Planning means to think in advance about the major decisions such as what to do, how to do, who will do it and how it will be done. Planning involves major brain storming and thus helps in bridging the gap between the present position and the target position. Plans should be made very carefully because without proper plan, decisions cannot be made and it becomes difficult to take any further step. Organizing, staffing, directing and controlling also depend on planning.
Plans should be properly made by properly analysing everything. it has logical steps which should be followed for making an simple, achievable, logical, measureable and rational plan. These steps are as under:
First thing that comes in planning process is setting objectives. Every organization has certain objectives which are to be achieved through different organizational activities. There are certain primary objectives. Keeping those objectives in mind, different departments and divisions have certain secondary objectives which are under the broad framework of the organization. Objectives clearly state what the goal of an organization is.
Objectives are set up for giving a direction to the organization. When objectives are stated properly it becomes easy for the employees to unite their actions at a focal point. Objectives should be specific, measureable, actionable, achievable, reasonable, rational, and time bound.
For example: A bicycle manufacturing company want to increase its sales by 10% this year. This is a primary objective set up by the company. Further, the departments can have different objectives such as getting a new technology for faster production or better production to increase demand of the bicycle etc.
Plans are always made for the future. We do not have accurate information about future. We are not sure about the happening which may happen in future. That is why; plans are made based on certain assumptions. These assumptions are called the premises for the plan. These premises are set based on the facts, forecasts, past plans, basic policies etc.
The forecasting involves following:
- Assumptions of future events
- Analysing the trends
- Systematic investigation
Every person or manager who is involved in planning should follow the same assumption to avoid chaos and bringing orderliness. Everyone should be in agreement with the premises set up by the organization.
For example: the bicycle manufacturing company has the objective of increase its sales by 10 % this year then it must take into consideration the following assumptions:
- Change in government policies, whether they will be favourable or unfavourable.
- Increase or decrease in competition of the product.
Identifying alternative courses of action
After setting up the objectives and developing the premises for the same, next step is to identify the alternative course of action. There are various ways in which a task can be performed. These steps are called course of action. An organization needs to find out all the possible courses of action. It is very rare when there are no alternate courses of action.
An organization should come up with these alternatives through brain storming, research, experiences, ideas from various people or stakeholders, and experimentation.
For example: the bicycle manufacturing company which wants to increase its sale by 10%, can reduce the prices, provide better services, increase the promotion of the bicycles etc.
Evaluating alternative courses of action
After identifying various alternative courses of action, it is now the time to evaluate these various courses of action. This evaluation is done on the basis of positive and negative aspects of these actions. The pros of the proposal taken should be higher than its cons and should be in alignment with the objectives of the organization.
There are many different ways to evaluate these alternatives to find out their viability and feasibility. These methods include:
- Careful considerations of various aspects
- Marginal analysis
- Cost effectiveness analysis
- Risk- return on investment calculation
For example: the bicycle manufacturing company has identified various courses of action and then evaluates these courses of action, such as:
Reducing the prices: Reduction in the prices of the product will attract various customers but it will become difficult for the company to cover the costs.
Increase the promotional activity: increase the investment in promotion will further increase the cost of the product.
Providing better after sales services: providing better after sales services will help the organization in retaining the customers and get better mouth publicity.
Selecting an alternative
After proper analysis of all the courses of action, it is now time to select and implement the best alternative course of action. The best course of action would be the most feasible, most viable, most profitable and with least negative possible results. Managers may select the best alternative based on their judgement, forecasting, facts, and experiences.
Not always the single plan will work, sometimes a combination of various alternatives have to be selected for better results.
Implement the plan
Now the plan is ready to be implemented. The plan now needs the action. The next steps need to be taken such as organizing, staffing, directing and controlling. For proper implementation and to get the best results, it is important to align the objectives of various departments and divisions with the main objective of the firm. Effective implementation is only possible with proper coordination.
For example: if the company wants to increase the manufacturing of the product then the next step will be to appoint the staff and the workers required for production and purchase the machinery for the same.
Follow up action
Just implementation is not enough checking up whether it is properly implemented or not is also very important. This is sometimes also called controlling because it involves looking back and comparing the results with the standard results and then taking the corrective actions. Feedback is the essence of planning as it helps in making changes to the plans and making the future plans.
Planning is the intellectual process which involves the mental exercise and various logical steps are to be taken for proper implementation and achieving the objectives. It is the first function of management and should be performed very carefully because making a mistake while planning which lead to chaos in the organization and other steps will suffer.