Planning is the most basic of all managerial functions. It is the process by which managers establish
goals and define the methods by which these goals are to be attained.
Planning involves selecting missions and objectives and the actions to achieve them; it requires
decision making, which is choosing from among alternative future courses of action – Weihrich
Planning is thus taken as the foundation for future activities. Newman has thus defined it as,
“Planning is deciding in advance what is to be done; that is a plan is a projected course of action.”
So, planning can be thought of as deciding on a future course of action. It may also be treated as a
process of thinking before doing.
Management has to plan for long-range and short-range future direction by looking ahead into the
future, by estimating and evaluating the future behavior of the relevant environment and by
determining the enterprise’s own desired role.
Planning involves determining various types and volumes of physical and other resources to be
acquired from outside, to allocate these resources in an efficient manner among competing claims
and to make arrangement for systematic conversion of these resources into useful outputs.
Nature of Planning:
(i) Planning Focuses on Achieving Objectives
Management begins with planning and planning begins with the determining of objectives. In the
absence of objectives no organisation can ever be thought about. With the determining of
objective, the way to achieve the objective is decided in the planning.
For example, a company decides to achieve annual sales of? 12 crores. After deciding upon this
objective, planning to achieve this objective shall immediately come into force. It was thought to
achieve this objective by giving advertisement in the newspapers.
2. After some time it comes to be known that the medium of advertisement appeared to be incapable
of achieving the target. In such a situation the medium of advertisement can be changed and it can
be shifted from newspapers to television in this way, every possible change is made through the
planned action for the purpose of achieving the objective.
(ii) Planning is Primary Function of Management
Planning is the first important function of management. The other functions, e.g., organising,
staffing, directing and controlling come later. In the absence of planning no other function of
management can be performed.
This is the base of other functions of management. For example, a company plans to achieve a
sales target of 112 crores a year. In order to achieve this target the second function of management,
i.e., organising comes into operation.
Under it the purchase, sales, production and financial activities are decided upon. In order to
complete these activities, different departments and positions are decided upon. The authority and
responsibility of every position are decided upon.
After the work of organising, information about the number of different people at different levels
required to achieve the objective shall have to be provided. This job will be performed under
staffing. Similarly, planning is the base of other functions like directing and controlling.
(iii) Planning is Pervasive
Since the job of planning is performed by the managers at different levels working in the enterprise,
it is appropriate to call it all-pervasive. Planning is an important function of every manager; he
may be a managing director of the organisation or a foreman in a factory.
The time spent by the higher-level managers in the process of planning is comparatively more than
the time spent by the middle-level and lower-level managers. It is, therefore, clear that all the
managers working in an enterprise have to plan their activities.
For example, the decision to expand business is taken by the higher-level managers. The decision
to sell products is taken by the middle-level and lower-level managers.
(iv) Planning is Continuous
Planning is a continuous process for the following reasons:
(a) Plans are prepared for a particular period. Hence, there is need for a new plan after the expiry
of that period.
(b) In case of any discrepancy plans are to be revised.
(c) In case of rapid changes in the business environment plans are to be revised.
(v) Planning is Futuristic
3. Planning decides the plan of action what is to be done, how is it to be done, when it to be done, by
whom is it to be done all these questions are related to future. Under planning, answers to these
questions are found out.
While an effort is made to find out these answers, the possibility of social, economic, technical
and changes in legal framework are kept in mind. Since planning is concerned with future
activities, it is called futuristic.
For example, a company is planning to market a new product. While doing so it shall have to keep
in mind the customs and the interests/tastes of the people and also the possibility of any change in
(vi) Planning Involves Decision Making
Planning becomes a necessity when there are many alternatives to do a job. A planner chooses the
most appropriate alternative. Therefore, it can be asserted that planning is a process of selecting
the best and rejecting the inappropriate. It is, therefore, observed that planning involves decision
For example, Mr. Anthony lives in a town where only commerce stream is taught in schools. His
daughter has passed matrix and wants to get admission in 10 + 1. It is evident that there is only
one option for her, i.e., commerce.
She doesn’t have to think or plan anything. On the other hand, if all the three faculties’ art, science
& commerce were available in the schools, she would have to definitely think and plan about the
subject of study. It would have been be nothing but decision making in this case.
(vii) Planning is a Mental Exercise
Planning is known as a mental exercise as it is related to thinking before doing something. A
planner has mainly to think about the following questions:
i) What to do? (ii) How to do it? (iii) When to do it? (iv) Who is to do it?
Objectives of Planning
(a) An improvement in the standard of living of the people through a sizable increase in national
income within a short period of time;
(b) A large expansion of employment opportunities for the removal of unemployment and for
creating jobs and incomes;
(c) A reduction in all types of social, economic and regional inequalities;
(d) An efficient utilisation of the country’s resources for faster growth;
(e) Removal of mass poverty within a definite time limit through land reform, employment
creation, and provision of educational and medical facilities;
(f) Attainment of self-reliance by reducing dependence on foreign capital and foreign aid.
4. Planning Process:
Planning is important for all the types of organizations irrespective of its size, variety of products,
number of employees there is no standard planning process as such. Among which few of crucial
steps are listed below:
Perception of Opportunities.
This is not an actual step in the planning however before going for the planning process one has
to study & find opportunities in the environment. If an opportunity does not exist in the
surrounding whole planning process may fail. So to make planning more successful one has to
study legal, political framework or existing position, change in customer mindset change in
technology competition, the present position of the industry level. Here organization has to
analyze its own strengths & weakness if the good opportunity is existing in the surrounding
organization can proceed to the next step.
For Eg. For Industries like hotels, the market is good nowadays because the income has been
increased over the last 5-6years, the lifestyle of youth has been changed, even females are working
more in number these days, etc.
2) Establishment of Objectives
Once the opportunity is perceived in the organization and unit objectives are been set from
which specific results are expected at the end of planning. The organizational objectives should be
specific to all key result areas.
5. For eg Sales profitability, R& D, quality & so on. Once these objectives are set the objectives of
lower units that are department objective setting is a crucial task that guides the organization
throughout the planning process. Planning Premises
3) Planning premises
It is nothing but study of external & internal environment i.e SWOT analysis is nothing but the
study of external & internal environment i.e SWOT analysis
External environment includes the study of following
National income availability of natural resources.
Availability of natural resources.
Political, social, legal technology.
Competitors plan –their status in the market.
While internal environment includes
Availability of the workforce.
Availability Of funds cost-effectiveness.
High market share.
This one will analyze strength/weakness/opportunity & treat in the organization & out of an
4) Identification of alternative
This is an important step where companies find various alternatives to achieve a particular
For eg If a company wants to launch a new mobile hand, this can be done in various ways
Creating mobile for youth
Creating for low or high-class income group
Whether smartphone including 3g & 4 g features
There should be mobile manufactured in India or out of India
5. Evaluation of Alternatives
Various alternatives are evaluated for different criteria like cost, future competition, generation of
profit, the requirement of manpower, etc. Out of this best suitable alternative is been selected
6) Choice of alternative
After the evaluation of the various parameter, the best alternative is selected this alternative is
selected by keeping in the view of environmental factor. Planning process & objectives
6. 7) Formulation of Supporting Plan
Once the best alternative or plan is selected a various supporting plan are prepared to support the
main plan like as
Buying of raw material
Recruitment of new staff
Training of staff
Buying of equipment’s
8) Establishing a sequence of activities
Once the supporting plan was prepared the sequence of actions are decided
For eg. Who will do a specific task when it will be completed what exactly he has to do etc