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Chapter: Principles of Management : Planning

Nature and purpose of planning

According to Koontz O'Donnel - "Planning is an intellectual process, the conscious determination of courses of action, the basing of decisions on purpose, acts and considered estimates".





According to Koontz O'Donnel - "Planning is an intellectual process, the conscious determination of courses of action, the basing of decisions on purpose, acts and considered estimates".





Nature of Planning


          Planning is goal-oriented: Every plan must contribute in some positive way towards the accomplishment of group objectives. Planning has no meaning without being related to goals.


         Primacy of Planning: Planning is the first of the managerial functions. It precedes all other management functions.


            Pervasiveness of Planning: Planning is found at all levels of management. Top management looks after strategic planning. Middle management is in charge of administrative planning. Lower management has to concentrate on operational planning.


        Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the objectives as economically as possible. Planning also focuses on accurate forecasts.


          Co-ordination: Planning co-ordinates the what, who, how, where and why of planning. Without co-ordination of all activities, we cannot have united efforts.


         Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and formulate plans in the light of these critical factors.


           Flexibility: The process of planning should be adaptable to changing environmental conditions.


          Planning is an intellectual process: The quality of planning will vary according to the quality of the mind of the manager.


Purpose of Planning

As a managerial function planning is important due to the following reasons:-


          To manage by objectives: All the activities of an organization are designed to achieve certain specified objectives. However, planning makes the objectives more concrete by focusing attention on them.


          To offset uncertainty and change: Future is always full of uncertainties and changes. Planning foresees the future and makes the necessary provisions for it.


         To secure economy in operation: Planning involves, the selection of most profitable course of action that would lead to the best result at the minimum costs.


           To help in co-ordination: Co-ordination is, indeed, the essence of management, the planning is the base of it. Without planning it is not possible to co-ordinate the different activities of an organization.


            To make control effective: The controlling function of management relates to the comparison of the planned performance with the actual performance. In the absence of plans, a management will have no standards for controlling other's performance.


           To increase organizational effectiveness: Mere efficiency in the organization is not important; it should also lead to productivity and effectiveness. Planning enables the manager to measure the organizational effectiveness in the context of the stated objectives and take further actions in this direction.


Features of Planning


 It is primary function of management.


 It is an intellectual process


 Focuses on determining the objectives


 Involves choice and decision making


 It is a continuous process


 It is a pervasive function



Classification of Planning


On the basis of content


            Strategic Planning


–  It is the process of deciding on Long-term objectives of the organization.


–  It encompasses all the functional areas of business



Tactical Planning

It involves conversion of detailed and specific plans into detailed and specific action plans.

–  It is the blue print for current action and it supports the strategic plans.



On the basis of time period


            Long term planning


–  Time frame beyond five years.


–  It specifies what the organization wants to become in long run.


–  It involves great deal of uncertainty.


            Intermediate term planning


–  Time frame between two and five years.


–  It is designed to implement long term plans.


            Short term planning


–  Time frame of one year or less.


–  It provide basis for day to day operations.



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