This document discusses various aspects of the management planning function, including: - The concept, nature, types, essential elements, need, limitations and process of planning. - Types of plans including corporate, functional, strategic, operational, long-term, short-term, proactive, reactive, formal and informal. - Key components of planning like objectives, future orientation, flexibility, integration, resources, forecasts, environment, realism, efficiency, timelines, employee support. - Steps in the planning process such as information collection, objective setting, strategy development, implementation, monitoring and control.

1. MANAGEMENT FUNCTION( PLANNING)
• Concept of Planning
• Nature and Characteristics of Planning
• Types of Plan
• Essential of a Sound Plan
• Need and Importance of Planning
• Limitations of Planning
• Steps in Planning Process
• Components of Planning
• Concept of Corporate Planning
• Steps in Corporate Planning Process

2. CONCEPT OF PLANNING
• Planning is the fundamental function of
management. It is pervasive of all other
management functions. Planning is the process
through which a manager looks in to the future and
discovers alternative courses of action for effective
corporate achievements at all levels.
• The future is uncertain and its prediction is always
difficult. Instead of leaving the future events to
chance, they are made to happen in a specified well
planned manner through planning. It involves
developing goals, strategies, policies, procedures
and programmes.

3. NATURE AND CHARACTERISTICS OF PLAN
The nature or characteristics of planning can be
studied under the following three major heads:
Constitutional Features:
(a) Planning is goal-oriented: Objectives are the beginning
and the end- points of a business planning process. The
planning process begins with the determination and
formulation of organisational objectives and ends with
their attainment.
(b) Planning is future oriented: Forecasting is the
heart of planning process. While planning, the
planner has to forecast economic, social, political
and technological conditions, within the
framework of which a plan will have to operate.

4. (c) Planning is the primary function: Although various
managerial functions cannot be arranged
sequentially, planning precedes all of them. It is the
base of all managerial activities, i.e. organising,
staffing, directing, co- ordinating and controlling.
(d) Planning is an intellectual process: Planning is a
creative process. It requires deep imagination,
foresight and intelligence. Needless to say that
more intelligent and experienced a manager is,
better would be his planning abilities and vice
versa.

5. Operational Features:
(a) Planning is all-pervasive: Planning function is performed
by all managers, from the highest to the lowest in the
management hierarchy. But the nature, scope and
significances of planning function varies at each level of
management.
(b) Planning is both short-range and long-range: Short range
plan is-meant for a period of one year while long range
plan is spread over number of years or may be decades. In
fact, short range plans are derived from the long range
plan.
(c) Planning is continuous: Planning process continues so
long as an enterprise is in existence. Management cannot
afford to be rigid in the era of fast changing business
environment, technological development, market
environment and government policies.

6. Desirable Features:
(a) Planning is actionable: An ideal plan should be
actionable. In other words, given the existing socio-
economic, technological and political environment, the
plan should be executable. It should neither be over-
targeted nor under-targeted.
(b) Planning is flexible: Planning operates in a dynamic
environment. Hence, it should be adaptable to the ever-
changing business environment. If a plan fails to adapt to
its environment, it might be rendered obsolete and may
go waste.
(c) Planning is an integrated system: Planning function is
performed at all the levels in the management hierarchy.
All these plans must be harmonised into a single
integrated system in order to achieve organisational goals.

7. TYPES OF PLAN
Planning can be differentiated on the basis of coverage of
organisational activities, importance of contents of
planning, time dimension in planning, approach adopted
for planning and degree of formalisation in planning
process.
On the Basis of Coverage of Activities:
(a) Corporate Planning: Corporate planning is undertaken at
the top level of management and is meant for the entire
organisation. It generally includes setting of objectives,
organising work, people and systems of attaining those
objectives, measuring performance and controlling the
progress of the plan.

8. (b) Functional Planning: Corporate planning is integrative
while functional planning is segmental. Functional planning
is derived from the corporate planning. It is undertaken for
each major function of the organisation such as production,
marketing, finance, personnel, etc. Such planning is
undertaken at the departmental level.
On the Basis of Importance of Contents:
(a) Strategic Planning: Strategic planning sets the long-term
direction of the organisation in which it wants to proceed in
future. It is the process of deciding objectives, changes in
these objectives, resources to be used, their acquisition
and disposition. For example, planned growth rate in sales,
diversification into new lines, and so on.

9. (b) Operational or Tactile Planning: Operational planning,
also known as tactile or short range planning, usually
covers a period of one year. It is the process of deciding the
most effective use of the resources already allocated and to
develop a control mechanism to assure effective
implementation of actions to fulfil organisational
objectives.
On the Basis of Time Dimension:
(a) Long-term Planning: Long term planning is of strategic
nature and extends beyond a period of one year which may
extend up to decades. The long-term plans usually
encompass all the functional areas of business and usually
involve analysis of the environmental factors, which directly
or indirectly affect the functioning of business.

10. (b) Short-term Planning: Short term planning, also known as
operational or tactile planning, usually covers a period of
one year. The short-term plans usually aim at sustaining
organisation in its production and distribution activities for
the current market where it operates. These plans are
directly related to functional areas such as production,
marketing, finance, etc.
On the Basis of Approach Adopted:
(a) Proactive Planning: Proactive planning involves designing
a suitable course action in anticipation of likely changes in
the environment. The organisations that use proactive
planning do not wait for environment to change but take
actions in advance in anticipation to change in environment
in future.

11. (b) Reactive Planning: Reactive planning is undertaken in
reaction to some changes in the environment. For example,
change in tastes and preferences of consumers, entry of
competitors and so on. Such planning is not that profitable
as it is undertaken to adjust to the changed environment. If
such planning fails, organisation may incur a huge financial
loss.
On the Basis of Degree of Formalisation:
(a) Formal Planning: Formal planning is undertaken in a
scientific way by experts through well structured process.
Generally, large organisations undertake planning in a
formal way by creating a separate department or hiring
experts from outside. Such planning involves large
investment.

12. (b) Informal Planning: Informal planning is based on
the past experience and available secondary
information rather than systematic evaluation of
environment. Since the environment of small
organisation is not complex they perform
reasonably well with informal planning.

13. ESSENTIAL OF A SOUND PLAN
The essential features of a sound plan are as follows:
(a) A plan should be easy to understand and execute:
Since plans are implemented at comparatively
lower levels of management manned by personnel
of average vision and intelligence, it is desirable that
they must be simple and free from all types of
ambiguity.
(b) It must be based on clear-cut objectives: A
business plan must be based on clear-cut
objectives. It should not only satisfy the needs of an
organisation and individuals working in it but
should also fit into the requirements of the
environment and resources available.

14. (c) It must be suitable to the needs of an organisation: A
plan must be formulated considering the needs of an
organisation. A good planner must consider available
resources, opportunities for business, challenges from
competitors, co-operation of workers, etc., before starting
planning exercise.
(d) It must be comprehensive and integrated: An ideal plan
should be comprehensive enough to include all important
areas of action. The 'hit and miss' method should not be
adopted by a planner. An ideal plan should harmonise the
efforts of various departments and individuals in to a single
integrated system.

15. (e) It must be flexible: Planning operates in a dynamic and
ever-changing external environment. A plan cannot afford
to be rigid in such ever- changing and ever-evolving
environment. Just as a car has to cope with the traffic, a
ship has to cope with the currents, a plan has to absorb and
adjust to the changes in the market.
(f) It should be based on rational forecasts: The basic
function of a planner is to forecast future events, viz.,
behaviour of consumers, competitors, government and
various social and economic phenomena. Therefore, a
sound plan must be based on a rational and objective
forecast of the future events.

16. (g) It should be consistent with the environment: A
sound plan must be consistent with the
environment, both internal and external. Internal
environment refers to the strengths and
weaknesses of the organisation while the external
environment consists of economic, social,
technological and political forces.
(h) It must be realistic and not idealistic: A sound
plan must adopt a realistic approach, i.e. it should
be practicable. In fact, some highly idealistic plans
may be a result of the psychology of egoistic leaders
who may over-target plans for the reason of self-
satisfaction or for creating false impression of the
enterprise.

17. (I) It must be efficient and economical: Business planning is
basically an economic exercise. Therefore, every possible
effort must be made to minimise and reduce cost and
eliminate the wastage of resources. However, a good
planner must ensure that economy should not be achieved
at the cost of quality.
(J) It should be time-bound: A plan must be launched and
accomplished within a specified time period. Time-bound
plans provide yardsticks for the evaluation of achievements
of the planning objectives. Additional time increases the
associated costs or it may even render the entire planning
activity futile.

18. (k) It must win employees' favour and confidence:
In the ultimate analysis, all plans are executed by
the rank and file. A sound plan, therefore, must
win employees' favour and beget their
confidence. In fact, there should be an equal
involvement of everyone concerned in the
organisation while formulating plans.

19. NEED AND IMPORTANCE OF PLANNING
The importance of planning may be highlighted with the help
of the following points:
(a) Planning is complementary to all management
functions: All management functions, viz., organising,
directing, co-ordination, control, staffing, motivation, etc.,
are directly related to planning. In fact, planning is the
starting point of all managerial activities.
(b) It helps management to face the future with confidence:
The most certain thing about future is that it is uncertain.
Planning cannot change the future but it certainly equips
managers with clear visions and great determination to
face the future with greater strength and confidence.

20. (c) It focuses its attention on objectives: Plans are objective
oriented. Hence, they help in synchronising the efforts of
everyone towards the fulfilment of pre-determined
organisational objectives. This helps in minimising
deviations and thereby reduces wastage.
(d) It leads to optimum utilization of resources: Planning
recognizes the alternative courses of action and chooses
the best alternative in terms of cost and resources. It also
exercises a control over the acquisition and employment of
resources and thereby ensures their optimum use.
(e) It increases overall efficiency: It is said that more sweat
on the parade ground lesser blood on the battlefield.
Planning prepares the organisation to meet unforeseen
contingencies and thus, reduces wastage and increases
overall organisational efficiency.

21. (F) It provides premises for effective control: Planning lays
down the track on which the work should proceed within
the given unit of time, labour and cost. Thus, it provides
bases for comparing the actual performance with the
targeted ones and locates deviations and takes corrective
action.
(g) It guides decision-making: Though planning in itself,
amounts to decision- making, yet it acts as a guide to
further decision making for the lower level managers.
Organisational or strategic plans set the boundaries within
which decisions can be taken by middle level and lower
level managers.
(h) It facilitates co-ordination: A well-defined plan clearly lays
down the objectives and defines the role of each individual
and department in the organisation. Hence, it co-ordinates
their activities and converts them into a homogeneous
activity.

22. (i) It helps in performance evaluation: Planning defines the
total volume of work, lays down courses of action and
identifies constraints. It is a time- bound exercise and
hence, provides a yardstick for evaluation of the
performance of managers and employees.
(J) It makes provisions for contingencies: A plan anticipates
the possible unforeseen contingencies in advance.
Moreover, it makes provision for such contingencies in the
form of reserves. Hence, a plan provides cushion for
absorbing future shocks.

23. LIMITATIONS OF PLANNING
Limitations of planning can be broadly studied from
two perspectives:
Fundamental Limitation:
Limitation of Forecasting: The limitation of
forecasting is a fundamental limitation. The whole
exercise of planning depends upon the accuracy of
forecasting, howsoever rational or scientific it may
be. In fact, some of the best laid plans collapse due
to unprecedented changes taking place in the
future conditions.

24. Other Limitations:
(a) Egoistic Planning: Some top level managers have a
tendency to under take unrealistic planning just to add to
their own prestige and status, without making any
contribution to the goals. Such planning raises false hopes,
without producing any results.
(b) Wastage of Resources: Planning involves huge investment
in terms of time, money, efforts and resources. It is, in fact,
a time-consuming, fund consuming and mind consuming
process. If a plan fails, valuable resources of the
organisation go waste.
(c) Expensive: Planning requires a great deal of funds in order
to finance the activities of collection of data, their
classification, analysis and interpretation and employment
of field staff. Hence, a small or a medium scale organisation
cannot afford planning exercise.

25. (d) Limits Individual Freedom: Plans are formulated by
the higher authorities. Therefore, they try to exercise
their power over the lower level managers. Usually the
lower level managers are ignored while framing
organisational plan. This restricts their individual
freedom.
(e) Not an End: Planning just lays down the path along
which the organisation has to move. Thus, planning is a
means to achieve organisational objectives and is not
an end in itself. People in the organisation have to work
in order to achieve the desired results.
(f) Dynamic Environment: Nothing is permanent except
change. Business environment is flexible, while a plan
makes business units rigid. Thus, if business units are to
function according to the plan then they will lag far
behind the existing environment.

26. (h) Unsuitable for Small Units: Planning is a
continuous process carried on by the experts. It
involves considerable amount of time, money and
labour. It requires specialised machinery for
research and study and therefore, it is not suitable
for small units.
(i) Time Consuming: Planning is a complex and
compitive activity. Thus, it becomes a time
consuming process. The plan formulated by the
higher-level management may become ineffective
for an existing environment due to a great deal of
time involved in formulating such plan.

27. (J) Delayed Action due to Deliberation: Planning is
the result of continuous efforts put in by the
management experts. It is the result of a
democratic process. The decisions are taken by the
managers through consensus and deliberation. This
leads to delayed decisions and actions.
(k) Other Limitations:
• Inaccurate forecasting.
• Internal and external inflexibility.
• Rapidly changing business environment.
• Unrealistic targets.

28. STEPS IN PLANNING PROCESS
Plans are made in all types of enterprises, at all the levels and
for all types of activities. Therefore, it is difficult to identify
a standardised planning process.
However, some of the basic steps involved in most types of
planning are:
(a) Awareness of Opportunities and Threats: Technically, this
could be referred to as a 'pre-step' in the planning process.
A progressive management must always be alert enough to
visualise opportunities offered and threats posed by the
environment. The management should, accordingly, initiate
the planning process at the most appropriate time in order
to grab opportunities and avoid threats.

30. (b) Collecting and Analysing Information: Little knowledge is
always dangerous in business planning. Therefore,
accurate, up-to-date, adequate and unbiased data for
planning should be collected from all the possible sources,
i.e. both internally and externally. The information so
collected should then be analysed through statistical tools
such as classification, tabulation, correlation, time series
analysis, trend analysis, etc.
(c) Determining Objectives: Determination of objectives is
the most crucial step in the planning process. While setting
objectives, the following factors must be taken into
account:

32. COMPONENTS OF PLANNING