment of pre-determined goals. The arrangement is necessary to ensure the proper utilisation of human and non-human resources. It is all-pervasive, it is an intellectual activity and it also helps avoid uncertainties, confusion, risks, wastage etc.

Definition of Planning

According to Henry Fayol, “Planning is deciding the best alternatives among others to perform different managerial operations to achieve the pre-determined goals”.

According to Koontz and O’Donnell, “Planning is deciding in advance what to do, how to do it when to do it, and who is to do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen”.

It is a detailed programme about future courses of action. The saying holds: “Having a well-thought-out plan is equivalent to completing half of the task”. Therefore, scheduling takes into consideration the available and prospective human and physical resources of the organisation to get effective coordination, contribution and perfect adjustment.

Nature of Planning 

The nature of planning is discussed below.

1. It is Goal-Oriented
2. It is Pervasive
3. It is Continuous
4. It involves Choice
5. It is a Primary Function
6. It is Flexible
7. It is Futuristic
8. It is a Mental Exercise

1) It is Goal-Oriented

Companies establish themselves with a shared objective in mind. Specific objectives are set out in the plans, along with the activities to achieve the goals. Thus, it is purposeful. It has no meaning unless it contributes to the attainment of predetermined organisational objectives.

2) It is a Primary Function

It lays down the base for other management functions. All other managerial functions are conducted within the framework of plans drawn. Thus, it precedes other functions.  It is also referred to as primacy planning. Different management functions are closely related and hold equal priority. However, it provides the foundation of all other functions.

3) It is Pervasive

All levels of management and every department within the organization require it. It is neither an exclusive function of top management nor of any individual department. However, the scope of planning varies at different levels and among different units.

4) It is Flexible

Forecasts play a pivotal role in the creation of plans. Since the future is uncertain, it must cope with changes in future situations. Activities planned with some assumptions about the future may not come true. Under the circumstances, the actual action plan must be revised in light of changing conditions.

5) It is Continuous

Organizations formulate plans with clear timeframes in mind, which could be a month, a quarter, or a year. At the end of that period, there is a need for a new plan to be drawn up based on new necessities and future conditions. Hence, forecasting is a never-ending activity. It is a continuous process.

6) It is Futuristic

Preparation involves looking ahead and scheduling for the future. The purpose of planning is to effectively meet future events to the best of an organisation. It means peeping into the future, analysing it and predicting it. It is, therefore, considered a forward-looking function based on forecasting. Organizations use forecasting to predict future events, possibilities, and conditions, forming plans in response.

7) It Involves Choice

It essentially involves a choice among various alternatives and activities. If there is one possible objective or only one possible course of action, there is no need for it because there is no choice. The need for planning occurs only when alternatives are available. In actual practice, planning presupposes the existence of choices. 

8) It is a Mental Exercise

It requires applying the mind to foresight, intelligent imagination and sound judgment. It is primarily an intellectual activity of thinking rather than doing. because planning determines the action taken. However, thinking for planning needs logical and systematic thinking rather than guessing or wishful thinking.

Objectives of Planning 

The objectives of planning can be understood with the help of the following points:

1. Reduce Uncertainty
2. Bring Cooperation and Coordination
3. Economy in Operation
4. Anticipate Unpredictable Contingencies
5. Achieving the Pre-determined Goals
6. Reduce Competition

1) Reduce Uncertainty

The future is uncertain. It may convert uncertainty into certainty. This is possible to some extent by, planning which is required to reduce uncertainty.

2) Bring Cooperation and Coordination

It can bring cooperation and coordination among various sections of the organisation. The conflicts and rivalries among departments could be avoided through organising. Besides this, It avoids duplication of work.

3) Economy in Operation

As already pointed out, planning selects the best alternatives among various available alternatives. This will lead to the effective utilisation of resources. The objectives of the organisation are achieved efficiently.

4) Anticipate Unpredictable Contingencies

Some events could not be predicted. These events are termed contingencies. These events may affect the smooth functioning of a business. The planning provides a provision to fulfil such contingencies and tackle them successfully.

5) Achieving the Predetermined Goals

Its activities are aimed at achieving the objectives of the company. The timely achievement of goals is possible only through effective arrangement. 

6) Reduce Competition

The presence of competition enables the company to get a chance for growth. At the same time, stiff competition should be avoided. It is possible to reduce competition through planning.

Process of Planning

Planning is a process consisting of specific steps or a series of sequential activities. There is no generally accepted or standard format for the planning process. Different authors have their ways of conceptualizing the planning process. Let us discuss one conceptual scheme of the planning process.

i) Planning to plan

Planning does not spontaneously occur or result from an order issued by the chief executive. It must be carefully and thoughtfully decided upon. The organization’s management has to instil a culture of planning at all levels by emphasizing the importance and virtues of planning and the philosophies and techniques embedded in it. The administration should educate managers in various departments through training programs and conferences on planning methodology to enhance their competence in planning. Additionally, the necessary planning system must be designed and activated, especially in the case of a new organization.

ii) Appraisal of the internal situation

In this step, top management, in collaboration with other managers, must analyze the current state of affairs within the organization. This involves comprehensively examining existing plans, processes, activities, performance levels, achievements, and problems. It is essential to review the fundamentals of planning and scrutinize the specific strengths and weaknesses of the organization in its sphere of operations.

This includes products and services it supplies, financial position, workforce and managerial resources, competitive position, profitability levels, market image, manufacturing and other facilities, R&D advantages, capital structure, etc. Management also needs to make forecasts and projections of the likely future positions and trends of the organization’s activities in all the above areas.

iii) Appraisal of the external environment

The top management of the organisation is vitally concerned with analysing external environmental conditions for planning purposes. This facilitates their understanding of the elements and events outside the organisation that affect its present and future functioning. Appraising ecological trends in the organisation’s economic, social, technological, and other relevant areas is continuous.

The present and the likely future trends have to be appraised through systematic scanning and forecasting mechanisms. This will enable the organisation to identify present and future opportunities and threats in the various external elements with which the organisation is directly concerned.

iv) Definition of critical areas and issues for planning

Appraising internal and external environmental conditions gives management an idea of the tentative planning the organisation needs. In light of the external appraisal, managers must ask themselves whether the existing businesses, products, markets, processes, and practices are relevant and which aspects need to be retained, strengthened, refined, or modified. The analysis may also reveal the need for new directions to enhance the organisation’s competitive position and bring about better alignment between the organisation and the external environment.

It may also unearth possibilities for entering new businesses, adopting new technologies, introducing new products, and exploring new markets. An essential outcome of the above appraisal is the identification of possible measures necessary to cope with environmental opportunities and threats, which are likely to either help or hinder the performance and progress of the organisation, as the case may be.

v) Development of alternative plans for preference and evaluation

In this stage, managers must apply their creative and innovative skills to generate plans—mission, objectives, strategies, policies, and programs—based on assessing planning needs. These plans are generally corporate-wide and long-range, ranging from 5 to 10 years ahead, depending on circumstances. Developing alternative methods calls for intensive thinking and exploration by 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 current markets, exploring new markets, introducing new products, acquiring outside enterprises, and so on. The objective of improving its economic power could be achieved by one or a combination of the above alternative strategies.

An essential part of this stage is the evaluation of alternative plans concerning their comparative merits and demerits. Subsequently, choices must be made from among the alternatives based on specific predetermined selection criteria. These choices represent decisions made by managers that will chart the long-range directions of the organization for a specified period.

vi) Formulation of medium-range and short-range plans

The long-range set of organisational procedures provides the basis for formulating more specific medium-range and short-range goals. Medium-range programs typically have a period of more than one year but up to three years in general. Short-range plans become progressively more specific than long-range plans and are called operational plans. The process of formulating these plans is known as ‘Operational Planning.’ 

Medium and short-range plans are generally formulated in functional management areas such as manufacturing, marketing, purchasing, personnel, finance, R&D, and so on. They are further ‘decomposed’ into more detailed sectional and unit plans that are valid for the organisation’s primary operations departments.

vii) Arrangements for the implementation of plans

The effective implementation of projects and decisions is the crux of the planning process. As programs are executed by managers and others at various levels of the organization, top management needs to secure their cooperation, participation, and commitment. Managers must clearly define authority and accountability to implement plans, acquire and allocate resources and tasks, make day-to-day decisions, take initiatives, and activate the communication system within the organization.

Principles of Planning

Since planning is a management function, it must be based on certain principles to serve as guidelines for undertaking the role earnestly. We may outline the principles of planning as follows:

1) Principle of Top Management Interest

The organisation’s chief executive must show genuine interest in planning, submit himself to the discipline of planning, and inspire his team to do the same.

2) Principle of Long-Range View

Every manager must plan decisions after a complete analysis and understanding of their long-term future effects, objectively considering all the available facts.

3) Principle of Contribution to Objective

Planning should be purposeful and directly contribute to achieving organisational objectives or desired ends.

4) Principle of Primacy of Planning

Planning holds the prime position in the management process. It is logically regarded as the first function of managers from which all other parts flow.

5) Principle of Flexibility

This principle suggests that flexibility in planning helps the organisation cope with rapid and unforeseen changes in external events. This can be achieved without abandoning predetermined plans or inviting adverse consequences, even if drastic.

6) Principle of Navigating Change

This principle is related to the direction of flexibility. It indicates that a regular process of monitoring the course of external events is to be combined with a review and revision of plans to achieve desired goals, just as a navigator negotiates his ship’s way by changing his route in response to the behaviour of the water mass.

7) Principle of Commitment

This principle helps determine the planning period. Planning should cover a period necessary to fulfil the commitments involved in a decision. For example, if a student decides to join a three-year B.Com Course, his planning period is three years.

8) Principle of the Limiting Factor

A limiting factor stands in the way of achieving the desired objective. Managers should tackle those limiting factors hindering smooth progress in achieving goals.

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