04 Planning Process, Strategic Planning and Operational Planning.

PLANNING
PROCESS
by
Dr. Ahmad Azhar
Assistant Professor, VBU, Hazaribag
Planning
• Planning is the conscious, systematic process of making decisions about
goals and activities that an organization will pursue in the future.
• A plan is a pre-determined course of action. Planning is essentially a process
to determine and implement actions to achieve organizational objectives.
• Planning involves the task of deciding in advance –
• What to do?
• How to do?
• When to do it?
• Who will do it?
A manager has to answer four basic questions while formulating a
plan –
• Where are we now realistic assessment of current situation?

• Where do we want to be?
• Gap between where we are and where we want to be?
• How do we get there?
• Planning is goal oriented – Plans arise from objectives. Objectives provide
guidelines for planning.
• It is a primary function – Planning provides the basis foundation from
which all future management functions arise.
• It is persuasive – It is required at all levels of management. It is not an
exclusive function of any management level or department. Managers have
to plan for every change that occurs in an organization. However, the scope
of planning differs at all levels and among different department.
• It is mental activity – Planning is a mental process involving –
imagination, foresightedness and sound judgment. Plans are based on
careful analysis of internal and external factors influencing business
activities. It is carried out in a logical and systematic manner.
• It is a continuous process – It is an ongoing process of adapting the organization with the
changes in business environment. Since a business exist in a dynamic environment it is
necessary to continuously plan based on changing business needs and situations.
• It involves choice – it is essentially a choice among various alternative course of action. A
manager has to select the best alternative after careful analysis and evaluation.
• It is forward looking – Planning means looking ahead and preparing for the future. It
involves analysis of the future needs and requirements of the business and preparing for it.
• It is flexible – Planning is based on future forecast of events and situations. Since future
is uncertain, plans are flexible enough to adapt with future change of events.
• It is an integrated process – Plans are structured in a systematic and logical sequence
where each plan or step is highly inter-dependent and mutually supportive.
• It includes effective and efficient dimensions – Plans aim at optimum utilization of
resources to be efficient and are based on predetermined objectives to measure
effectiveness of the plan.
Elements of a Plan
• Objectives – Objectives are goals established to guide the activities of the enterprise.
• Policies – A policy is a basic statement that guides action and decision making. It sets behavioral limits
on managers.
• Procedures and Methods – A procedure is a well thought out course of action. It prescribes the specific
way to do a particular job. Methods are sub units of procedure. They indicate the techniques to be used
to make the procedure effective.
• Rules – A rule specified necessary course of action in respect of a situation. It prescribes restriction and
a definite and rigid course of action.
• Strategy – It is a plan of action designed to achieve long term or overall aim.
• Programs – Programs are precise plans of action followed in proper sequence in accordance with
objectives, policies and procedures.
• Budgets – A budget is an estimate of men, money, material and machine required for successful
implementation of plans.
• Projects – A project is a particular job that needs to be done in connection with the general programme.
The steps in the planning process are:
• 1) Establishment of objectives
• It involves identification of goals and objectives of the organization by carefully examining the
internal and external environment affecting the business.
• (2) Developing premises
• Premises are assumptions about the environment in which plans are made and implemented.
Thus assumptions about market demand, cost of raw material, technology to be used,
population growth, government policy etc. are to be made while formulating a plan.
• (3) Evaluating and selection of alternatives
• Changes in the external environment pose different alternatives for organizations to carry out a
particular task. Different alternatives are evaluated against factors like costs, risks and benefits
involved in following a specific course of action and the best alternative is chosen.
• (4) Formulating derivative plans
• Derivative plans are secondary plans formulated to support the basic plan. E.g.
Detailed plans formulated for various departments, units, activities etc. Derivative
plans indicate the time schedule and sequence of performing various tasks.
• (5) Securing cooperation and participation
• Manager must involve people from various departments and take their suggestions
and criticisms to rectify the defects in the plan if any. Participation of employees in
formulation of plans motivates them to carry out the plan with best of their abilities.
• (6) Providing for follow up
• Plans are constantly reviewed to ensure their relevance and effectiveness with the
changing dynamics in the business environment. It helps to develop sound plans for
the future and avoiding mistakes that surface after or while implementing a plan.
Approaches to Planning
• Top down approach

• Authority and responsibility is centralized at the top.
• The top management defines the mission and lays down strategies and plan of
action required to achieve stated goals.
• The blueprint of the plan is passed on to the people working at lower levels
who do not participate in the planning process.
• The success of this approach depends upon the qualification, experience and
capabilities of top management.
• Bottom up approach
• Lower level managers are responsible for preparation and implementation of
plans (make functional plans which are approved by top management)
• Composite approach
• In such a approach the lower and middle management is responsible of
drafting out plans in accordance with guidelines and boundaries stated by
the top management. Every plan is up for a discussion and debate and a
middle path is chosen to facilitate smooth implementation of plans.
• Team approach
• In such a approach a team of managers having relevant experience and
skills in various functional areas are assigned the job of planning. The
plans are then approved by the top management.
Strategic planning
• Strategic planning is a process in which

organizational leaders determine their vision for the
future as well as identify their goals and objectives for
the organization. The process also includes establishing
the sequence in which those goals should fall so that
the organization is enabled to reach its stated vision.
Operational planning
• Operational planning is the process of planning

strategic goals and objectives to tactical goals and
objectives. It describes milestones, conditions for
success and explains how, or what portion of, a
strategic plan will be put into operation during a given
operational period,
Strategic Planning Operational Planning
Time Horizon 5 years or more
Types of Planning
Under a year
Adapt to changes in external
Purpose environment
Implement internal goals
Overall organizational
Activity controlled performance
Internal tasks and operation
Decision making Many decisions Focus on one decision

Organizational level
Top management Middle and lower management
involvement
Basis of planning Judgmental Exact data & standards
Predictability Uncertain Highly certain
Accuracy 25 – 30% 80-90%
Management function Planning & forecasting Controlling
Control over outcome Less control Complete control
• It provides direction.
I mp or tan ce of P lan nin g
• It focuses on organizational objectives and goals

• It helps in optimum utilization of resources
• It reduces risks of uncertainty
• It facilitates decision making
• It encourages innovation and creativity
• It facilitates control
• Establishes a sound organization
• Improves standard of living of people
• Reduces costs
Reasons for planning:
1. Planning is essential in modern business.
2. Planning is related to performance
3. Planning puts a focus an objectives
4. Planning anticipates problems and helps in the
smooth flow of operation.
5. Planning is necessary to facilitate control.
6. Planning helps in the process of decision making.
Planning process has three characteristics.
1. Planning is anticipatory in nature
2. Planning is a system of decisions
3. It is focused on desired future results

Since Peter Drucker is supposed to be a Pioneer of modern
management, it will be interesting to know how he defines it.
He has given the definition as:
Planning is a continuous process of making present entrepreneurial

decisions systematically and with best possible knowledge of their
futurity, organising systematically the efforts needed to carry out
these decisions and it measuring the result of these decisions
against the expectation through organised, systematic feedback.
The Six P's of planning
1. Purpose
2. Philosophy
3. Premise
4. Policies
5. Plans
6. Priorities.
Why is it so important to plan?
• Planning is important as it allows you to prioritize your work, get more
done in less time, helps you to produce quality work and keeps as
disciplined. It is quite important to plan your work so as to improve on
your productivity by ensuring you are staying on the right track with your
goals.
Planning
• Planning is the process of thinking about the activities required to

achieve a desired goal. It is the first and foremost activity to achieve
desired results. It involves the creation and maintenance of a plan, such as
psychological aspects that require conceptual skills.
Characteristics of good planning :
1. A good plan is based upon clear, well defined and easily
understood objectives.
2. A good plan must be simple and comprehensive
3. It should be well balanced, but flexible.
4. Every plan should be time bound.
5. The plan should involve participation by subordinates.
6. Characteristics of Unity planning is initiated by different
managers of different divisions at different times.
THANK YOU

04 Planning Process, Strategic Planning and Operational Planning.

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PLANNING

• Where are we now realistic assessment of current situation?

• Top down approach

• Strategic planning is a process in which

• Operational planning is the process of planning

Decision making Many decisions Focus on one decision

• It focuses on organizational objectives and goals

Planning is a continuous process of making present entrepreneurial

• Planning is the process of thinking about the activities required to

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