Planning Process
Planning is the primary function that always be forward-looking. It is a systematic process that involves the execution of various steps shown in the following fig.1. It directs all the activities of various functional areas of the organization.
Fig. 1. Steps in Planning Process
Analysis of External and Internal environment
The first step of planning deals with the detailed study of the internal environmental factors of the business. Internal environmental factors are under the control of organization. It includes employees, technology, strategies, policies, etc. Organization strategies and policies can influence business. So an organization can adopt the best strategies. So before planning it is essential to study these factors to know the strengths and weaknesses of the organization.
Examples:
- Employees’ potential in producing more quantity with less wastage enhance organization productivity. Employees’ potential is under the control of the organization.
- Material used to manufacture the product influences its quality. The organization needs to study whether the used material is useful or needs to change to improve the quality of the product.
- HR policy of the organization is to hire experienced employees only.
- Incentive system of an organization can motivate employees toward performing better.
The external environmental analysis deals with the factors which are beyond the control of the organization. These factors influence the business but the business cannot have control over them. It includes Govt. tax policies, inflation, recession, competitors, etc.
Examples:
- Government’s tax-related policies influence the pricing policies and revenue of the organization. Before making planning, it is necessary to study and consider government policies.
- Recent covid19 pandemic situation influenced the business in different ways. It affected sales and production. The company faced shortages of labour and raw materials. So, the organization needs to study and predict such situations to survive and tackle the situation.
- Labour laws regarding wages and other facilities influence the organization’s internal policies.
Defining Vision, Mission, and Objectives
An organization can formulate the effective plan after having sufficient information regarding internal and external factors of organization. An organization’s strength factors useful for it benefits whereas the weaknesses can create the risk. By knowing the strength and weaknesses organization can strives to enhance the strength and reduces the weaknesses. SWOT analysis addresses the possible opportunities and risk factors. Organization can formulate their goals according to the SWOT analysis.
This stage involves in formulating the organizational goals according to its capability and opportunities.
Vision: it is the goal that indicates how the organization wants to world to be in which they operate the business.
Examples of Vision statement
- TATA company’s Vision: “We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship”.[2]
- Patanjali company’s vision statement is “Keeping Nationalism, Ayurved and Yog as our pillars, we are committed to creating a healthier society and country. To raise the pride and glory of the world, we are geared up to serve people by bringing the blessings of nature into their lives. With sheer dedication, scientific approach, astute planning, and realism, we are poised to write a new success story for the world”[1]
Mission: It is the overall goal of an organization that directs all the objectives of various functional areas.
Objectives: These are the goals made according to the mission. objectives are the goals of various functional areas and are made with consideration of a mission.
Examples of Mission statement:
- Google’s Mission Statement: “Our mission is to organize the world’s information and make it universally accessible and useful”.[3]
- Patanjali’s mission statement: “Making India an ideal place for the growth and development of Ayurveda and a prototype for the rest of the world”.[1]
Developing planning premises
Planning premises includes sales, demand, and other favourable factors for business. Favourable factors include government policies, increasing demand, etc. Organizations need to forecast the sales and demand to maintain the production capacity and formulate strategies accordingly.
Example 1: forecasting of sales and demand enable an organization to achieve excellence in the implementation of inventory management and distribution supply chain management e
Formulation of alternatives or plan
Various alternative plans help the organization to achieve its mission effectively and easily. It enables the employees to create many alternatives or plans which act as solutions for problems and an idea for development. Any organization strives to implement innovative ideas for growth. Many times happens the employed ideas cannot give the expected results. In such situations, organizations have alternative plans which give expected results.
Evaluation of alternatives
Evaluation of alternatives is necessary to ensure whether the defined plan is feasible and suitable. Several parameters are applied while measuring the alternative such as its economic impact, impact on revenue, profit, sales, etc. Evaluation of alternatives decides whether the plan is useful and effective enough to achieve the expected result.
Determination of suitable alternative or determine the strategy
This stage is concerned with the choice of a suitable and effective plan or strategy which gives the expected outcome. The alternative plan or strategy can also be useful in problem-solving. The choice of the right plan helps the organization in achieving the common goal. The right kind of strategy is utilized for solving current problems or the growth and development of the organization.
Determine the strategic plan
Strategic plans are the plans which creates long-term impact on various functional areas of the organization. the strategic plan directs many activities of most of the functional areas.
Example 1: Organization may decide to produce affordable products which can connect the largest part of the market.
Example 2: HR strategy consists of hiring employees who have concerned experience which is more than 2 years.
Example 3: marketing management strategy includes, a pricing policy that attracts maximum customers. Reliance Jio implemented the pricing strategy to increase maximum subscribers or customers.
Determine the tactical plan
Tactical plans are decisions useful for a short period. These plans are made for day-to-day operations, weekly operations, or activities implemented for months and quarters. Tactical plans help to achieve strategic plans. Tactical plans are made by long-term plans.
Example 1: production management employs a specific schedule and method to manufacture a specific variety of products.
Example 2: marketing management department adopt the tactical plan of personal sales to promote and increase the sale of products.
Formulate the action plan
Formulation of all the Objectives of the organization is done according to the mission and these objectives direct all the action plans. Action plans are the decisions regarding the implementation of plans at a lower level. Excellency of organization strategy achieved by the implementation of the action plan.
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