2. Nature and process of planning
Intellectual process - deciding in advance what needs to be done
based upon collection, study and analysis of facts. Selection of best
alternative from available ones.
Primary function – it is a primary activity to other managerial
functions of organizing, staffing, directing, motivating,
coordinating, communicating and controlling.
Focus on goals – plans begin with goal setting, developing
policies, procedures and strategies to achieve the goals.
Pervasive – it spreads across all management levels i.e. top come
up with strategic plans, middle with operational plans and lower
with basic team level plans.
Decision making – plans target goals and decision making guides
as to which plans to choose from to achieve goals.
3. Nature and process of planning
• Flexible – it should be able to adapt to the changing business
environment.
• Continuous process – plans are always changing and being
revised as per the changing environment.
• Future oriented – plans forecast future requirements as per
demands.
4. Types of Plans
Standing Plans:
These are used for a long time period over and over again for issues
that occur again and again.
They include;
Objectives – business goals and related goals at all levels of the
organization.
Two approaches to setting objectives;
Traditional – here goals are set at top level for those at low level. But
this approach is more authoritative and fails to motivate
employees.
Modern (Management By Objective) MBO – here organizational objective
is converted into a personal objective of the employee which leads
to better performance by the employee.
5. Types of Plans
Policies – they lay down broad limits for executive action.
Kinds of policies are;
Originated – made by managers guide subordinates how to act
in a given situation.
External/imposed - when government imposes a condition that
certain percent of profit has to used for CSR.
Functional – meant for different functions like financial policy,
marketing policy, production policy etc.
Policies at different levels – basic policies used by top managers,
general policies used by middle managers and departmental
policies used by departmental managers.
6. Types of Plans
Procedures – steps for performing activities.
Methods – they provide details about a particular operation to
be carried out.
Rules – to operate in a particular way rules are made. They are
used to control all the operations and resources of the
organization.
Strategies – an action plan which sets the direction or future
course of action the organization will take or the way in
which it will go.
Types of strategies;
7. Types of Plans
Master – to enter a new market with the objective of getting a 15%
market share.
Program – to achieve master strategy extensive advertising and selling
strategies would be framed.
Minor/sub-strategies – to capture market an advertising agency would
be appointed as a minor strategy.
Benefits of standing plans:
Efficiency – routine decisions are promptly taken using these plans.
Delegation of authority – this is done through well laid down rules
and procedures. Strategy and methods help employees take fast
decisions.
8. Types of Plans
Control – methods and procedures are designed to bring about
control to the operational activities of the organization.
Co-ordination – the efforts of every individual in the
organization are blended with each other through methods,
policies and procedures. But standing plans prevent
innovation and increases resistance to change.
9. Types of Plans
Single Use Plans:
They are used only in specific situation for taking care of
specific matters.
Types of such plans are;
Program – program for increasing sales by 20% would require
number of small plans to be formed.
It is a laid down course of action to achieve goals.
Budget – it is a monetary/quantitative expression of business
plans.
Types of budgets;
10. Types of Plans
According to time:
Long term budget – for long term planning of business by the top
management.
Short term budget – meant for one or two years
Current budgets – these are for weeks or months.
According to functions:
Functional/subsidiary budgets – these are related to different
functions like sales, purchase, cash and finance.
11. Types of Plans
Master budget – various functional budgets are integrated into a
master budget.
According to flexibility :
Fixed budget – they are prepared for a given level of activity and
it never changes.
Flexible budget – they consists of series of budgets for different
levels of activity.
12. Advantages of Planning
Attention on objectives – plans should focus on
organizational goals.
Minimizing uncertainties – based on past experiences
plans should take future eventualities into consideration.
Better utilization of resources – purchase and distribution
of resources can be properly done with the help of planning
thus reducing wastages and proper use of resources
Cost reduction – when use of resources is done properly
cost get reduced
Better co-ordination – duplication of activities, delays are
avoided through proper co-ordination of activities
13. Advantages of Planning
Encourages innovation, creativity – managers can make
plans to creatively manage business activities
Facilitates control – actual performance can be compared
with set performances thus plans serve as control
mechanisms
Management by exception – it means managers look into
operational activities only when required with the help of
plans
Facilitates delegation – passing on authority and control
becomes easier when there are proper plans in place
14. Limitations of Planning
Lack of accuracy – plans are based on past and meant for the
future hence incorrect past data and inaccurate future
predictions can lead to inaccurate plans
Costs – some plans may not be used later this becomes a waste
of money in making the plans
Rigid plans – they can cause problems in ever changing
business environment due to their not being flexible
Delay in actions – can be caused due to too lengthy, rigid
plans
Limited practical value – sometimes plans can be based on
theory leaving aside the practical situations faced by the firm
15. Decision Making
• Process of choosing best course of action in the given
circumstances
• An intellectual process involving analysis, reasoning aimed
towards the business goals
• Decisions are sometimes taken to take action or not to take
action hence they can be positive or negative, verbal or non-
verbal
• It is a managerial function since it is done by managers and an
organizational process since along with the managers other
teams and departments are also involved
16. Stages of Decision Making
Defining the problem – to check what is the root cause of
the problem
Analysis of the problem – by collecting data sufficient for
making decisions
Developing alternate actions plans – options should
always be open to the decision makers to take their decisions
Selecting best course of action – managers are always
guided by past experiences, they carry out a trial and error
or experiment and do a proper research and then analyze
which is the best course of action to be taken
17. Stages of Decision Making
Implementation of decision – managers on the basis of the
selected course of action put the decision into actual use
Following up the decision – managers also check for any
deviations from the decision taken by comparing the set
action decisions with the actual decisions taken
