Chapter – 4 Planing (6 Marks)

Define Planning? – 1 mark (part of the question)

Planning means

• making decisions with regards to goals to be achieved and
• the methods to be adopted to achieve those goals.

Explain briefly 6 steps in PLANNING PROCESS OR in FORMULATION OF A PLAN – 6

DCDCFPF : the steps should be answered in sequence

1. Defining objectives
   1st step-of the management is to develop a plan and set some clear and specific objectives, which should stipulate the areas where organized planning must occur.
2. Choosing alternatives:
   2nd step - the manager should ascertain as many available alternatives as possible for reaching those objectives and he should explore all those alternatives without going into the merits and demerits of those alternatives.
3. Developing planning premises:
   3rd step - the manager should list all the premises (assumptions) for each alternative and then determine the feasibility of using any one alternative to reach its objectives.
4. Choosing the best alternative:
   4th step - the manager should evaluate all the alternatives + the premises on which the alternatives are based so that the unreasonable alternatives can be eliminated from further consideration and the best alternative can be decided to achieve the objectives of the organization.
5. Forming supportive (derivative) plans: (Explain the meaning of supporting plans with the help of a suitable example?
   After forming the main plan, secondary plans are derived in order to support and expedite the achievement of the main plan. These secondary plans are known as derivative or supportive plans.
   For example – once the production plan is prepared, secondary plan would be to buy equipment, raw material, recruit and train staff, develop new product, etc. These derivative plans are formed on the basis of the main plan and therefore support it.
6. Putting the plan into action:
   Once plans are developed, they are ready to be put into action. The organization does not benefit from the planning process until this step is carried out.
   For example – if the firm decides to promote sales through advertising, then the company should engage an advertising agency to go ahead with the advertising otherwise the company will not achieve its desired results.
7. Following up:
   Once the plan is put into action, it should be monitored because in the course of implementing the plan, many adjustments may be required in order to achieve the given objective.
   NOTE: if any additional correct point is added at any relevant stage without violating the sequence, full credit should be given. If sequence is not maintained, 2 marks are deducted

“Planning is not a guarantee of success of a business “. Comment

Or

Why does planning sometimes fail in spite of the best effort of management? – 5 marks

Or

Explain the LIMITATIONS of planning? – 5 marks (First Semester 2003)

Or

Explain “rigidity” as a limitation of planning – 3 marks (Board Exams - 1998, 2004) - Imp

Anagram for Planning Limitations = RIP CUT

Rigidity:

• Planning leads to rigidity. This has an adverse effect on the initiative to be taken by the managers.
  For example – due to a sudden change in the economic environment, a manager may have to change the course of action to achieve the desired result. But the manager may not be able to take the initiative if it is not in the plan in which case rigidity in planning may prove costly to the organization.
• Rigidity may be internal as well as external.

Inaccurate:

Planning is based on the future, which is uncertain and beyond the control of the organization. Predicting the future is difficult. Any plan based on inaccurate information may not be very useful to the organization.

Psychological barriers:

There are some inbuilt psychological barriers. For example-people prefer the present rather than the future, as the future is relatively uncertain. Also planning involves change and adjustment to such changes and people tend to resist change.

Costly:

• Planning is an expensive exercise as it involves time and money to prepare estimates, collect information and evaluate various courses of action.
• Often there may be need to hire the services of experts for the purpose of planning.
• Thus, planning can be beneficial only if the benefits to be derived from it are more than the costs.