5. Thus, planning is a continuing and ongoing process involving planning action-control and re-planning and plans are subject to alterations in the light of new circumstances. After having evaluated the various alternatives, the most suitable alternative is selected. These are necessary to achieve the objectives within the specified period. There is no readymade planning to be followed by all companies. Steps in Planning – Determination of Objectives, Constructing Planning Premises, Evaluation of Alternatives, Selecting Plan, Controlling the Plan and a Few Others Every business has its own problems, and so planning details differ from business-to- business. Many other factors such are uncertain future trend, problems faced financially, future uncertainties renders the evaluation process, complex and difficult. The six steps to the strategic planning process include: Identifying your strategic position; Gathering people and information; Performing a SWOT analysis; Formulating a strategic plan; Executing a strategic plan; Constantly monitoring performance For instance, technical know-how may be secured by engaging a foreign technician or by training staff abroad. Everything you need to know about the steps involved in planning process. iv. Outline the planning and controlling processes. There are many types of objectives managers may select- a desired sales volume or growth rate, the development of a new product or service, or even a more abstract goal such as becoming more active in the community. After a careful analysis of different alternatives, the best one is selected. v. What would be the tax policy and economic policy of the Government? If there is clarify about the objectives, we can plan for the future. The basis of planning are those factors/assumptions which influence the possible results of different alternatives. Adjustments and Follow Up of Plan. These factors are not controllable ones. They must monitor and maintain their plans. These plans are developed within the framework of the overall planning. For example, if thinking of the government is to develop rural areas … The effect of various factors should be carefully weighed. The very fact of achievement of goals is required to be evaluated, by seeing whether these goals are accomplished. Forecasts will generally be made for the following: (a) The expectation of demand for the products. Planning not only gives direction, but becomes a powerful instrument of control also. Without the secondary plans, the basic plan which is prepared for the whole enterprises cannot be effectively operated. Planning involves a number of steps ranging from determining the problem to follow-up action. They help in achieving the overall organisational goals. Strategic Planning 101. (c) Whether it is necessary to devise a new plan or will it be sufficient to modify the existing plan? They indicate the end result the company wishes to achieve. There is hardly any plan for which alternatives do not exist. Through the monitoring function, managers can take corrective action if they observe unexpected and unwanted deviations. Koontz and O’Donnell state: “There is seldom a plan made for which reasonable alternatives do not exist.” Therefore, managers should search for and examine alternative courses of action. The ultimate objective of the plan is to achieve certain objectives, results or goals. The statistical methods and computers have greatly helped the evaluation process. A course of action is determined according to the circumstances prevailing. Obviously, it is foolish to let a plan run its course without monitoring its progress. The second step in the planning process is to establish objectives for the entire organisation and then for each subordinate work unit. In such a situation, the planners should evolve a new alternative course by a mixture of different alternative courses. In the planning process, objectives are determined and defined first of all so that all the employees concerned can be informed about them to get their complete cooperation. Make or Buy Decision 3. Plans should be compared with actual results. For every plan there are a number of alternatives and hence, all possible alternatives to work out a plan for achieving the desired objectives should be found out for their evaluation. After finding out the available alternatives and having made an analysis of their strong and weak points, the planner must evaluate the alternatives in the light of premises and goals. Planning is not complete as soon as the best course is selected. (9) Providing for Follow-Up and Future Evaluation: In order to see that the plans are proceeding along right lines, it is necessary for the management to devise a system for continuous evaluation and appraisal of the plan. Evaluation of Alternatives 6. In view of this, the management should involve employees in planning through communication, consolation and participation. (c) To work along with the major plan to reach the same objective. Hence to implement master plan, each departmental head prepares a plan of his department. Analysis and interpretation of data facilitate in determining the enterprise objectives. Constraints such as Governmental control will also exist. Any forecast of future action must have some base which should further be improvised and processed with the help of anticipations. Planning is always for uncertain future. For Example—for effective operation of the basic production plan, a number of secondary plans for purchasing basic production plan, a number of secondary plans for purchasing of raw materials acquisition of plan and machinery, training of workers arranging for adequate finance, etc., have to be prepared for the successful operation of the basic plan. Important derivative plans used in business include policies, procedures programmes, projects, methods, budget, rules etc. After determining the organization’s objectives, we fix up the departmental objectives and then the objectives of sections of the department. Plans are prepared with a view to achieve certain goals. Once a main plan is formulated then a number of supportive plans are required. (6) Evaluation of Alternatives and Selection: The next step is to evaluate all possible alternatives with reference to cost, speed, quality etc., and select the best course of action. Naturally, after the setting of objectives, what is required to be done is to secure required information from various sources. Past information related to past objectives, courses of action being adopted, its effect and probability of achievement of objectives that can assess the effectiveness of current courses of action. Planning is a process, which embraces a number of steps to be taken. The organizational objectives should be set in key areas of operations. They analyze current state and have a preliminary look at possible future opportunities. Management, Functions, Planning, Planning Process. Goal setting: Plans are the means to achieve certain ends or objec­tives. Following a career planning process will enable you to discover your professional strengths. The various stages in the process of planning are as follows: 1. This portion of the planning process should include a detailed overview of … Formulation of Supporting Plan 8. Future in form at in is nothing but logical anticipation of near as well as distant future. Determining the alternative courses of action is an important step in the planning process. Objectives can be long term and short term as well. 6. The next step is determining available alternative ways of achieving objec­tives. Most good product ideas are born when a consumer notices a need for a specific tool that will solve their problems. Hence, establishing the objectives is an important step in the process of planning. Developing Premises 4. Some of the premise like population growth and political environment are uncontrollable while some degree of control can be exercised on the technology to be used, availability of raw materials, etc. Forecasts are essential for planning even if all may not prove correct. The planning of the sales and production quantities can be carried out in different levels of detail. Before taking a final decision about any alternative, a forecast of these assumptions is made. The successful execution of plan, depends to a large extent on the whole-hearted co-operation of the employees. The product planning process begins with an idea. There is seldom a plan for which reasonable alternatives do not exit, and quite often an alternative that is not obvious proves to be the best. A planning process helps an organization in developing the strategy. 8. The difficulties, in process, it any, can be removed. On the basis of the objectives of the organisation and the limitations of planning, alternative courses of doing a particular work can be discovered. These plans are meant for the implementation of the main plan. Forecasting will reveal those areas where control is lacking. (f) The changing pattern of consumer preferences. Hence, establishing the objectives is an important step in the process of planning. The document should include an overview of the decision-making process and the plan for the program. No partiality is shown while selecting the best alternative. Welcome to EconomicsDiscussion.net! (b) External Premises – Rate of interest, rate of taxes, etc. Forecasting means the assumption of and the anticipation of certain events. Examining Alternative Course of Action: The next step in planning will be choosing the best course of action. Some alternatives can be seen through, some may appear to be the most profitable and will be too expensive. Planning involves looking into the future which necessitates the enterprise to know, how future conditions will affect its activities. Although the strategic planning process … Quite often an alternative does not immediately prove to be the most profitable way of undertaking a plan.”. Objectives are always at the center of plan because every planned action is directed to the objectives. (ii) Is an entirely new plan necessary or is it sufficient to modify the existing plan? Normally, managers will select the alterna­tive that, in their judgement, will best enable the firm to accomplish its goals. Plan must make sure that every activity undertaken contributes to the achievement of objectives. The question of timing and who will do that, will then have to be enunciated. (d) By effectivating the plan, what benefit will the organisation get? Being Aware of Opportunity 2. This process is, at times termed as decision making, as planning process and decision making are very closely interrelated. External premises include total factors in task environment like political, social, technological, competitors’ plans and actions, government policies, etc. Cost benefit analysis of each alternative must be made. Further, there will be constraints like Government Control which affect the plans. Planning means thinking in advance. Present and future opportunities must be found so that planning may be undertaken for them. The last step in the planning process should be to pull all of the notes together into one formal document. The steps generally involved in planning are as follows: The first step in planning is to determine the enterprise objectives. The planner should study all the alternatives and then a final selection should be made. In some instances, plans are made for a year only while in others they span decades. Crystalizing the Opportunities or Problems: Crystalizing at the primary stage means analysing the external environment and opportunities as well as threats. Best results will be achieved only when best way of doing a work is selected. Planning Process comprises of: Setting Objectives, Developing Premises, Identifying alternative courses of action, Selecting an alternative, Implementing the plan and Follow-up action. Market force refers to demand, supply, buying capacity and the like. The process of planning does not end with the implementation of plans. For example, if thinking of the government is to develop rural areas as industrial centres, a farsighted businessman will think of setting up units suitable to that environment and will avail the facilities offered for this purpose. Strategy thinktanks also call this an explicit approach. It is important to note that the number of alternatives should be reduced to the most promising and fruitful ones by preliminary look. Page5 Who does what? To develop premises, planners need to do realistic forecasting. The main steps that are taken in planning process are as follows: Establishing the objectives is the first step in planning. Some of the premises such as population growth are uncontrollable by the organisation whereas others such as advertising policy to be adopted by the company are controllable. Generally, forecasting is made in the following ways: i. All information relating to operations of the business should be collected in detail. and (iii) developing the basis for decisions and planning through systematic investigations. Moreover, before weighing alternatives and reaching a decision, one is wise to search for alternatives that may not be immediately apparent. How is the finance raised for expansion and/or modernisation of the business? The rate of success of planning will be in direct proportion to the rate of the success of forecasting. Before venturing into new areas the pros and cons of such projects should be evaluated. The successful execution of any plan depends upon the extent of participation of employees. Prices and wage rates can also be forecast. Finally, the manager should draft a final plan in definite terms. Each alternative has its own strong and weak points. In fact secondary plans are meant for the implementation of principal plan. 4. Perception of Opportunities 2. Budgets provide standards against which the progress of plans can be measured. When action is to take place? Share Your Word File This involves putting the plans into action so as to achieve the business objectives Implementation of plans requires establishment of policies, procedures, standards, budgets, etc. The plan becomes a reality when it is put into operation. The expectation of technology change in production. Planning will be in the backdrop of such premises and constraints which must be watched to detect changes and their effect on plans. To get co-operation in imple­mentation, subordinates should be associated in the planning process. Planning starts with the determination of objectives. The process map should depict all phases including the early planning steps, feasibility and master plans, the permitting process and final implementation. The last step in planning process is the implementation part. What kind of products are to be sold and in what price? Conduct an Environmental Scan. Evaluating Alternative Courses 6. Our product planning methodology uses six steps to guide you through the entire process. The moment there appears to be changes in the assumptions on which the plans are based; there should be corresponding changes in the plans also. The assumptions/premises of planning are of two types: (a) Internal Premises – Capital, labour, raw material, machinery etc. Preparation of Working Drawing 2. However, planning process follows certain necessary steps in all the types of business. Each alternative weighed against the other alternatives. Once upper-level managers have selected the basic long-term goals and the planning premises, the next task is to decide the period of the plan. Doing the ground work Page14 What is planning? Follow up or feedback mechanism is an attempt to determine whether the plan has achieved the desired results. Rather planning starts with it. In the second step, the organization sets forth goals based on … Facts are collected and analyzed and the best out of all is chosen and adopted. Determining alternative courses is the third step in the planning process. Without bud­gets, plans cannot be executed; they become paper exer­cise. After determination of organizational goals, the next step is establishing planning premises, that is, the conditions under which planning activities will be undertaken. The tie between planning and objectives helps employees to understand their duties. Keeping the general economic conditions in mind, a study of the industry is made. Selection of a plan is a skilled job. It requires the use of other management functions, such as organizing, staffing, directing and controlling. The shortcomings of planning can be identified through a follow-up action and rectified then and there. The objectives should be for the enterprise as a whole and then they must be broken down into departmental and sectional objectives. Note that the suggested order of the steps is not binding, although it is applicable to most scenarios. Typically, the process of marketing planning produces the marketing strategy which is in fact, used to enhance the sales for the business producing it. Important premises include- (a) forecasts, (b) basic policies and (c) existing company plans. Share Your PPT File, Features of Management: Top 17 Features of Management, Planning Process: 11 Important Steps of Planning in Organisations, Steps Involved in Planning Process – According to Koontz and O’Donnell, Steps Involved in Planning Process – 7 Important Steps which Differs from Organization to Organization, Steps Involved in Planning Process – 8 Steps (Ranging from Determining the Problem to Follow-Up Action), Steps Involved in Planning Process – 8 Steps in the Planning Process in Management, Steps Involved in Planning Process – Setting Objectives, Developing Premises, Identifying Alternative Courses of Action, Evaluating Alternative Courses and a Few Others, Steps Involved in Planning Process – Some Important Steps to be Followed by all Types of Companies for Having a Comprehensive Planning for Execution, Steps Involved in Planning Process – 8+ Major Steps, Steps Involved in Planning Process – Planning Process which may be Treated as Commonly Acceptable. They are required to be balanced in the form of balance sheet. (b) What is the plan to be performed to exploit such opportunities or such problems? Such information is regarding internal as well as external environment. It depends upon accurate business forecasting. Plan must make sure that every activity undertaken contributes to the achievement of objectives. An analysis of the data so collected will result in the formation of certain assumptions as a base. The evaluation of various alternatives will help in knowing which of them offers the greatest chance of success in reaching the desired objectives. Objectives should be measurable. Within the framework of a basic plan, derivative plans are formulated in each functional area. This step involves making assumptions concerning the behaviour of internal and external factors mentioned in the second step. If the forecasts are accurate then planning will also be reliable. Basic organisational plans cannot be executed effectively unless they are supported by the derivative or sub-plans. There are a number of ways of doing a thing. The timing is fixed for introduction of plans. Feedback provides managers with input that can help them to update and adjust plan accordingly. Establishing the Sequence of Activities: The determined course of action is adopted for each section or department, product, for a quarter, month, week, etc. Hence, as a part of plan, budgets are passed to make provision for cash and capital expenditures. At this step of the strategic planning process, managers are faced with the question of whether a new strategy is required and, if so, what kind of strategy it will be. The management should watch how the planning is being done. 5. Planning premise is planning assumptions – the expected environmental and internal conditions. The objectives fixed must clearly indicate what is to be achieved, where action should take place, who is to perform it, how it is to be undertaken and when it is to be accomplished. Budgets provide meaning to plans. (g) The impact of technological changes on production processes. This article throws light upon the eight main steps involved in the planning process of an organisation. (e) The economic policies of the government. If no gap is found from the above analysis (step six), there is hardly any problem. Strategic Planning Steps . Securing Participation of Employees 11. A good planner must consider combination of all possible limitations and make provision for them. While it can be time consuming, in the long run it is worth the investment. in the future. The short comings can be rectified as early as possible. Implementation of plans is the final step in the process of planning. Business varies considerably in their planning periods. Such analysis further helps in identifying organisational strength in all vital areas. Hence, the process of controlling is a critical part of any plan. From the basic plans as selected above, other plans will have to be developed, to support the basic plan. These are described as derivative plans. First, an organization establishes its preplanning foundation, which reviews past events and describes the current situation. At this stage, it is seen as to what extent a particular alternative course can help in the attainment of the objectives of the organisation. For instance a basic marketing plan may result in other derivative plans such as the advertising plan, recruiting personnel plan, training plan etc. External environment includes Govt. How and when these derivate objectives are to be accomplished? What will be the market force? 4 Basic Steps in the Business Planning Process Ultimately, the definition of business planning can be seen in the business planning process. Planning process is concerned with making current decisions to allocate our resource in such a manner that we can achieve future objectives. We have the following major steps, in the 5 step planning process: Defining Objectives Each alternative should be closely studied to determine its suitability. Throughout the planning process, premises must be monitored and updated. Various factors will be weighed against each other. of a planning process. In case the future forecast proves wrong and the first alternative course fails, the reserved one can immediately be brought into operation and failure can be averted. The plan should be objective oriented. The following is a simple guide that explains the basic steps of project management planning. Managers need to determine- (a) what threats to achieving the unit’s objectives are developing and (b) how changes in the environment present opportunities for greater achieve­ment of those objectives. Managers have to “sell” the plan to the people who will be responsible for turning it into reality. Setting objectives is the most crucial part of planning. Plan should be formulated by the management in the backdrop of such premises and constraints. Changes in the environment and the organisation subvert even the best plans. That is, managers should be able to restate the objectives of the firm in definite and clear terms that will motivate examination and evaluation of performance against targeted performance in the plan. (5) Finding Out the Alternative Courses of Action: The next step is to find out the various alternative courses of action. They examine organisation’s strengths and weaknesses. Once the organisation’s objectives are determined, the section-wise or department-wise objectives are planned at the lower level. For a socio-economic system, the only vehicle for change (adaptation or innovation) is the business planning and decision making process as described above. These organizational goals are made by senior level managers after reviewing numerous objectives. The facts and figures collected will help in framing realistic plans. (2) Collecting and Analysing Information: The next step is to gather adequate information and data relating to the planning to be done and to analyse it to find out the cause-effect relationship between the various factors. Recognizing Need for Action: The first step in planning process is the awareness of business opportunity and the need for taking action. The implementation will require establishment of policies, procedures, standards and budgets. The following are the major steps in the planning process: Crystalizing at the primary stage means analysing the external environment and opportunities as well as threats. (4) Determining Planning Premises and Constraints: Premises are planning assumptions on the basis of which planning takes place. Budgets are expressions of expectations in numerical terms. It helps in making realistic assumptions about sale, costs, prices, products, and technological developments etc. Organisational goals provide direction to and control the objectives of subordinate departments. Planning is a process, which embraces a number of steps to be taken. The type of customers to be dealt with, the circumstances under which goods are to be provided, value of products to the customers, etc., should be studied in detail. The preparation of a secondary plan is necessary to expedite the achievement of the basic plan. Plans are formulated for future which is uncertain. What would be their manufacturing costs? Strategy mapping is an effective tool to visualize your entire plan. All these possibilities must be explored during the planning process. Keeping in view the uncertainties of future it is justifiable to select more than one good alternative course. This involves converting it into action. To make the planning process more effective, it should also provide for a feedback mechanism. Middle and lower-level managers must draw up the appropriate plans, programmes and budgets for their subunits. Formal planning is a systematic process. Below, you can find the steps to take to create a … Establishing Objectives 3. The main plan should be supported by a number of derivative plans. It is advisable to limit premising to those factors which are critical or strategic to the planning process. Planning is a combination of information handling and decision making systems. Objectives are the guides of employees. Planning determines the future course of action for utilising various resources in a best possible way. Secondary plans flow from the primary or basic plan. Because the future events are complex, premises must be limited to assumptions that are critical to a plan. Understanding goals and plans of the … After the overall plan has been adopted, it is necessary to develop other derived plans for each segment of the enterprise to support the major plan. Assumptions denote the expected environment in the future and are known as planning premises. Objectives should clearly define as to what is to be achieved by policies, procedures, rules, strategies, budgets and programmes. Therefore, it requires a serious thought on numerous factors necessary to be considered in making plans. Objectives must be specific and clear and should indicate the end result of planning activity. Implementing the Plan 10. This is the point at which the plan is adopted – the point of decision making. A course of action may be suitable but it may involve huge investments and the other may involve less amount but it may not be very profitable. Here, the secondary plan includes production schedule, purchase of plant and machinery, purchase of raw materials, consumable stores, selection, training and placement of personnel and the like. Planning will be reliable when the forecast methods are accurate. Good managers assume changes and plan for them. A manager should try to screen out the most viable alternative so that he has a small number of alternatives for final selection. It is difficult to separate budgeting from planning process. Various factors such as profitability, investment requirements, etc., of such alternatives should be weighed against each other. So objectives will percolate down from the managers and will also guide and push the employeesin the correct directi… Plans are prepared with a view to achieve certain goals. The strategic planning process is essentially a list of steps that managers should follow to complete and implement a strategy within a company. Determining Planning Premises and Constraints: Planning is forward looking. Project Planning Process Step #16: Determine all roles & responsibilities . After implementing the plans, the sequence of different activities has to be decided. Thus, it is a forecast of conditions like trends in population, political and economic environment, production costs, advertising policy, availability of labour, material, power, etc. An intelligent manager must make plans anticipating the conditions or limitations that might restrict the smooth operation of the plans. Objectives should clearly define as to what is to be achieved by policies, procedures, rules, strategies, budgets and programmes. The steps in the planning process are: Develop objectives ; Develop tasks to meet those objectives ; Determine resources needed to implement tasks ; Create a timeline Though nothing may be certain in the coming period but still certain assumptions will have to be made for formulating plans. 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