Class 12 Business Studies Lesson 3

Meaning and concept of planning:

Planning is the primary function of management. Simply, planning is thinking in advance about the task (work) to be done in the future. In other words, planning is an intellectual process which is concerned with deciding in advance what to do? how to do it? When to do it? and by whom to be done?

According to Louis Allen,” planning involves the development of forecast, objectives, policies, programmes, procedures, serials and budgets.”

According to ME Harley, “planning is deciding in advance what is to be done”

In conclusion planning is predetermination of objectives and an intellectual course of action that should be taken to acid defined goals efficiently and on time. No work can be successful without planning.

Types of planning:

A. On the basis of managerial hierarchy:

a) Strategic plan: A long term plan prepared by top level management after the environmental scanning is known as a strategic plan. It is planning for the total enterprise. It is good and general in nature. It clearly days down the basic goals, strategies and policies for the enterprise as a whole. This plan is also known as a strategic plan. This plan is set by the board of directors with the environment of CEO and other high ranking personnel.

b) Tactical plan: Departmental level plants are called tactical plans. Such plans are prepared as means to achieve strategic goals. Generally, search plans are met on plants which have been formed by middle level managers. It is prepared for smooth running or implementation of corporate plan with time bound.

c) Operational plan: operational plans are formed to reach operational goals. Such plans are developed mainly by lower level managers. This plan has very short term focus. The front line managers and supervisors are responsible for developing and implementing operational plans.

On the basis of time:

Long term plan: Long term plan: the plants prepared for achievement of organisational goals for strategic goals are called long term plan. Generally, such plans are formed for more than 5 years. Long term plans are formed by top/high level management.

Mid-term plan: The plants prepare to achieve tactical goals are called mid-term plans. Generally, search plans may be prepared for one to three years. Mid-term plans are formed by middle level managers.

Short term plan: Short term plans are prepared for the achievement of operational goals. Generally, such plans are formed for not more than 1 year. Search plans are prepared by lower level managers. All the operational planning is a short term plan. The plan only provides guidelines to members. The members can modify short plans on the basis of their facility, need and requirement. School, colleges, yearly plan is an example of a flexible plan way for subject change.

On the basis of use:

Single use plans: The plans specially prepared for specific purpose and for non-repetitive activities are called single use plans. Such types of plans are useful only once. Budget projects and programs can be taken as examples of use plans. Short plan becomes meaningful at least once the defined objective is gained.

Standing use plans: the plants prepare for guiding the activities to be performed by repetition at call standing plans. Policy, produce and objective rules are examples of standing plans. Search plans are prepared for long term.

Planning process:

The planning process are as follows:

1. Identification of needs for planning: identification of needs for planning is the first stage of the planning process. A planner should be fully conscious about the need of plan before planning. Planners should be conscious about internal and external environments. Management needs to analyze the weakness, strength, opportunity and threats.
2. Setting objectives: Setting objectives is the second stage of the planning process. Objective may be long term or short-term. The objective should be made clear and specific according to the primary importance of work. While forming the objective of the organization, departmental and technical objective should also be made clear. Measures of all levels should be well informed about this task and the goal set must be smart (specific, measurable, attainable, realistic and timely) for the successful future.
3. Developing planning premises: Developing planning premises is the third stage of the planning process. Premises mean forecast of sales volume, production cost, prospective environmental changes, wages, rates, tax rate, etc. So, planning premises provide basic information necessary for effective planning.
4. Identification of alternative: in the first step of the planning process various alternatives are identified. Indian can be the only one way to solve any problem. There may be several alternatives for solving problems. For this, different sources may provide information for example newspaper, TV, net, experience of managers, competitors, analysis etc.
5. Evaluation of alternatives: all the alternatives mean not be of equal importance. So, the alternative should be evaluated with the help of proper technique at time of alternatives evaluation. The cost, the risk, profit etc. elements should be compared. Some alternatives may be more profitable but risky. Some alternatives may be less risky and less profitable. So, such alternatives can be evaluated with the help of arithmetical, modern and computer.
6. Selecting the best alternative: after evaluating the alternative according to their strong and weak point usefulness. Now, we are here at the real point of decision making. the management has to select the best alternative which helps to achieve the organizational goal.
7. Formulating supporting plan: in the next step, supporting plans are formulated on the basis of min plan or master plan. Different types of planks or as long term, midterm, and short term plans that are associated with each and every department should be formulated. but while formulating supporting plans, the plans to contradict with the main plan.
8. Implementing the plan: All those plans remain on the paper should be implemented to give meaningful sense only then a planning process ends. After implementing the plan, we can know how it is effectively utilized. If any necessary changes are felt, it will be improved next time when planning is a cyclical process.

Benefits/advantage of planning

The advantages of planning are:

1. To achieve the goals: Planning is directed towards achieving enterprise objectives. Good and effective management is possible only with management by objective. planning the organization knows its present position and also where it wants to go.
2. To reduce uncertainty: Planning apps to forecast possible changes and uncertain future provides alternative ways to lead the organization towards development and prosperity despite uncertainty. So, business organizations can remain free from changing in demand, interest, fashion, technology and so on.
3. To maintain effective control: Planning and controlling both are interrelated subject matters or inseparable because control involves keeping activity on predetermined goals by rectifying deviation from the plan whereas planning helps by setting standards.
4. To increase organizational effectiveness: Planning utilizes the resource properly to reduce the wastage and maintenance cost of production. Thus, planning helps the organization to run in profitability. Planning performs the above activities and also helps to increase the effectiveness of the organization.
5. To develop innovation: Planning is the basic and primary function of management. It develops the initiative and creates an aspect of managers. Planning enables and encourages the manager to use their creativity and innovation.
6. To maintain the resources: All the physical, human, financial and informational resources of an organization are fully utilized and mobilized through proper planning. Hence, all the resources give considerable benefit to the organization.
7. To maintain coordination: In order to achieve an objective of business and organization, there should be better coordination among all the activities, department, sections and employees. new coordination can be bought in different activities of an organization without planning.
8. To increase competitive strength: We know that today’s business is facing tough competition. show in order to face search competitions we need to formulate sound planning which will improve the efficiency of products or services. It helps to stand out in the mass of competitors.

Limitation or disadvantage of planning

The disadvantage of planning are:

1. Time consuming process: Planning is a time consuming process. It is the business unit to come in action. In the process of planning, every step may consume a lot of time. It is unsuitable for immediate situations.
2. Costly process: The planning procedure involves too much expenditure, money and effort. Both are required in the process of planning such as collecting information, preparing estimates, forecasting and evaluating the alternatives. So planning is not suitable for a small size business organization.
3. Rapid changes problem: Rapid changes in technology, consumer, interest and fashion app for the constraints to planning. In a complex and rapidly changing environment planning is more difficult as it has new problems. In the rapidly changing conditions, planning activity taken in one period cannot be relevant for another period.
4. Problem of accurate information: Before preparing planning, sufficient and reliable data and information are to be collected from different sources inside and outside the organization. if reliable information and data are not available for planning there is a chance of business loss and failure.
5. Lack of flexibility: Planning makes an organization stable. Due to internal and external reasons, plans cannot be changed according to the situation. So it lacks flexibility. Plans are formulated considering the possibility of changes in the future but irregular changes directly affect the plan.

Nature/ characteristics/ features of planning

1. Goal-oriented: Goals or objectives are the end result towards which an activity is directed. The first stage of planning is the conscious and explicit statement of the ultimate objectives. However, the goal should be clear, specific and realistic as well.

Primary function: planning is the primary function of management. planning provides the basis for organizing, staffing, leading and controlling and flows through all of them as their life blood.

2. Pervasiveness of planning: Managers at all levels of organization perform the planning function. Planning is needed for all activities at all levels although the nature and extent of planning varies with the position a person is holding in the organizational hierarchy and with the board guidelines provided by his superiors. Planning at low levels is also necessary but it should still remain within the framework of the master plan set by the top management.
3. Continuous activity: Planning is a continuous and never ending process. All the organizations, at all points of time, have clearly defined hierarchy of plans. Manager can’t plan once for all. There is always a need for continuous revision of existing plans and implementation of new ones.
4. Intellectual process: Planning involves logical thinking decision making. All decisions require ability required ability, experience and foresightedness on the part of managers. They are required to anticipate the changes in the environment, make predictions about the future problems and search for alternative courses of action. Thus, planning is a mental or thinking process.
5. Forward looking: Planning is always done for the future. One of the basic objectives of every business firm is to ensure its survival and growth. This is possible only if it is able to cope with the changing environment. Thus, planning implies anticipating, analysis and predicting the future.
6. Directed towards efficiency: Planning involves efficient utilization of various resources like materials, machines, capital, labour etc. An effort is made to achieve organizational objectives with minimum resources

Nature/ characteristic/ feature of planning: [Important Questions]

1. Intellectual process: Planning is an intellectual process, it is related to thinking before doing something, thus, it is a mental exercise. A planner has to think about the questions like how to do it? Who is to do it? what to do? and when to do it? A planner should be educationally and mentally sound.
2. Goal oriented: Learning begins with the determination of organizational goals. With the determination of goods, the way to achieve the goal is decided in the planning. All kinds of plans are linked with a goal of organization, without goals, plan has no meaning. Thus it is clear that planning is helpful in the attainment of goals of the organization.
3. Primary function: Planning is the primary function of management. It starts with the setting of specific measurable attainable realistic and timely objectives. In the absence of planning, no other functions of management such as organizing, staffing, leading and controlling can be performed effectively. So planning is also a basic and primary function of management.
4. Pervasiveness: Planning is pervasive. Every work needs planning to accomplish its objectives. It has equal importance at all levels of management. The top level managers formulated strategic plans while the middle level manager formulates tactical plans, and the lower level manager formulates optional plans. All plans will be integrated for the achievement of organizational goals. Plants are equally necessary in every sector of the universe.
5. Continuous process: Planning is a continuous process, it is endless. Planning is a continuous process for the following reasons:

Plan is prepared for a particular period. Hence, there is need for a new plan after the expiry of the period

In case of any discrepancy, plans are to be revised.

In case of rapid changes in the business environment plans are to be revised.

6. Directed towards efficiency: Planning is directed towards efficiency. A successful plan is what to do in the future? where to do it? Why to do it? When to do it? by whom to be done and so on. planning helps to achieve organizational objectives with minimum resources by utilizing the various resources like materials, machine, capital and Labour efficiency.
7. Forward looking: Planning is the course of action for the future. It decides the plan of action, what is to be done, when it is to be done, by whom is it to be done all these questions are related to the future. Under planning, answers to these questions are found out. Since planning is concerned with future activities, it is called futuristic. Planning defines objectives, means and policy for future works. Thus, it is related to the future.