Planning Process: 11 Major Steps of Planning (with diagram)

Everything you need to know about the steps involved in planning process. Planning is a process, which embraces a number of steps to be taken. It is an intellectual exercise and a conscious determination of courses of action.

Therefore, it requires a serious thought on numerous factors necessary to be considered in making plans. Facts are collected and analyzed and the best out of all is chosen and adopted.

Planning process involves the setting up of business objectives and allocation of resources for achieving them.

Planning determines the future course of action for utilising various resources in a best possible way.

The steps involved in planning process are:

1. Being Aware of Opportunity 2. Establishing Objectives 3. Developing Premises 4. Determining Alternative Courses 5. Evaluating Alternative Courses 6. Selecting the Best Alternative

7. Formulating Derivative Plans 8. Numberizing Plans by Budgeting 9. Implementing the Plan 10. Securing Participation of Employees 11. Adjustments and Follow Up of Plan.

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Planning Process: 11 Important Steps of Planning in Organisations

Steps Involved in Planning Process – According to Koontz and O’Donnell

Planning is deciding in advance what actions and resources are required to reach a goal. Formal planning is a systematic process.

Koontz and O’Donnell list the following steps in the process (see figure 5.1):

Step # 1. Being Aware of Opportunity:

During this stage, managers create a foundation from which they will deve­lop their plans. They analyze current state and have a preliminary look at possible future opportunities. They examine organisation’s strengths and weaknesses. Clemens and Mayer state: “The further you look back, the further you can see ahead.” Managers at this point must have an understanding of “why we wish to solve uncer­tainties, and a vision of what we expect to gain.”

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.

Step # 2. Establishing Objectives:

The second step in the planning process is to establish objectives for the entire organisation and then for each subordinate work unit. Objectives define the results to be achieved and indicate where the primary emphasis is to be placed and what is be accomplished by the network of strategies, policies, procedures, rules, budgets and programmes. Organisational goals provide direction to and control the objectives of subordinate departments.

Step # 3. Developing Premises:

Premises are planning assumptions about the environment in which the plan is to be carried out. Premises encompass the expected environment of plans in operation. Important premises include- (a) forecasts, (b) basic policies and (c) existing company plans. Managers charged with planning respon­sibility must establish, circulate, and obtain consent to utilize critical planning premises. Managers use these premises to evaluate future events, and to develop ‘action statements’ and alternative course of action.

To develop premises, planners need to do realistic forecasting. The process of forecasting generally involves- (i) calculation of probable future events; (ii) analysing changes in consumer attitude, technology, competitive forces, government policies etc. and (iii) developing the basis for decisions and planning through systematic investigations.

Because the future events are complex, premises must be limited to assumptions that are critical to a plan. Throughout the planning process, premises must be monitored and updated.

Step # 4. Determining Alternative Courses:

The next step is determining available alternative ways of achieving objec­tives. 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. It is important to note that the number of alternatives should be reduced to the most promising and fruitful ones by preliminary look. Alterna­tives can be discovered through research, experimenta­tion, and experience.

Step # 5. Evaluating Alternative Courses:

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. Eval­uation is not an easy process because alternatives have so many variables and limitations. Some alternatives can be seen through, some may appear to be the most profitable and will be too expensive. Some may be less desirable or efficient than others; still another may better suit the firm’s immediate goals.

Hence, the effective manager evaluates these alter­natives against the considerations for both feasibility and consequences. The statistical methods and computers have greatly helped the evaluation process.

Step # 6. Selecting the Best Alternative:

This is the point at which the plan is adopted – the point of decision making. Selecting the most appropriate alternative involves choos­ing the plan. Normally, managers will select the alterna­tive that, in their judgement, will best enable the firm to accomplish its goals. Sometimes, the manager may de­cide to follow many viable, feasible or sufficient realistic courses rather than the one best course. The worst decision is ‘to decide not to decide.’

Step # 7. Formulating Derivative Plans:

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.

A derivative plan may be neces­sary:

(a) To co-ordinate the different phases of the organisation;

(b) To develop new policies and procedures for effecting the plan; and

(c) To work along with the major plan to reach the same objective.

Step # 8. Numberizing Plans by Budgeting:

Without bud­gets, plans cannot be executed; they become paper exer­cise. Budgets provide meaning to plans. Hence, as a part of plan, budgets are passed to make provision for cash and capital expenditures. Budgets provide standards against which the progress of plans can be measured.

Budgeting is telling money where to go rather than asking it where it went. Budgets are expressions of expectations in numerical terms. Budgets are generally financial, though they may be expressed in other terms also such as labour hours. It is difficult to separate budgeting from planning process.

Step # 9. Implementing the Plan:

The plan becomes a reality when it is put into operation. This involves converting it into action. Implementation means that resources are committed and employees act. It requires the use of other management functions, such as organizing, staffing, directing and controlling. To get co-operation in imple­mentation, subordinates should be associated in the planning process.

Effective implementation of a plan requires manage­rial co-ordination and teamwork. Managers have to “sell” the plan to the people who will be responsible for turning it into reality. It requires managers to keep a careful eye on plan progress and results.

Step # 10. Adjustments and Follow up of Plan:

Changes in the environment and the organisation subvert even the best plans. Long-range plans Eire most susceptible to change due to external forces. Good managers assume changes and plan for them. They must monitor and maintain their plans. Constant monitoring of plans is necessary so that adjustments and corrections can be made in a timely and relevant manner.

Through the monitoring function, managers can take corrective action if they observe unexpected and unwanted deviations. Follow up or feedback mechanism is an attempt to determine whether the plan has achieved the desired results. Plans should be compared with actual results. Feedback provides managers with input that can help them to update and adjust plan accordingly.

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Steps Involved in Planning Process – 7 Important Steps which Differs from Organization to Organization

Planning is a process, which embraces a number of steps to be taken. It is an intellectual exercise and a conscious determination of courses of action. Therefore, it requires a serious thought on numerous factors necessary to be considered in making plans. Facts are collected and analyzed and the best out of all is chosen and adopted.

The planning process, valid for one organization and for one plan, may not be valid for all other organizations or all types of plans, because various factors that go into planning process may differ from organization to organization or plan to plan. For example, planning process for a large organization may not be the same as for a small organization.

The steps generally involved in planning are as follows:

Step # 1. Establishing Verifiable Goals or Set of Goals to be Achieved:

The first step in planning is to determine the enterprise objectives. Upper level or top managers most often set these, usually after a number of possible objectives have been carefully considered. 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. The type of goal selected will depend on number of factors – the basic mission of the organization, the values its managers hold, and the actual and potential ability of the organization.

Step # 2. Establishing Planning Premises:

The second step in planning is to establish planning premises, i.e., certain assumptions about the future on the basis of which the plan will be intimately formulated. Planning premises are vital to the success of planning as they supply economic conditions, production costs and prices, probable competitive behaviour, capital and material availability, governmental control, and so on.

Step # 3. Deciding the Planning Period:

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. Business varies considerably in their planning periods. In some instances, plans are made for a year only while in others they span decades. In each case, however, there is always some logic in selecting a particular time range for planning.

Companies generally base their period on a future that can reasonably be anticipated.

Other factors, which influence the choice of a period, are as follows:

(a) Lead time in development and commercialization of a new product;

(b) Time required to recover capital investments or the payback period; and

(c) Length of commitments already made.

Step # 4. Findings Alternative Courses of Action:

The fourth step is planning is to search for and examining alternative courses of action. For instance, technical know-how may be secured by engaging a foreign technician or by training staff abroad. Similarly, products may be sold directly to the consumer by the company’s salesmen or through exclusive agencies. 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.

Step # 5. Evaluating and Selecting a Course of Action:

Having sought alternative courses, the fifth step is to evaluate them in the light of the premises and goals and to select the best course or courses of action. This is done with the help of quantitative techniques and operations research.

Step # 6. Developing Derivative Plans:

Once the plan has been formulated, its broad goals must be translated into day-to-day operations of the organization. Middle and lower-level managers must draw up the appropriate plans, programmes and budgets for their subunits. These are described as derivative plans. In developing these derivative plans, lower-level managers take steps similar to those taken by upper-level managers – selecting realistic goals, assessing their subunits’ particular strength and weaknesses and analyzing those parts of the environment that can affect them.

Step # 7. Measuring and Controlling the Progress:

Obviously, it is foolish to let a plan run its course without monitoring its progress. Hence, the process of controlling is a critical part of any plan. Managers need to check the progress of their plans so that they can (a) take whatever remedial action is necessary to make the plan work, or (b) change the original plan if it is unrealistic.

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Steps Involved in Planning Process – 8 Steps (Ranging from Determining the Problem to Follow-Up Action)

Planning process involves the setting up of business objectives and allocation of resources for achieving them. Planning determines the future course of action for utilising various resources in a best possible way. It is a combination of information handling and decision making systems based on information inputs, outputs and a feedback loop.

Steps in Planning Process:

Planning involves a number of steps ranging from determining the problem to follow-up action.

Following steps are taken in planning process:

1. Recognising Need for Action:

The first step in planning process is the awareness of business opportunity and the need for taking action. Present and future opportunities must be found so that planning may be undertaken for them. The trend of economic situation should also be visualised. 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.

Before venturing into new areas the pros and cons of such projects should be evaluated. A beginning should be made only after going through a detailed analysis of the new opportunity.

2. Gathering Necessary Information:

Before actual planning is initiated relevant facts and figures are collected. All information relating to operations of the business should be collected in detail. 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 facts and figures collected will help in framing realistic plans.

3. Laying Down Objectives:

Objectives are the goals which the management tries to achieve. The objectives are the end products and all energies are diverted to achieve these goals. Goals are a thread which bind the whole company. Planning starts with the determination of objectives. The tie between planning and objectives helps employees to understand their duties. Objectives are the guides of employees. It is essential that objectives should be properly formulated and communicated to all members of the organisation.

4. Determining Planning Premises:

Planning is always for uncertain future. Though nothing may be certain in the coming period but still certain assumptions will have to be made for formulating plans. Forecasts are essential for planning even if all may not prove correct. A forecast means the assumption of future events. The behaviour of certain variables is forecasted for constituting planning premises.

Forecasts will generally be made for the following:

(a) The expectation of demand for the products.

(b) The likely volume of production.

(c) The anticipation of costs and the likely prices at which products will be marketed.

(d) The supply of labour, raw materials etc.

(e) The economic policies of the government.

(f) The changing pattern of consumer preferences.

(g) The impact of technological changes on production processes.

(h) The sources for supply of funds.

It is on the basis of the forecasts that planning is undertaken. The success or failure of planning will depend upon the forecasts for various factors mentioned above. If the forecasts are accurate then planning will also be reliable. The effect of various factors should be carefully weighed.

5. Examining Alternative Course of Action:

The next step in planning will be choosing the best course of action. There are a number of ways of doing a thing. The planner should study all the alternatives and then a final selection should be made. Best results will be achieved only when best way of doing a work is selected. According to Koontz and O’Donnell, “There is seldom a plan made for which reasonable alternatives do not exist.” All the pros and cons of methods should be weighed before a final selection.

6. Evaluation of Action Patterns:

After choosing a course of action, the next step will be to make an evaluation of those courses of actions. Evaluation will involve the study of performance of various actions. Various factors will be weighed against each other. 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. The evaluation of various action patterns is essential for proper planning.

7. Determining Secondary Plans:

Once a main plan is formulated then a number of supportive plans are required. In fact secondary plans are meant for the implementation of principal plan. For example, once production plan is decided then a number of plans for procurement of raw materials, purchase of plant and equipment, recruitment of personnel will be required. All secondary plans will be a part of the main plan.

8. Implementation of Plans:

The last step in planning process is the implementation part. The planning should be put into action so that business objectives may be achieved. The implementation will require establishment of policies, procedures, standards and budgets. These tools will enable a better implementation of plans.

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Steps Involved in Planning Process – 8 Steps in the Planning Process in Management

Planning process is concerned with making current decisions to allocate our resource in such a manner that we can achieve future objectives. Planning is a combination of information handling and decision making systems. We have information inputs, outputs and a feed-back. Let us now briefly view the steps generally involved in the planning activity.

The following are the major steps in the planning process:

Step # 1. Crystalizing the Opportunities or Problems:

Crystalizing at the primary stage means analysing the external environment and opportunities as well as threats. This further includes identification of problems to which solutions are to be provided and the opportunities that can be grabbed to make use of. It is necessary to clearly ascertain the areas requiring improvement for which planning is to be visualised.

Answers to the following questions can help in planning – (i) Why a plan is required to be prepared? (ii) Is an entirely new plan necessary or is it sufficient to modify the existing plan? (iii) Will the organisation be benefited if such a plan is prepared and put into operation? (iv) If yes how? These answers will facilitate formulation of practical and realistic plans.

Determination of crystal clear objectives is the first step in planning. Rather planning starts with it. Objectives are always at the center of plan because every planned action is directed to the objectives. This process can also be used as motivation to individuals in achieving the objectives because they have helped in establishing them along with tasks to be performed for their achievement.

Overall objectives define the goals to be achieved in general, whereas derivative objectives provide focus on their details i.e. what exactly is to be accomplished? When action is to take place? Who is to take this action? How and when these derivate objectives are to be accomplished?

Step # 2. Securing and Analysing Necessary Information:

Plans are blue prints of what is to be done, how is to be done, who has to do etc. Plans provide the course of action to reach predetermined goals, by departments and ultimately by the organisation. Any forecast of future action must have some base which should further be improvised and processed with the help of anticipations. Such base and anticipation is the information pertaining to past, present and future.

Naturally, after the setting of objectives, what is required to be done is to secure required information from various sources. Such sources are located as well as identified and required information is gathered from them. 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. Future in form at in is nothing but logical anticipation of near as well as distant future.

Such information is regarding internal as well as external environment. External environment includes Govt. policies, social values, political conditions, international situation and other externalities that may have effect on the organisation in future. Analysis of such information to the benefits of organisation only, must be made and thereby ‘Plus’ and ‘Minus’ or ‘strong’ and ‘weak’ points are assessed and identified. Such analysis further helps in identifying organisational strength in all vital areas.

Constructive approach can reveal the deficiencies and pinpoint weaknesses, particularly in relation with competition. Such identified strength and weakness are assets and liabilities. They are required to be balanced in the form of balance sheet. This will help in knowing “where we stand in the market.”

Step # 3. Establishing Planning Premises and Constraints:

This step involves making assumptions concerning the behaviour of internal and external factors mentioned in the second step. It is essential to identify the assumptions on which the plans will be based. An analysis of the data so collected will result in the formation of certain assumptions as a base. Assumptions denote the expected environment in the future and are known as planning premises. Again forecasting is important in premising.

It helps in making realistic assumptions about sale, costs, prices, products, and technological developments etc. in the future. The assumptions along with the future forecasts provide a basis for the plans. Since future environments are so complex and uncertain; it would not be realistic to make assumptions in great details about every environmental factor. It is advisable to limit premising to those factors which are critical or strategic to the planning process.

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. Constraints such as Governmental control will also exist. Planning will be in the backdrop of such premises and constraints which must be watched to detect changes and their effect on plans.

Step # 4. Ascertaining Alternative Courses of Action or Plans:

There is always a possibility of existence of certain limitations that could affect the ability of the work-group to reach its objectives. An intelligent manager must make plans anticipating the conditions or limitations that might restrict the smooth operation of the plans. A good planner must consider combination of all possible limitations and make provision for them.

Determining the alternative courses of action is an important step in the planning process. In the light of the above analysis the possible alternative courses of action will have to be ascertained and examined. There is hardly any plan for which alternatives do not exist. Generally in all situations, there is more than one possible course of action. Ingenuity and imagination as well as experience are required to ascertain a number of possible alternative courses of action available in a given situation.

A manager should try to screen out the most viable alternative so that he has a small number of alternatives for final selection. This will help in the thorough analysis of the alternatives so developed.

Step # 5. Evaluation and Selection of Optimum Plan:

The fifth and most important step in planning process is evaluation and selection of the optimum plan. After selecting the few viable alternatives, they should be evaluated with the help of number of parameters which are related to planning premises and objectives. These alternative courses of action will then be evaluated either by judgement alone or with the help of quantitative techniques and staff assistance.

This will help in evaluating and selecting plan or course of action which will be the optimum or the best, considering all the factors in the interest of the company. The evaluation of various alternatives will help in knowing which of them offers the greatest chance of success in reaching the desired objectives.

The purpose of evaluating the alternatives courses of action is to select the most suitable course of action, which will achieve organisational objectives. Techniques of decision-making are applied to choose a particular course of action. Some factors should be taken into account.

While selecting the plan they are:

i. The plan should be objective oriented,

ii. It should be flexible or adjustable,

iii. It should be specific and clear,

iv. It should be easily acceptable by the operating personnel,

v. The resources required for the implementation of the plan should be made available.

Therefore, the management may decide to select two or more alternatives and combine them to have most feasible plan.

Step # 6. Determining Derivative Plans:

Basic organisational plans cannot be executed effectively unless they are supported by the derivative or sub-plans. From the basic plans as selected above, other plans will have to be developed, to support the basic plan. They are described as derivative plans.

These plans are developed within the framework of the overall planning. For instance a basic marketing plan may result in other derivative plans such as the advertising plan, recruiting personnel plan, training plan etc.

Important derivative plans used in business include policies, procedures programmes, projects, methods, budget, rules etc. They help in achieving the overall organisational goals.

Step # 7. Fixing Timing of Introduction:

The timing is fixed for introduction of plans. The question of timing and who will do that, will then have to be enunciated. An appropriate time schedule has to be prepared and detailed instructions are written for communication of the plan.

Step # 8. Arranging Future Evaluation of Effectiveness of the Plan:

The ultimate objective of the plan is to achieve certain objectives, results or goals. The very fact of achievement of goals is required to be evaluated, by seeing whether these goals are accomplished. If not, it is essential to find out as to where be the slip up. Such an evaluation must be made at the earliest possible opportunity so that adequate controlling is resorted to for ensuring achievement of planned goals. This process is, at times termed as decision making, as planning process and decision making are very closely interrelated.

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. Thus planning needs review, evaluation and recycling. Flexible plans can adapt with changes in the environment. Business enterprise is an open, adaptive system with its own environment.

For a socio-economic system, the only vehicle for change (adaptation or innovation) is the business planning and decision making process as described above. Planning not only gives direction, but becomes a powerful instrument of control also. Managers throughout the chain of command are planners-cum-controllers.

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Steps Involved in Planning Process – Setting Objectives, Developing Premises, Identifying Alternative Courses of Action, Evaluating Alternative Courses and a Few Others

(i) Setting Objectives:

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.

(ii) Developing Premises:

The basis of planning are those factors/assumptions which influence the possible results of different alternatives. Before taking a final decision about any alternative, a forecast of these assumptions is made. The rate of success of planning will be in direct proportion to the rate of the success of forecasting.

The assumptions/premises of planning are of two types:

(a) Internal Premises – Capital, labour, raw material, machinery etc.

(b) External Premises – Rate of interest, rate of taxes, etc.

(iii) Identifying Alternative Courses of Action:

Generally, there is no work which has no alternative method of doing it. On the basis of the objectives of the organisation and the limitations of planning, alternative courses of doing a particular work can be discovered.

(iv) Evaluating Alternative Courses:

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. There is however, one problem which confronts us while analysing these alternative courses. Every alternative course has its merits and demerits. In such a situation, the planners should evolve a new alternative course by a mixture of different alternative courses.

(v) Selecting an Alternative:

After a careful analysis of different alternatives, the best one is selected. Sometimes, the analysis yields more than one alternative course with similar merits. Keeping in view the uncertainties of future it is justifiable to select more than one good alternative course. One of such alternative is adopted and the other is kept in reserve. 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.

(vi) Implementing the Plan:

After having decided the chief plan and the subsidiary plans, they are to be implemented. After implementing the plans, the sequence of different activities has to be decided. In other words, it is decided as to who will do a particular job and at what time.

(vii) Follow Up Action:

The process of planning does not end with the implementation of plans. Plans are formulated for future which is uncertain. It is of great importance that there is a constant review of plans so as to ensure success in the uncertain future. 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. In this way, we can say planning is a continuously moving process.

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Steps Involved in Planning Process – Some Important Steps to be Followed by all Types of Companies for Having a Comprehensive Planning for Execution

There is no readymade planning to be followed by all companies. It has to be developed to meet the individual needs of a particular company. However, there are some important steps to be followed by all types of companies for having a comprehensive planning for execution.

These are as follows:

1. Determination of Objectives:

Planning is not possible without definite objective. Therefore determination of objectives of business starts the planning process. If there is clarify about the objectives, we can plan for the future. After determining the organization’s objectives, we fix up the departmental objectives and then the objectives of sections of the department.

2. Constructing Planning Premises:

Planning means thinking in advance. It depends upon accurate business forecasting. Demand for commodity can be forecast. Prices and wage rates can also be forecast. Forecasting generates planning premises which are three types – (i) Beyond control (Population explosion and price level) (ii) Partially controllable (efficiency of work force) (iii) Fully controllable (development plan for future) qualitative and quantitative methods are used to make these forecasts.

3. Collection, Classification and Processing of Information:

Only relevant information facilities the planning. Information must be classified, analyzed and processed.

4. Deciding Alternative Course of Action:

To fulfil an objective, there can be more than one course of action. For example if we want to increase the profit, we must increase the sales by keeping the prices constant or we must reduce the cost of production by avoiding all sorts of wastes. All these possibilities must be explored during the planning process.

5. Evaluation of Alternatives:

Each alternative weighed against the other alternatives. Cost benefit analysis of each alternative must be made. Operational research can be used to evaluate the alternative sources of action.

6. Selection of Plan:

Evaluation makes comparison of different plans possible in terms of results. The best plan is then selected. Selection of a plan is a skilled job.

7. Subsidiary Plans to Aid Master Plan:

After deciding the main plan, subsidiary plans are prepared to implement the main plan successfully. For example, if an aviation company decides to buy aeroplanes, then it also prepares subsidiary plans like manpower supply, training, purchasing of ancillary etc. Hence to implement master plan, each departmental head prepares a plan of his department.

8. Controlling the Plan:

Plans and subsidiary plans are first used on trial basis to the possibility of their success. The difficulties, in process, it any, can be removed. Then the plan and its subsidiaries are implemented. The short comings can be rectified as early as possible.

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Steps Involved in Planning Process – 8+ Major Steps

The various steps involved in the planning process are as follows:

(1) Awareness of Opportunities and Problems:

The first step in planning is the awareness of the unemployed business opportunity or the problem to be provided for in future.

The following type of questions will help in ascertaining clearly the opportunities and problems:

(a) What business opportunities or problems are likely to arise in future?

(b) What is the plan to be performed to exploit such opportunities or such problems?

(c) Whether it is necessary to devise a new plan or will it be sufficient to modify the existing plan?

(d) By effectivating the plan, what benefit will the organisation get?

(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.

(3) Determination of Objectives:

Analysis and interpretation of data facilitate in determining the enterprise objectives. Objectives must be specific and clear and should indicate the end result of planning activity. The objectives should be for the enterprise as a whole and then they must be broken down into departmental and sectional objectives.

(4) Determining Planning Premises and Constraints:

Premises are planning assumptions on the basis of which planning takes place. 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.

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. Further, there will be constraints like Government Control which affect the plans. Plan should be formulated by the management in the backdrop of such premises and constraints.

(5) Finding Out the Alternative Courses of Action:

The next step is to find out the various alternative courses of action. 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.

(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.

(7) Determining Secondary Plans:

After selecting the best course of action, the management has to formulate the secondary plans to support the basic plan. Without the secondary plans, the basic plan which is prepared for the whole enterprises cannot be effectively operated.

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.

(8) Securing Participation of Employees:

The successful execution of plan, depends to a large extent on the whole-hearted co-operation of the employees. In view of this, the management should involve employees in planning through communication, consolation and participation.

(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. By this, the management can notice short comings in time and can also take immediate suitable corrective actions.

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Steps Involved in Planning Process – Planning Process which may be Treated as Commonly Acceptable

The planning process is different from one plan to another and one organisation to another.

Given below is a planning process which may be treated as commonly acceptable:

1. Analysis of External Environment:

It is necessary to consider the external environment of an organisation. The term external environment includes socio-economic conditions and political conditions prevailing in a country. Socio-economic condition refers to classification of society on the basis of income, age, class, living conditions, aspirations, expectations and the like. These factors are not controllable ones. But, every organisation has to prepare the plan according to the changing trends in the external environment.

2. Analysis of Internal Environment:

It can be otherwise called as Resource audit. Resource audit means an analysis of the strength and weaknesses of an organisation. Due consideration is made on the availability of resources, profitability, plant capacity, available manpower, communication effectiveness and the like.

3. Determination of Objectives:

The objectives of an organisation are pre- planned. Objectives specify the results expected. Once the organisation’s objectives are determined, the section-wise or department-wise objectives are planned at the lower level. Defining the objectives of every department is a very essential one; then only clear-cut direction is available to the departments. Control process is very easy if the objectives are clearly defined.

4. Determining Planning Premises and Constraints:

Planning is forward looking. Therefore, planning is based on forecasting. Forecasting means the assumption of and the anticipation of certain events. It implies a calculation of how certain factors will behave in future. The planning must consider the likely behaviour of these factors. In this sense, these constitute the planning premises.

Generally, forecasting is made in the following ways:

i. What will be the market force? Market force refers to demand, supply, buying capacity and the like.

ii. The expectation of volume of sales.

iii. What kind of products are to be sold and in what price?

iv. What would be their manufacturing costs?

v. What would be the tax policy and economic policy of the Government?

vi. The expectation of technology change in production.

vii. How is the finance raised for expansion and/or modernisation of the business?

5. Examination of Alternative Courses of Action:

An action may be performed in many ways but a particular way is most suitable to the organisation. Hence, the management should find alternative ways and examine them in the light of planning premises.

According to Koontz and O’Donnell, “There is seldom a plan made for which reasonable alternatives do not exist. Moreover, before weighing alternatives and reaching a decision, one is wise to search for alternatives that may not be immediately apparent. Quite often an alternative does not immediately prove to be the most profitable way of undertaking a plan.”

6. Weighing Alternative Course of Action:

All the alternatives are not suitable to an organisation. Each alternative has its own strong and weak points. So, there is a need for weighing all the alternatives to determine the best alternative.

7. Selection of the Best Alternative Course of Action:

The selection of the best alternative is based on the weighing of various alternatives. A course of action is determined according to the circumstances prevailing. No partiality is shown while selecting the best alternative.

8. Establishing the Sequence of Activities:

The determined course of action is adopted for each section or department, product, for a quarter, month, week, etc. Finally, the manager should draft a final plan in definite terms.

9. Formulation of Action Programmes:

The term action programme includes fixing time limit for performance, allocation of work to individuals and work schedule. These are necessary to achieve the objectives within the specified period.

10. Determining Secondary Plans:

Secondary plans flow from the primary or basic plan. The preparation of a secondary plan is necessary to expedite the achievement of the basic plan. For example, once a basic plan of sales is decided upon, a number of secondary plans could be prepared. 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.

11. Securing Participation of Employees:

The successful execution of any plan depends upon the extent of participation of employees. So, the management should involve employees in planning through communication, consultation and participation.

12. Follow-Up and Evaluation:

There should be a system of follow-up. The management should watch how the planning is being done. The shortcomings of planning can be identified through a follow-up action and rectified then and there. The continuous evaluation of planning is also necessary. It means that the actual performance is compared with the planning and then corrective action is taken if there is any deviation.

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