WISDOM COMMERCE CLASSES

PLANNING
The word planning incorporates both ideas: It means determining the organization's goals and
defining the means for achieving them. Planning allows managers the opportunity to adjust to the
environment instead of merely reacting to it. Planning increases the possibility of survival in
business by actively anticipating and managing the risks that may occur in the future.

In short, planning is preparing for tomorrow, today. It's the activity that allows managers to
determine what they want and how they will achieve it.

On the basis of the definition of planning, its following features can be identified:

1. Planning is a process rather than behaviour at a given point of time. This process determines
the future course of action.

2. Planning is future oriented It is primarily concerned with looking into future. It requires
forecasting of future situation in which the organization has to function. Therefore, correct
forecasting of future situation leads to correct decisions about future course of actions.

3. Planning involves selection of suitable course of action. This means that there are several
alternatives for achieving a particular objective or set of objectives. However, all of them are not
equally feasible and suitable for the organization.

4. Planning is undertaken at all levels of the organization because all levels of management are
concerned with the determination of future course of action. However, its role increases at
successively higher levels of management. Moreover, planning at different levels may be
different in the context that at the top management level, managers are concerned about the
totality of the organization and tries to relate it with the environment white-managers at lower
levels may be involved in internal planning.

5. Planning is flexible as commitment is based on future conditions, which are always dynamic.
As such, an adjustment is needed between the various factors and planning.

6. Planning is a pervasive and continuous managerial function involving complex processes of

perception, analysis, conceptual thought, communication, decision, and action. The very
pervasiveness of these planning elements makes it difficult to identify and observe them in
detail.

Importance of planning:

1 Planning makes personnel conscious of enterprise objective.

2. Planning leads to economy in operation

3. Planning Precedes control

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4 Planning is a precious managerial instrument to provide for future.

5. Planning influences efficacy of other managerial function.

Limitation of planning:
1.Planning premises may not be fully reliable.

2. Rapidity of change sets another limit to planning.

3. Availability of time and cost involved in planning also lay down limits to planning.

4. Philosophy of management and personnel can be a very serious limitation of planning.

5. procedural and policy rigidity also come in the way of planning

6. Capital invested in the firm is a very powerful internal constrain of planning.

Types of plan:
1. Business plan: It may contain background information about the organization or the team
attempting to reach those goals.
2. Marketing plan.
3. Operational plan
4. Project Plan
5. Strategic Plans

PLANNING COMPONENT

Vision
A description of the reality you expect to create. What will success look like? If a strategic plan
is the “blueprint” for an organization’s work – the vision is the “artist’s rendering” of the
achievement of that plan.
Mission
Answers the question – why do we exist? What you are here to do, and what is your unique
approach to the business you are in? This statement is key to the organization, as everything that
it does should flow from your mission.
Values
Answers the question – what do we believe? What are the abstract qualities that you prize?
Goals
Answers the question – what do we want to see happen? This is a desired result or condition that
is generally intermediate and consistent with the overall mission. Some describe goals as critical
competencies the organization must have to achieve its vision, values, and mission.
Measurable Objectives
Specific, measurable, time-bound, and achievable short-term results that are consistent with a
goal. Indicates when a goal is achieved.

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Strategies
The ways your organization will accomplish its goals.

Budgets

Budgets is single-use plan containing expected results in numerical terms.

Planning process/ steps involved in planning

1. Establishing objectives
2. Premising
3. Determining alternative courses
4. Evaluation of alternatives
5. Selecting course of action
6. Formulating derivatives plans
7. Numberizing plans by budgeting.

Planning period

It may be long term or short term according to the requirement of the manager of the
organization.

CONCEPT OF FORECASTING :

A planning tool that helps management in its attempts to cope with the uncertainty of the future,
relying mainly on data from the past and present and analysis of trends.

Forecasting starts with certain assumptions based on the management's experience, knowledge,
and judgment. These estimates are projected into the coming months or years using one or more
techniques such as Box-Jenkins models, Delphi method, exponential smoothing, moving
averages, regression analysis, and trend projection. Since any error in the assumptions will result
in a similar or magnified error in forecasting, the technique of sensitivity analysis is used which
assigns a range of values to the uncertain factors (variables). A forecast should not be confused
with a budget. See also backcasting.

Steps in Forecasting:
1. Identity and developing the structure.
2. Forecasting future course of business.
3. Analysis of deviation.
4. Improving the existing forecasting procedure.

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CONCEPT OF DECISION MAKING:

Decision-making is an essential aspect of modern management. It is a primary function of

management. A manager's major job is sound/rational decision-making. He takes hundreds of
decisions consciously and subconsciously. Decision-making is the key part of manager's
activities. Decisions are important as they determine both managerial and organizational actions.
A decision may be defined as "a course of action which is consciously chosen from among a set
of alternatives to achieve a desired result." It represents a well-balanced judgment and a
commitment to action.

Decision making condition

1. Certainty
2. Risk
3. Uncertainity

Steps Involved In Decision Making Process

1. Defining / Identifying the managerial problem,

2. Analyzing the problem,
3. Developing alternative solutions,
4. Selecting the best solution out of the available alternatives,
5. Converting the decision into action, and
6. Ensuring feedback for follow-up.

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Identifying the Problem: Identification of the real problem before a business enterprise is the first step
in the process of decision-making. It is rightly said that a problem well-defined is a problem half-solved.
Information relevant to the problem should be gathered so that critical analysis of the problem is
possible.

Analyzing the Problem: After defining the problem, the next step in the decision-making process is to
analyze the problem in depth.

Collecting Relevant Data: After defining the problem and analyzing its nature, the next step is to obtain
the relevant information/ data about it. There is information flood in the business world due to new
developments in the field of information technology.

Developing Alternative Solutions: After the problem has been defined, diagnosed on the basis of
relevant information, the manager has to determine available alternative courses of action that could be
used to solve the problem at hand.

Selecting the Best Solution : After preparing alternative solutions, the next step in the decision-making
process is to select an alternative that seems to be most rational for solving the problem.

Converting Decision into Action: After the selection of the best decision, the next step is to convert the
selected decision into an effective action. Without such action, the decision will remain merely a
declaration of good intentions. Here, the manager has to convert 'his decision into 'their decision'
through his leadership.

Ensuring Feedback : Feedback is the last step in the decision-making process. Here, the manager has to
make built-in arrangements to ensure feedback for continuously testing actual developments against
the expectations.

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Decision making by group

Decision making by groups is not a rare thing to observe in business operation. Board meeting,
committees, staff-meeting, conference, provide examples of decision making by groups.

Evaluating Decision’s importance

1. Size or length of commitment

2. Flexibility of plans
3. Certainty of goals and premises
4. Quantifiability of variables

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