Organisation of Commerce and Management · Ch 2 — Functions of Management
Planning
Planning
Planning is the first and most fundamental function of management. It is the process of deciding in advance what is to be done, when it is to be done, how it is to be done, and who will do it. Planning bridges the gap between where an organisation stands today and where it wants to reach in the future. It is essentially a thinking process — a mental exercise of looking ahead — that precedes every other management function, because organising, staffing, directing and controlling all take their direction from the plan.
Meaning
Planning may be defined as the process of setting objectives and determining, in advance, the best possible course of action to achieve those objectives. It involves forecasting future conditions, deciding objectives, and selecting the most efficient and economical alternative from among the various courses of action available.
Features of Planning
- Planning is goal-oriented. Every plan starts from an objective; planning without a goal is meaningless.
- Planning is a primary function. It comes first because every other function is built on the foundation the plan provides — organising, staffing, directing and controlling all follow from what was planned.
- Planning is a continuous process. Plans are made for a specific period, and once that period ends (or circumstances change), fresh plans have to be made. Planning never truly stops.
- Planning is futuristic. It involves looking ahead and preparing for future conditions, based on forecasts and reasonable assumptions about what will happen.
- Planning involves decision-making. At every stage, planning requires choosing one course of action from among several available alternatives.
- Planning is all-pervasive. It is required at every level of management — top, middle and lower — though the nature and scope of the plan differs by level.
- Planning is a mental exercise. It requires sound judgement, imagination and foresight rather than mere guesswork.
- Planning focuses on achieving objectives efficiently. It aims not merely at accomplishing the objective but at accomplishing it in the most efficient, least wasteful manner.
Importance of Planning
Planning gives direction to organisational effort so that all activities move consistently towards the common goal instead of pulling in different directions. It reduces the risks of uncertainty by compelling managers to look ahead and prepare for likely changes in the environment. It reduces overlapping and wasteful activities because roles and resource use are thought through in advance, coordinating work between departments. Planning also promotes innovative ideas, since it is fundamentally a thinking, forward-looking activity that pushes managers to search for better ways of doing things. It facilitates decision-making by laying down in advance what objectives are to be achieved and which course of action will best achieve them, giving future decisions a ready reference point. Finally, planning establishes the standards against which actual performance is later measured, making effective control possible — without a plan, there is nothing to control against.
The Process (Steps) of Planning
| Step | What happens |
|---|---|
| 1. Setting objectives | The organisation decides precisely what it wants to achieve — clear, specific, and time-bound goals. |
| 2. Developing planning premises | Assumptions are made about the future internal and external environment (economic conditions, competition, government policy, resource availability) on which the plan will be based. |
| 3. Identifying alternative courses of action | Various possible ways of achieving the objective are listed out — there is rarely only one way to reach a goal. |
| 4. Evaluating alternative courses | Each alternative is examined for its strengths, weaknesses, cost, feasibility and consequences. |
| 5. Selecting the best alternative | The most suitable course of action is chosen — sometimes a combination of alternatives is adopted rather than a single one. |
| 6. Implementing the plan | The chosen plan is put into action by allocating resources and assigning responsibility. |
| 7. Follow-up action | The plan is monitored while it is being carried out, so that any deviation can be corrected in time — this step links planning forward to the controlling function. |
The management function of deciding in advance what is to be done, when, how, and by whom, by setting objectives and selecting the best course of action from …
The assumptions made about the future internal and external environment on which a plan is based, such as expected economic conditions, competition …