What is the process of planning and how can plans be made effective?

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In the process of planning, there is an establishment of business objectives and also the allocation of organizational resources in order to achieve these objectives. It is the process of deciding the future course of action that has to be taken by the organization in order to fully utilize the resources available with the organization. In this way, the process of planning can be described as a combination of finding information and decision making that is based on information inputs, outputs as well as a feedback loop.

Steps in the process of planning: there are different steps that are involved in the process of planning. These range from deciding the problem to taking the follow-up action. Therefore the steps that are involved in this process can be described as:-

1. Recognizing the need for action: the first step that is involved in the process of planning requires the awareness regarding business opportunity and also the need to take action. In this regard, the present as well as the opportunities that may arise in the future need to be discovered so that the managers can make plans for them. At the same time, the current economic trends are also required to be considered. An example can be given in this regard of a situation where the government of a country is willing to develop the rural areas as industrial centers, it will be considered by any farsighted organization that units should be established in these areas so that the facilities that may be offered by the government for this purpose can be availed by the organization.

2. Collecting required information: before the real process of planning is initiated by the managers, it is very important that all the relevant facts and figures are gathered. All the information that is related with the operations of business should also gathered. Similarly the type of customers that the organization generally has, the circumstances of delivering the goods and the value of the product among the customers are some of the other things that have to be studied in detail before initiating the process of planning. The reason is that these facts and figures can significantly help the managers in making realistic plans.


3. Laying down objectives: In this regard, the objectives can be described as the goals that the management of the organization is trying to achieve. Therefore the objectives of the organization are the end products and all the resources of the organization should be used to achieve these objectives or goals. These goals are the binding force behind all the actions taken in the company. The process of planning starts by deciding these goals or objectives. In this way the relationship that is present between planning and the goals of the organization helps the employees in clearly understanding their duties. The organizational objectives also act as a guide for the employees. It is very important to decide these objectives properly and at the same time, these objectives should also be properly communicated to all the employees of the organization.

4. Determining planning premises: Planning is always done for the future that is uncertain. Although nothing can be said with certainty regarding the future, however still it is possible to make some assumptions while making plans for the future. In this way, forecasts regarding the future are an integral part of planning even if all of them may not turn out to be correct. A forecast can be described as an assumption regarding future events. The behavior of some variables has to be forecasted in order to constitute planning premises. Generally, forecasts are made by the managers while planning regarding the following matters:

• The expectation of demand for the products or services of the organization
• The expected volume of production
• The anticipation of costs involved and the probable price at which these products can be marketed
• The supply of raw materials and labor etc.
• The economic policies adopted by the government
• The effect of technological changes on the process of production
• The change in the consumer preferences
• The sources for supply of funds.

In this way, planning is undertaken by the managers on the basis of these forecasts. In the same way, the success or failure of a plan also depends on the forecasts regarding different factors that have been mentioned above. In case these forecasts turn out to be inaccurate, the plans that depend on them will also turn out to be ineffective and unreliable. In this way, the managers are required to carefully evaluate the impact of different factors.

5. Examining alternative course of action: the next step that is involved in the process of planning is to select the best course of action that is available to the organization. For example, there are several ways in which a particular thing can be done. Therefore the planner is required to consider all these ways and then make a final selection. The planners can achieve the best results if they are successful in selecting the best way of doing a particular work. In this regard, the managers have to consider all the advantages as well as the disadvantages related with the method that they are going to use finally.

6. Evaluation of action patterns: after the referred course of action has been selected by the managers, the next step in the process of planning is to evaluate these courses of actions. Such evaluation requires the study of the performance by different actions. In this regard, various factors have to be considered in comparison with each other. A particular course of action can be suitable however it may require a large investment. In the same way, another course of action may need less investment but it may not be highly profitable. In this way, the various action patterns are required to be evaluated in order to make proper plans.

7. Determining secondary plans: once the managers have formulated the main plan, they are also required to make several supported plans. These secondary plans are formulated with a view to help in implementing the main plan. For example once the managers have decided the production plan, they may be required to formulate several plans regarding the procurement of raw materials, purchasing the plant and machinery, the need for recruiting the personnel. In this way, the secondary plans are considered as a part of the primary plan.

8. The implementation of plans: the last step that is involved in the process of planning is the implementation of the plan. A plan is required to be put into action so that the organizational objectives can be achieved. In order to implement the plan, policies procedures, standards and budgets are required to be established. All these tools help in implementing the plans in a better way.


Making plans effective: the plans can be useful for the organization only when they have been implemented effectively. In this regard, there are certain factors that are required to effectively implement the plans.

1. Consciousness for planning: Plans can be effective only if there is an appropriate environment in the organization for it. Therefore the senior managers are required to make efforts to set objectives and then review the rules and redraft these goals if required in order to effectively implement the plans. The problems that have faced in the process of planning should also be removed. In the same way, the junior level managers should be regularly informed regarding the progress made by the plans. In this way, wholehearted cooperation from everybody in the organization is necessary for the successful implementation of plans.

2. Initiative by top-level management: initiative as well as the support by the top-level management is also required to make the plans effective and efficient. The organizational goals are set by the top-level management. In the same way, the resources of the organization that are required to achieve different targets are also evaluated by the top management. However the lower-level management is also required to be involved in this process because the execution of the plan takes place at this level. When the plans are formulated at the top level it makes sure that there is coordination between the plans made by different departments. In the same way, the philosophy of the top-level management can be seen in the formulation of plans. Therefore, plants can prove to be effective only if the top-level management is involved in their formulation.

3. Proper communication: another essential requirement is that they should be proper communication between different levels within the organization. Therefore the objective of the organization should be properly communicated to the persons who have the responsibility to implement them. Similarly the programs, policies and procedures that have been suggested in order to achieve the goals of the business should also be communicated at the operational level. If the persons who have the responsibility to implement the plans do not properly understood these plans, it is possible that in such a case, they may not be able to achieve the desired objectives.

Communication should not take place only from top to bottom but it should also take place from the lower-level management to the top management. The viewpoints as well as the suggestions made by the lower-level managers regarding the objectives of the organization should be communicated to the top-level as soon as possible. In this way, such communication allows a channel through which information can be exchanged within the organization between different persons. In case the proper channel of communication is not present in the organization, the planning cannot be successful.
The method and the extent to which people participate in the plan depend on the organization itself. For example in some organizations, committees have been constituted to formulate different plans. The members of these committees are the persons from different fields. On the other hand, another method that is used to ensure participation is to discuss the budget at the grassroots level and then move upwards. In this way, if the persons at different levels in the organization participate, it can be very helpful in properly implementing the plans,

5. The emphasis on long-term and the short-term planning: equal emphasis needs to be given to long-term planning as well as the short-term planning. Both these types of plans should be integrated in order to achieve proper implementation. However generally it has been seen that the managers only focus on short-term plans. It needs to be noted that the short-term plans are made with their view to fulfill a part of the long-term plans. On the other hand, the long-term plans established the ultimate objectives of the organization and the short-term plans are made in order to achieve these objectives. Therefore in order to effectively implement planning, equal significance needs to be given to long-term planning as well as the short-term planning.

This article has been written by KJ Singh a MBA Graduate from a prestigious Business School In India
Article Published:November 19, 2016
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