CHAPTER NO.

05

THE PLANNING PROCESS

Definitions:

1. As Billy E. Goetz said years ago

Planning is “fundamentally
choosing” and “a planning problem
arises only when an alternative
course of action is discovered”.
(Koontz & O’Donnell 1976)
2. Planning is deciding in advance
what to do, how to do it, when
to do it, and who is to do it.
Planning bridges the gap from
where we are to where we want
to go. It makes it possible for
things to occur which would not
otherwise happen. (Harold
Koontz & Cyril O’Donnell 1976)
4. Planning involves defining the
organization’s goals, establishing an
overall strategy for achieving those
goals, and developing a
comprehensive set of plans to
integrate and coordinate
organizational work. It’s concerned
with both ends (what’s to be done)
and means (how it’s to be done).
(by Stephen P. Robbins and Mary
Coulter, 2002)
5. Planning is the selecting and
relating of facts and the
making and using of
assumptions regarding the
future in the visualization and
formulation of proposed
activities believed necessary to
achieve desired results. (Terry)
It is to determine in advance what
is to be done and how it is to be
done.
Five Key Dimensions of Business Planning
SUBJECT
Product
Research
New Product
Development
Financial
Marketing
ORGANIZATION ELEMENTS
Acquisition
Corporate Facility Charter
Subsidiaries Creed
Manpower
Functional Groups Purpose
Divisions Objectives
Departments Strategy
Project/Product Policy
Concept Program
Budget
Procedure
Rule

CHARACTERISTICS
Simple/Complex
Comprehensive/ Narrow Coverage TIME
Major / Minor importance Short Range
Quantitative / Qualitative Medium Range
Strategic / Tactical Long Range
Confidential / Public Perpetual
Written / Unwritten
Prepared Formally / Informally
Ease of Implementation
Rational / Irrational
Flexibility / Inflexibility
Economical / excessively costly
PLANNING PROCEEDS ALL THE FUNCTIONS OF MANAGEMENT

What kind of
Organization
Structure

Necessary for Which helps us to know

What kind of
people we need
PLANS and when
Objectives and
how to achieve
them In order to assume success of Plan

How most
effectively to lead
and direct people

Affects leadership & direction

By furnishing
standards of
control
Plans as the foundation management
PLANNING PROCESS
1. Choose Objectives
Peter Drucker (1974) argues for choosing
objectives:
1. Market Standing
2. Innovation
3. Productivity
4. Physical Resources
5. Financial Resources
6. Profitability
7. Human Organization
8. Social Responsibility
►Objectives are needed in
every area where performance
and results directly and vitally
affect the survival and
prosperity of the business.
2. Communicate Objectives
To all concerned in organization, e.g.,

a)Top Management with stress

on overall picture of profit,
public, stockholder
satisfaction.
b. Production people with their targets
cheaper and faster.
c. Marketing personnel for quotas,
businesses and commission.
d. Finance folk for dividends, interest.
e. Supervisory personnel – for
satisfying management and keep
workers working
f. The workers
3. Identify Premises
(Premises/assumptions)
► Management should consider
controllable factors/premises i.e.,
salary level, program
responsibilities and uncontrollable
factors such as economic
conditions and political climate.
4. Survey Resources

► All resources with limitations.

5. Establish Policies
► Policies are defined as substitute of
common sense i.e., company policy market
policy, recruitment policy etc.
6. Choose alternative and
take action.
7. Create Procedures and
Rules
8. Establish Budgets
 9. Establish Time-tables
(ASAP= as soon as possible
in meaningless)
10. Decide on Standards
(Standards – Performance
Results, Quantity-Quality,
Time-Cost)
 Ten reasons for failure
1. Corporate planning is not integrated
into the total management system.
2. Planning is not systematic, lack of
understanding of different dimensions
of planning.
3. Management at all levels is not
involved in planning.
4. Responsibility for planning is
vested only in planning
department.
5. Management assumes that as it
is planned, it will come true.
6. Too much is attempted at one
time.
7. Management plans its work but
fails to work its plan.
8. Extradition and financial
planning are confused with
planning.
9. In-adequate information
inputs are used.
10.Too much emphasis is placed
on any single aspect of
planning.