The document outlines the concept of planning in management, defining it as the process of setting objectives and developing action plans to achieve them. It highlights the characteristics, importance, principles, and types of planning, including strategic, operational, tactical, and contingency planning. The document emphasizes that effective planning involves logical decision-making, a continuous review of objectives, and adapting to changing circumstances to enhance organizational performance.

1. Dr. Rishiraj Sarkar
Management Concepts &
Applications

2. Unit 2: Planning
 Definition:
 Planning is the fundamental management function, which involves deciding beforehand, what
is to be done, when is it to be done, how it is to be done and who is going to do it.
 It is an intellectual process which lays down an organization's objectives and develops
various courses of action, by which the organization can achieve those objectives. It chalks
out exactly, how to attain a specific goal.
 Planning is nothing but thinking before the action takes place. It helps us to take a peep into
the future and decide in advance the way to deal with the situations, which we are going to
encounter in future.
 It involves logical thinking and rational decision making.

3.  Characteristics / Nature of Planning:

4.  Managerial function: Planning is a first and foremost managerial function provides the base
for other functions of the management, i.e. organising, staffing, directing and controlling, as
they are performed within the periphery of the plans made.
 Goal oriented: It focuses on defining the goals of the organisation, identifying alternative
courses of action and deciding the appropriate action plan, which is to be undertaken for
reaching the goals.
 Pervasive: It is pervasive in the sense that it is present in all the segments and is required at all
the levels of the organisation. Although the scope of planning varies at different levels and
departments.
 Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so
on. Once that period is over, new plans are drawn, considering the organisation’s present and
future requirements and conditions. Therefore, it is an ongoing process, as the plans are
framed, executed and followed by another plan.
 Intellectual Process: It is a mental exercise at it involves the application of mind, to think,
forecast, imagine intelligently and innovate etc.

5.  Futuristic: In the process of planning we take a sneak peek of the future. It encompasses
looking into the future, to analyse and predict it so that the organisation can face future
challenges effectively.
 Decision making: Decisions are made regarding the choice of alternative courses of action
that can be undertaken to reach the goal. The alternative chosen should be best among all,
with the least number of the negative and highest number of positive outcomes.
 Planning is concerned with setting objectives, targets, and formulating plan to accomplish
them. The activity helps managers analyse the present condition to identify the ways of
attaining the desired position in future. It is both, the need of the organisation and the
responsibility of managers.
 Importance / Benefits of Planning:
 It helps managers to improve future performance, by establishing objectives and selecting a
course of action, for the benefit of the organisation.
 It minimises risk and uncertainty, by looking ahead into the future.

6.  It facilitates the coordination of activities. Thus, reduces overlapping among activities and
eliminates unproductive work.
 It states in advance, what should be done in future, so it provides direction for action.
 It uncovers and identifies future opportunities and threats.
 It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.
 Principles of Planning:
 Principle of Contribution to Objectives Principles of Management Interest
 Principle of Premises Principle of Primacy
 Principle of Efficiency Principle of Flexibility
 Principle of Navigational ChangePrinciple of Commitment
 Principle of Timing Principle of Pervasive
 Principle of Alternatives Principle of Limiting Factor
 Principle of Comparative Strategies Principle of Cooperation
 Principle of Long-Range View Principle of Acceptance

7.  Principle of Contribution to Objectives - Contribution of objectives states that plans must
be goal-focused and should positively contribute toward the achievement of organizational
goals.
 Principles of Management Interest - This principle states that managers should genuinely
invest their interests and expertise in designing effective plans.
 Principle of Premises - Assumptions concerning expected future events are known as
premises. By this premise principle, the future likely events should be forecasted and analyzed
and the plans should be well prepared for such events.
 Principle of Primacy - Primacy states you should make a plan first and organize other
functions in a way that ensures the achievement of goals addressed in planning.
 Principle of Efficiency - The planning should be done in a way that ensures the achievement
of the result with minimum cost and effort.
 Principle of Flexibility - The plan should be flexible enough to cope with environmental
changes.
 Principle of Navigational Change - Continuously monitor changes during the course of
implementation of plan and if necessary bring changes for effective execution.
 Principle of Commitment - When you make a plan it should reflect the time period within
which it would be achieved. This principle states the planning should also be time-specific.

8.  Principle of Timing - It states which plan (activity) should be done first and which one later
should be specified.
 Principle of Pervasive - This principle states all levels of managers should be involved in
planning.
 Principle of Alternatives - This principle states that, like principles of decision-making, the
planning should also include the selection of the best one from the pool of options.
 Principle of Limiting Factor - Your business might not have an abundance of all the
resources that are essential to effectively achieve desired goals. Your focus should be on a
component that, although being expensive, limited in supply, or scarce, significantly affects
performance.
 Principle of Comparative Strategies - It states that while making plans you should also
consider the strategies of competitors.
 Principle of Cooperation - It states that all members of the organization should cooperatively
contribute to plan development. Cooperation in planning also reduces the confusion and
unnecessary hurdles of all members and promotes efficient execution.
 Principle of Long-Range View - While making plans you should also consider the future
impacts of such plans.
 Principle of Acceptance - The last principle of planning states that the plan should be
acceptable and understandable to all members of your business.

9.  Kinds / Types of Planning:
There are four types of planning:
1. Strategic
2. Operational
3. Tactical
4. Contingency
 ‍
Strategic planning:
Strategic planning is defining a company's direction and goals and allocating its resources to pursue
them. It consists of analyzing the competitive environment and identifying external and internal factors
that can affect the organization. An example of strategic planning for a Software as a Service (SaaS)
company that offers project management software and wants to expand its customer base and increase
revenue would look like this:
Conduct market research to understand the needs and preferences of its target audience. Analyze the
competitive landscape to identify potential opportunities and threats. Based on this analysis, the company
sets the following goals:
 Introduce new features and functionality to the software that addresses the specific needs and pain
points of the construction and engineering industries.
 Develop targeted marketing campaigns to reach small and medium-sized businesses in these
industries through targeted online advertising, social media marketing, and content marketing.
 Increase customer retention by providing exceptional customer support and offering a loyalty
program for long-term subscribers.
 To achieve these goals, the company allocates needed resources for marketing, development, and
customer support staff.

10.  Operational planning:
Operational planning is the process of defining specific actions and resources needed to
achieve the goals set out in the strategic plan. It involves developing detailed plans and
budgets to implement the strategies and tactics outlined in the strategic plan and identifying and
addressing any potential risks or challenges that may arise. The example SaaS company has
identified introducing new features and functionality to its software as a key goal in its strategic
plan. To achieve this goal, the company develops an operational plan that outlines the
specific actions and resources needed to execute this strategy. The operational plan includes
tasks such as:
 Implementing new features.
 Allocating development resources and setting goals and timelines for developing the new
features.
 Developing a budget for testing and quality assurance efforts.
 Assigning staff members to oversee the development and testing of the new features.
 Tactical planning:
 Tactical planning develops plans and actions to achieve the goals set out in the operational
plan. It involves breaking down the larger goals and objectives into smaller, more manageable
tasks that can be completed within a shorter time frame, typically ranging from a few weeks to a
few months. Tactical planning includes developing content marketing campaigns, promoting
new features, assigning tasks to developers, etc.

11.  Contingency planning:
Contingency planning is the process of identifying potential risks or challenges that may
arise and developing plans to mitigate or address them. To ensure the success of the launch
of the new features, our example SaaS company develops a contingency plan to mitigate
potential risks or challenges that may arise. The contingency plan includes the following
measures:
 Identifying potential disruptions to the development process, such as staff illness or
unexpected delays, and minimizing their impact on the timeline for launching the new
software.
 Identifying potential IT issues, such as server outages or security breaches, and ensuring
that the software remains accessible to customers and secure.
 Sudden change in market conditions or a major competitor entering the market.

12.  Derivative Plans:
 Objectives:
A specific result that a person or system aims to achieve within a time frame and with
available resources. In general, objectives are more specific and easier to measure than goals.
Objectives are basic tools that underlie all planning and strategic activities. Goals are the
outcome you intend to achieve, whereas objectives are the actions that help you achieve a
goal.

13.  Steps involved in Planning:
 Analyzing Opportunities:
Awareness of opportunities in the external
environment as well as within the
organisation is the real starting point for
planning. It is important to take a preliminary
look at possible future opportunities and see
them clearly and completely. All managers
should know where they stand in the light of
their strengths and weaknesses, understand
the problems they wish to solve and know
what they gain.
 Setting Objectives:
The major organisational and unit objectives
are set in this stage. This is to be done for the
long term as well as for the short range.
Objective specify the expected results and
indicate the end points of what is to be done,
where the primary emphasis is to be placed
and what is to be accomplished by the
various types of plans.

14.  Developing Premises:
Planning premises are planning assumptions the expected environmental and internal
conditions. Thus planning premises are external and internal. External premises include total
factors in task environment like political, social, technological, competitors, plans and actions,
government policies. Internal factors include organisation’s policies, resources of various
types, and the ability of the organisation to withstand the environmental pressure. The plans
are formulated in the light of both external and internal factors.
 Identifying Alternatives:
Various alternatives can be identified based on the organisational objectives and planning
premises. The concept of various alternatives suggests that a particular objective can be
achieved through various actions. For example, if an organisation has set its objectives to
grow further, it can be achieved in several ways like expanding in the same Field of business
or product line diversifying in other areas, joining hands with other organisations, or taking
over another organisation and so on. Within each category, there may be several alternatives.
The most common problem is not finding alternatives but reducing the number of alternatives
so that the most promising may be analysed.
 Evaluating Alternatives:
The various alternative course of action should be analysed in the light of premises and goals.
There are various techniques available to evaluate alternatives. The evaluation is to be done in
the light of various factors. Example, cash inflow and outflow, risks, limited resources,
expected pay back etc., the alternatives should give us the best chance of meeting our goals at
the lowest cost and highest profit.

15.  Selecting an Alternative:
This is the real point of decision-making. An analysis and evaluation of alternative courses
will disclose that two or more alternative advisable and beneficial. The fit one is selected.
After formulating the basic plan, various plan are derived so as to support the main plan.
 Implementing Action Plan:
After formulating basic and derivative plans, the sequence of activities is determined so those
plans are put into action. After decisions are made and plans are set, budgets for various
periods and divisions can be prepared to give plans more concrete meaning for
implementation.
 Reviewing:
Reviewing your plans helps reveal assumptions that need to be adjusted. Plans rest upon
assumptions, whether you articulate those assumptions or not and therefore it should be
reviewed from time-to-time.
By planning process, an organisation not only gets the insights of the future, but it also helps
the organisation to shape its future. Effective planning involves simplicity of the plan, i.e. the
plan should be clearly stated and easy to understand because if the plan is too much
complicated it will create chaos among the members of the organisation. Further, the plan
should fulfil all the requirements of the organisation.

16.  Standing Plans:
Standing plans, also known as ongoing plans, provide guidance for recurring activities or situations. They are
long-term plans that are designed to be used repeatedly, serving as a framework for decision-making and
actions over an extended period. Standing plans are commonly used for routine and repetitive activities, as
well as for addressing situations that occur regularly within an organization. These plans provide consistency,
efficiency, and continuity in managing day-to-day operations. Examples of standing plans include:
 Policies: Policies are established guidelines that define acceptable behavior, procedures, and practices
within an organization. They provide a framework for decision-making and help maintain consistency
and uniformity in organizational operations.
 Procedures: Procedures outline the step-by-step actions required to perform specific tasks or processes.
They provide detailed instructions on how to carry out routine activities and ensure consistency and
efficiency in work execution.
 Rules and Regulations: Rules and regulations establish specific requirements, limitations, or
prohibitions within an organization. They serve as guidelines for behavior, safety, and compliance with
legal or ethical standards.
Standing plans are designed to be flexible and adaptable to changing circumstances while providing a
consistent approach to recurrent situations.
 Single-Use Plans:
Single-use plans are created to address specific, time-limited objectives. They are developed for a particular
situation, project, or event that is not expected to recur in the future. Single-use plans are commonly used in
organizations for non-routine activities that require specific attention and detailed planning. Examples of
single-use plans include:

17.  Project Plans: These plans outline the specific tasks, resources, timelines, and milestones
for completing a particular project. Once the project is completed, the plan is no longer
applicable.
 Event Plans: Event plans are developed for organizing special events, such as
conferences, product launches, or charity fundraisers. They include details regarding
logistics, scheduling, budgeting, marketing, and other aspects specific to the event.
 Campaign Plans: These plans are created for short-term marketing or advertising
campaigns to achieve specific objectives, such as increasing brand awareness or
promoting a new product. Once the campaign is over, the plan is no longer in use.
Single-use plans are typically focused on achieving a specific outcome within a defined
timeframe and are not intended for continuous use or application to ongoing activities.

18.  Corporate Planning & Strategy Formulation:
 Corporate planning:
Corporate planning is the process by which businesses create strategies for meeting business
goals and achieving objectives. It involves strategy definition, strategy direction, decision-
making and resource allocation. Corporate planning ensures that business operations are orderly
and that the team works towards the same goals. It can also help you identify potential
challenges in meeting goals, so you can provide methods to overcome them. Corporate planning
is a continuous and dynamic process that lasts throughout the life of the business.
 Strategy formulation:
It refers to the process of choosing the most appropriate course of action for the realization of
organizational goals and objectives and thereby achieving the organizational vision. The
process of strategy formulation basically involves six main steps:
 Setting Organizations’ objectives - The key component of any strategy statement is to set the
long-term objectives of the organization. It is known that strategy is generally a medium for
realization of organizational objectives. Objectives stress the state of being there whereas
Strategy stresses upon the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider
term which believes in the manner of deployment of resources so as to achieve the objectives.

19. While fixing the organizational objectives, it is essential that the factors which influence the selection
of objectives must be analyzed before the selection of objectives. Once the objectives and the factors
influencing strategic decisions have been determined, it is easy to take strategic decisions.
 Evaluating the Organizational Environment - The next step is to evaluate the general economic
and industrial environment in which the organization operates. This includes a review of the
organizations competitive position. It is essential to conduct a qualitative and quantitative review of
an organizations existing product line. The purpose of such a review is to make sure that the factors
important for competitive success in the market can be discovered so that the management can
identify their own strengths and weaknesses as well as their competitors’ strengths and weaknesses.
After identifying its strengths and weaknesses, an organization must keep a track of competitors’
moves and actions so as to discover probable opportunities of threats to its market or supply sources.
 Setting Quantitative Targets - In this step, an organization must practically fix the quantitative
target values for some of the organizational objectives. The idea behind this is to compare with long
term customers, so as to evaluate the contribution that might be made by various product zones or
operating departments.
 Aiming in context with the divisional plans - In this step, the contributions made by each
department or division or product category within the organization is identified and accordingly
strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic trends.

20.  Performance Analysis - Performance analysis includes discovering and analyzing the gap
between the planned or desired performance. A critical evaluation of the organizations past
performance, present condition and the desired future conditions must be done by the
organization. This critical evaluation identifies the degree of gap that persists between the
actual reality and the long-term aspirations of the organization. An attempt is made by the
organization to estimate its probable future condition if the current trends persist.
 Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of
action is actually chosen after considering organizational goals, organizational strengths,
potential and limitations as well as the external opportunities.

21.  Management by Objectives (MBO):
 Definition: Management by Objectives (MBO) or otherwise called as Management by Results
(MBR) is management philosophy which was first propounded by Peter F. Drucker in the
year 1954, in his book “Practice of Management”.
 Management by objectives is a planning and controlling system, in which the superior and
subordinates work together in order to define business objectives and establish targets
that are to be achieved by the subordinates, and also determine each individual’s key area of
responsibility as regards the results expected. Further, these measures are considered as
yardstick to run the unit and also assess the contribution of each individual.
 Assumption of Management by Objectives:
 MBO relies on the premise that people tend to perform better when they know about what
is expected from them and when they can associate their personal goals with that of the
objectives of the organization. In addition to this, it also proposes that people have interest in
establishing goals and comparing the performance against the set target.

22.  Process of Management by Objectives:

23.  Goal Setting: First and foremost, the long term goals of the organization are defined, such as its
strategic intent, vision, mission and goals. Once these are formulated, the management then
decides specific objectives to be attained within the given time frame.
Therefore, goal-setting includes:
1) Defining overall corporate objectives (Defining goals set by top management)
2) Setting Departmental Goals
3) Setting of target for individuals
 Action Plan: Action plan refers to the way through which the objectives are achieved. It provides
direction regarding how the objectives can be achieved, as in what is to be done, what steps are to
be followed, etc.
This is followed by establishment of check-points or standards of performance through periodic
meetings of the superior and subordinates.
 Performance Appraisal: Last but not the least, at this stage, a comparison is made between actual
and predetermined standards. These objectives acts as a basis for reviewing the progress. This is
generally followed by employee counseling.
MBO, is directed towards raising the performance level of the organization by conspicuously
identifying the measurable goals and end results, which are agreed to the management as well as
employees of the organization. Thereafter, the employees participate in formulating the action plan
and strategy for the attainment of the goals.
Superior Subordinate co-
ordination

24.  Benefits of Management by Objectives:
 Better Planning
 Better Organisation
 Self-control
 Higher Productivity
 Better Appraisal of Performance
 Executive Development
 Open Communication
In a nutshell, Management by objectives is nothing but a process wherein the goals,
plans and control system of the organization are defined by the management and employees
jointly.

25.  Management by Exception:
Management by exception (MBE) is a workplace practice that allows employees to work more
independently and only involve their managers on specific issues or “exceptions” to normal
operations. The practice uses both active and passive management. Active management by
exception means assisting with challenges and preventing problems, while the passive
approach means only intervening when there’s a problem.
This practice can be fine-tuned so that smaller issues are handled by lower-level
managers and larger issues are reported to senior management. Management by exception can
also be applied within business functions or financial operations. For instance, a call center
manager might only focus on major customer complaints, allowing their employees to monitor
their own call performance.
How does management by exception work?
The process of management by exception, or by the importance of the issue, follows four
objectives:
1. Setting normal operation standards - Your company sets a standard for daily operations so
employees know what warrants contacting managers. This means every employee understands
the normal workday operations. The standard, or norm, should be quantifiable and achievable.
2. Assessing whether performance is on track - Once you’ve established the norms, you can
begin using management by exception.

26. 3. Analyzing exceptions - There are two outcomes when data is compared with norms:
 No significant exception: You take no action.
 Finding a significant exception: If you are a manager, you need to either respond to the
deviation or report it higher up in the chain, depending on the procedure.
4. Solving the exceptions - When employees find situations or data that go against the
company norm, they report it to the appropriate manager. That manager then works with a team
or independently to address the issue.
Advantages of management by exception
 Efficient practices
 Sets clear priorities
 Motivates employees
 Quickly addresses problems
Disadvantages of management by exception
 Less focus on preventative measures
 Requires close monitoring
 Requires advanced problem-solving skills

27.  Planning Premises:
 According to Koontz & O’Donnell, “Planning premises are the anticipated environment in
which plans are expected to operate. They include assumptions or forecasts of the future and
known conditions that will affect the course of plans such as prevailing policies and existing
company plans that controls the basic nature of supporting plans.”
 Planning premises constitute the framework within which planning is done. They imply
not only the assumptions about the future but also predictions.
 Premises are to be established on the basis of systematic forecasting. Effective planning is
largely dependent on the correct knowledge and choice of planning premises.
 Change in planning premises may result in modification of plans.
 Different types of planning premises are:
1) Internal and External Premises
2) Controllable, semi-controllable and non-controllable premises
3) Tangible and Intangible premises

28.  Types of Planning Premises:
1. Internal and External Premises
Internal Premises come from the business itself. It includes the skills of the labor force,
investment policies of the company, management style, sales forecasts, etc.
External Premises come from the external environment. That is economic, technological,
social, political and even cultural environment. External premises cannot be controlled by the
business.
2. Controllable, Semi-controllable and Uncontrollable Premises
Controllable Premises are fully controlled by the management. They include factors like
materials, machines, and money.
Semi-controllable Premises are partly controllable. They include marketing strategy.
Uncontrollable Premises as the name suggests are those over which the management has
absolutely no control. Take for example weather conditions, consumer behavior, natural
disasters, wars, etc.
3. Tangible and intangible premises:
Tangible premises can be estimated in quantitative terms like, production units, cost per unit
etc.
Intangible premises cannot be quantified, for example, goodwill of the firm, employer-
employee relationships, leadership qualities of the managers, motivational factors that affect
employees’ performance etc.
This classification is not mutually exclusive.

29. Thank You!