15 Planning : Objectives & Functions

Dr.Shafali Nagpal

15.1  Learning Objective

15.2  Introduction

15.3   Definitions

15.4  Types of Plans

15.5  Is planning Process

15.6  Objectives of Planning

15.7  Summary

1.1 Learning Objectives

After completing this module, you will be able to:

1. To know about Planning, its meaning and importance
2. To learn the types of planning based on different classification
3. To gain understanding into process and objectives of comprehensive planning.

Introduction

Management planning is the process of assessing an organization’s goals and creating a realistic, detailed plan of action for meeting those goals. The necessary steps in the management planning process involve creating a roadmap that outlines each task the company must accomplish to fulfil its overall objectives. Much like writing a business plan, a management plan takes into consideration short- and long-term corporate strategies.A primary management function involving the formulation of one or more detailed plans to achieve an optimum balance of needs or demands with the available resources. The planning process (1) identifies the goals or objectives to be achieved, (2) formulate strategies to achieve them, (3) arranges or creates the means required, and (4) implements, directs and monitors all steps in their proper sequence.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB‘ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and O’DONNELL, i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management, but practically these functions are overlapping in nature, i.e. they are highly inseparable. Each function blends into the other & each affects the performance of others.

The planning function of management controls all the planning that allows the organization to run smoothly. Planning involves defining a goal and determining the most effective course of action needed to reach that goal. Typically, planning requires flexibility, as the planner must coordinate with all levels of management and leadership in the organization. Planning also involves knowledge of the company’s resources and the future objectives of the business.

Definition: Planning

According to Theo Haimann, “Planning is deciding in advance, what is to be done. When manager plans, he projects a course of action for the future, attempting to achieve a consistent, coordinated structure of operations aimed at the desired results.”

According to Alford and Beaty, “Planning is the thinking process, the organized foresight, the vision based on fact and experience that is required for intelligent action.”

Concept

Planning is based on the theory of “thinking before acting”. Planning is an integral part of our life. We make plans in every step of life whether it be to go to school or to buy household goods during shopping. We make plans according to the limitations of our budget and resources to get maximum satisfaction and to fulfil goals from out activities.Planning is the most basic and primary function of management. It is the pre-decided outline of the activities to be conducted in the organization. Planning is the process of deciding when, what, when where and how to do a certain activity before starting to work.

It is an intellectual process which needs a lot of thinking before a formation of plans. Planning is to set goals and to make certain guidelines achieve the goals. Also, Planning means to formulate policies, segregation of budget, future programs etc. These are all done to make the activity successful.Management has been described as a social process involving responsibility for careful and effective planning & regulation of the operation of an enterprise in the fulfilment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to every manger irrespective of his level or status.

Different experts have classified functions of management. According to George & Jerry, “There are four fundamental functions of management, i.e. planning, organizing, actuating and controlling”.

All other function of management is useless if there is not proper planning system in an Organization. So planning is the basis of all other functions. Thus Planning is the map or a blueprint for the organization.

Any organization can have different plans. We can classify the types of plans in the following ways:

Operational Plan: Operational plans are the plans which are formulated by the lower level management for short term period of up to one year. It is concerned with the day to day operations of the organization. It is detailed and specific. It is usually based on past experiences. It usually covers functional aspects such as production, finance, Human Resources etc.

Tactical Plan: the Tactical plan is the plan which is concerned with the integration of various organizational units and ensures implementation of strategic plans on day to day basis. It involves how the resources of an organization should be used to achieve the strategic goals. The tactical plan is also known as coordinative or functional plan.

Strategic Plan: a Strategic plan is a plan which is formulated by the top level management for a long period of five years or more. They decide the major goals and policies to achieve the goals. It takes in a note of all the external factors and risks involved and makes a long-term policy of the organization. It involves the determination of strengths and weaknesses, external risks, mission, and control system to implement plans.

By managerial level:

Top level Plans: Plans which are formulated by general managers and directors are called top-level plans. Under these plans, the objectives, budget, policies etc. for the whole organization are laid down. These plans are mostly long-term plans.

Middle-level Plans: Managerial hierarchy at the middle level includes the departmental managers. A corporate has many departments like purchase department, sales department, finance department, personnel department etc. The plans formulated by the departmental managers are called middle-level plans.

Lower level Plans: These plans are prepared by the foreman or the supervisors. They take the existence of the actual workplace and the problems connected with it. They are formulated for a short period and called short-term plans.

By time:

Long-Term Plan:the Long-term plan is the long-term process that business owners use to reach their business mission and vision. It determines the path for business owners to reach their goals. It also reinforces and makes corrections to the goals as the plan progresses.

Intermediate Plan: Intermediate planning covers six months to 2 years. It outlines how the strategic plan will be pursued. In business, intermediate plans are most often used for campaigns.

Short-term Plan: Short-term plan involves pans for a few weeks or at most a year. It allocates resources for the day-to-day business development and management of the strategic plan. Short-term plans outline objectives necessary to meet intermediate plans and the strategic planning process.

By use:

Single Plan: These plans are connected with some special problems. These plans end the moment of the problems to be solved. They are not used, once after their use. They are further re-created whenever required.

Standing Plan: These plans are formulated once, and they are repeatedly used. These plans continuously guide the managers. That is why it is said that a standing plan is a standing guide to solving the problems. These plans include mission, policies, objective, rules and strategy.

What Is the Planning Process?

The planning process is the steps a company takes to develop budgets to guide its future activities. The documents developed may include:

• Strategic plans (long-range, high-level company goals)
• Tactical plans (shorter-term, specific plans to work toward goals in the strategic plan) Operating plans (detailed plans for a specific department to implement)
• Project plans (plans to implement projects such as launching new products or building a new plant)

How Does the Process Work?

Although the specific steps differ slightly from company to company and depend on which type of plan you’re developing, there are general steps that should be taken to ensure a good result. The steps in the planning process are:

• Develop objectives
• Develop tasks to meet those objectives
• Determine resources needed to implement tasks Create a timeline
• Determine tracking and assessment method Finalize plan
• Distribute to all involved in the process

We’re going to follow Mark, a department manager in a large company, as he develops a tactical budget for his sales department for the next year.

Step One: Develop Objectives

The first step in the planning process is to determine what you want to accomplish during the planning period. A long-range strategic plan might focus on specific market share achievements five years in the future, while a department-level operating plan might target implementation of a new method of tracking sales orders in the next quarter.

Mark is focused on annual objectives for his sales department, and so he begins by establishing sales goals for his team for the next year and also defines a project he’d like to implement that automates the sales order process.

Step Two: Develop Tasks to Meet Those Objectives

The next step is to come up with a list of required tasks to achieve the objectives defined. In our example, Mark determines the sales per month required to meet the sales goal he is targeting and also lists out a few main tasks relating to the automation process – including a selection of the tool and training for the team on its use.

The first step of the management planning process is to identify specific company goals. This portion of the planning process should include a detailed overview of each goal, including the reason for its selection and the anticipated outcomes of coal-related projects. Where possible, objectives should be described in quantitative or qualitative terms. An example of a goal is to raise profits by 25 percent over a 12-month period.

Step Three: Determine Resources Needed to Implement Tasks

Next, resources to implement the objectives need to be determined. In this case, ‘resources’ includes both the people required to implement the plan and the supplies or other resources required to support those people. For the sales department, this might include the salespeople, a sales administrator, various supplies such as brochures, and funds for an advertising campaign to increase the number of prospects in the sales team funnel.

Step Four: Create a Timeline

As the company prioritizes projects, it must establish deadlines for completing associated tasks and assign individuals to complete them. This portion of the management planning process should consider the abilities of staff members and the time necessary to realistically complete assignments. For example, the sales manager in this scenario may be given monthly earning quotas to stay on track with the goal of increasing sales by 25 percent.

Comprehensive planning is a complicated process which requires a high level of studies and analysis. To create a plan, there must be a determination of objectives and outlining of the course of action to achieve the goals. There is no set formula for planning. A planning process which is suitable for one kind of organization may not be appropriate for another type of organization. However, we can take the following steps as the guideline to draw a plan:

1. Analysis of the environment: Planning begins with the awareness of the opportunities in the external environment and within the organization. For this SWOT analysis is most suitable. Strength and weaknesses are the internal factors whereas opportunities and threats are the environmental factors which are to be analyzed.

2. Setting the objectives: The second step of planning is to set objectives and goals for the organization as a whole and each department. Long term, as well as short-term plans, are to be created. Objectives are specified to every manager and department head. Objectives give direction to the major plans. So managers should have an opportunity to contribute their ideas for setting their objectives and of the organization.

3. Develop premises: Planning premises are the assumptions about the future by which the plans will be ultimately formulated. Planning premises are the key to the success of planning as they supply pertinent facts and information regarding the future such as general economic conditions, production cost, and prices, probable competitive behaviour, governmental control etc. Forecasting is an essential part of premises.

4. Determine and evaluate alternatives: The fourth step is to search and identify the alternative course of action. It suggests that a particular objective can be achieved through numerous ways. But the most relevant alternatives must be listed down so that selection is made easier. Once various alternatives are identified, they must be well analyzed with their strong and weak points.

5. Selection of Best Alternative: This is the point where the certain plan is adopted. When the alternatives are determined most suitable alternative must be chosen out from the list which can give maximum output with minimum risk.

6. Formulation of a derivative plan: Derivative methods are the backing plans which are very essential. Once the basic plan has been formulated, it must be translated into day to day operation of the organization. Middle and low-level managers must draw up the appropriate plans, programs and budget for their sub-units.

7. Budget formulation: After decisions are made, and plans are set the next step is giving them sufficient funds to carry them out. Optimum budgeting must be done for every course of action.

8. Implementation of a plan: Once the plans are set up, now the plans must be well informed and shared with the employees and managers expecting full commitment and trust. Finally, the plans must be carried out.

9. Follow-up action: Obviously once a plan is carried out it generates a positive output. The progress must be well monitored, and managers need to check the progress of their plans so they can take necessary steps to improve the plans if needed.

Major objectives of Planning

Let us take an example of planning in India done by Planning Commission to understand the objectives of planning.

The basic objectives of planning in India, according to the Planning Commission, can be grouped under the heads of growth, modernization, self-reliance and growth by raising national income, full employment and social justice. Now, let us detail out the main objectives of Indian Plan.

1. High Rate of Growth:

Increase in national income as well as per capita income is the first and foremost aim of Indian planning. On looking plan-wise objectives of various plans, it is evident that the First five-year plan had envisaged a target of 11 percent increase in national income while it rose by 18 percent.

The Second Plan fixed the target of 25 percent increase in national income over the plan period. Again, a Third Five-Year plan aimed to secure an increase in national income of 5 percent per annum.During the Third Plan, the national income increased only by 11.2 percent. The Fourth Plan had visualised to attain the growth rate at 5.7 percent per annum, but it remained at 3.4 percent per annum. The new Sixth Five Year Plan achieved the growth rate of 5.2 percent.

Similarly, Seventh Plan has achieved an annual growth rate of 5 percent. The eighth plan had fixed the target of 5.6 percent. Similarly, Ninth Plan aims at achieving a growth rate of 7 percent per annum. So from this example we can see how the plan is made what we have achieved.

2. Raising Investment Income Ratio:

Achieving a planned rate of investment within a given period to bring the actual investment as the proportion of national income to a higher level has been regarded significant due to two reasons. Firstly, such an increase in output capacity is deemed to be needed to increase the output. Secondly, it is needed to bring the capital stock of the economy to ensure the growth of future output capacity.

3. Social Justice:

Another major objective of Indian Five Year Plans is to provide social justice to the common folks and weaker sections of the society. However, this social justice implies reducing the income inequalities and removal of poverty. These two aspects have been well dealt in various drafts of five-year plans in our country.

4. Removal of Poverty:

Up to the end of the Fourth Five Year Plan, it was felt that the benefits of development have received a raw deal to tackle the problem of poverty. In the Fifth Plan, there was a visible shift in the approach which resulted in the Minimum Needs Programme.

Earlier to it, there was 20 Point Economic Programme to uplift village community, The Sixth Plan (1980-85) document mentioned that the incidence of poverty in the country is still very high and necessary measures need to be adopted to combat poverty. Similarly, seventh, Eighth and Ninth Plan Stressed for the removal of poverty in the country.

5. Full Employment:

The unemployment problem is a chronic problem in undeveloped and developing countries. Though India has emerged is emerging as fast developing country, yet it is in the grip of acute problem of disguised unemployment. Thus, the important objective of Indian. Planning is the creation of conditions for attaining full employment and the elimination of unemployment, underemployment and disguised unemployment.

6. Alleviating Three Main Bottlenecks:

Another objective of planning is the adoption of various measures to alleviate the three ‘bottlenecks’ viz., agricultural production, the manufacturing capacity for producer goods and the balance of payments.

The various plans have in one way or other been concerned with the removal of these three principal barriers to achieving stability-both internal and external-in the economy.

I hope with the above example you must have understood the defining of objectives in planning.

7. Self-Reliance:

Another objective of Indian Plans is self-reliance. The earlier two plans could not emphasize it because they were formulated for rehabilitating and establishing basic key industries in the country.Thus in the Third Five Year Plan, for the first time, the idea of self-reliance was mentioned, ” dependence on foreign aid will be greatly reduced in the course of the Fourth Plan.

It was planned to do away with confessional imports of food grains under PL-480. Foreign aid, net of debt charges and interest payments will be reduced to about half by the end of the Fourth Plan compared to the current level”.

8. Modernization:

For the First time, the idea of modernization was floated in the Sixth Five Year Plan. In common sense, it implies up-to dating the technology.

Summary

Planning is an intellectual process which needs a lot of thinking before formulation of a plan. It is made to set goals and to define guidelines to achieve those goals. It means to formulate policies, segregation of budget, future programs etc. These are all done to make the organisational activity successful. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to every manger irrespective of his level or status.

Suggested Readings

1. Drucker, Peter F., (1974), Management Tasks, Responsibilities, Practices, William Heinemann, London.
2. Allen, L.A., Management and Organisation, New York, McGraw Hill Book Company, 1958.
3. Gupta C. B., “Management Theory and Practice”, Sultan Chand & Sons, New Delhi, 1997.
4. Massie Joseph L. “Essentials Of Management” Prentice Hall of India, New Delhi, 1982.
5. Prasad L.M, “Principals and Practice of Management”. Sultan Chand &Sons, Educational Publishers, 23 Dargaigani, New Delhi.110002. 1993.
6. Sherlekar S.A, “Essentials of Business Organisation and Management” Himalaya Publishing House, Bombay, 1985.
7. Manager tasks, responsibilities, practices, op. cit., p. 121
8. Koontz Harold and Cyrill O’Donnell, “Essentials of Management” New Delhi, Tata McGraw Hill, 1987.