suggests the proposed course of action. To make it operational, it has to be split into departmental plans. Plans for the various operational units within the departments have to be formulated. The plans thus developed for the various levels down the organization are called derivative plans. For instance, production and marketing of 10,000 units of a product and achieving a return of 10 percent on the investment may be the enterprise’s plan relevant for the whole organization. Its effective execution is possible only when specific plans are finalized for the various departments like production, marketing, finance, personnel and so on with clear-cut objectives to be pursued by these departments.
f. Review periodically
Success of the plan is measured by the results and the ease with which it is implemented. Therefore, provision for adequate follow-up to determine compliance should be included in the planning work. To make sure that the plan is contributing for the results, its review at regular intervals is essential. Such a review helps in taking corrective action, when the plan is in force.
Why plans fail?
Effective planning is not an easy task. There are a number of reasons for failure of plans in practice. Planning suffers from the following limitations.
1. Cost and time
Planning is quite a costly and time consuming process. Unlimited amount of time is spent on forecasting, evaluating alternatives etc. By the time a plan is established, the environment might change and this requires a complete revision of the plan. Besides this, cost also increases.
2. Validity of the forecasts
Planning is future oriented activity based on forecasts. As the period of planning increases, the accuracy of forecasting diminishes. Planning loses its value if reliable and adequate data is not available.
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3. Inflexibility
Planning becomes rigid at times because of internal inflexibilities. This reduces individual initiative and causes delay in decision making. Internal inflexibilities like rigid policies and procedures and limited resources affect planning process.
4. Influence of External Factors
External factors beyond the control of an organization affect the effectiveness of planning. These are very difficult to predict and make execution of plans very difficult. External factors like government control, technological changes and trade unions affect the planning process.
5. Resistance to change
Another important limitation of planning is resistance to change. The human element in an organization always resists change. People are more concerned about the present rather than the future which is uncertain. Planning being forward looking is always affected by this resistance to change.
Unrealistic plans
The entire planning process may fail, if people involved in it do not formulate correct plans. The reasons for failure of people in planning may be due to a number of reasons like lack of commitment to planning, lack of delegation of authority, excessive reliance on past experience, tendency to overlook premises, etc.
Ensure the following when you plan!
It is an irony that at times even the best of the plans may flounder inspite of careful analysis and emotional commitment. So as to avoid the pitfalls in planning, make sure of the following;
ӹӹSet realistic and achievable goals;
ӹӹCommunicate the assumptions on which plans are formulated to all the people and departments concerned;
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ӹӹEncourage and make people participate in the planning program so as to ensure the right commitment;
ӹӹEnsure proper coordination between the short-term and longterm plans. They should not be viewed as mutually exclusive;
ӹӹEncourage creativity in planning. Creativity helps in identifying the best alternatives; and
ӹӹPay attention to the resources position of the organization so as to ensure the availability as and when required.
Characteristics of a Sound Plan
A sound plan should have the following characteristics:
(a)Primacy: Planning is an important managerial function that usually precedes other functions. Obviously, without setting the goals to be reached and the lines of actions to be followed, there is nothing to organize, to direct, or to control in the enterprise. But this should not lead us to think that planning is isolated from other managerial functions.
(b)Continuity: Planning is a continuous and never ending activity of a manager to keep the enterprise as a going concern. One plan begets another plan to be followed by a series of other plans in quick succession. Actually, a hierarchy of plans operates in the enterprise at any time. Planning gets used up where tomorrow becomes today and calls for further planning day in and day out. Again, the incessant changes make re-planning a continuous necessity.
(c)Flexibility: Planning leads to the adoption of a specific course of action and the rejection of other possibilities. This confinement to one course takes away flexibility. But if future and assumptions upon which planning is based prove wrong, the course of action is to be modified for avoiding any deadlock. Accordingly, when the future cannot be molded to conform to the course of action, the flexibility is to be ingrained in planning by way of adapting the course of action to the demands of current situations.
(d)Consistency: Planning is made by different managers at different times. Maintenance of consistency or the unity of planning is one of its essential requirements. Objectives provide the common focus for
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unifying managerial action in planning. Moreover, policies and procedures introduce a consistency of executive behaviour and action in matters of planning.
(e)Precision:Planning must be precise with respect to its meaning, scope and nature. As guides to action, planning is to be framed in intelligible and meaningful terms by way of pinpointing the expected results. Planning must be realistic in scope rather than being dreams indicating pious desires. As planning errors are far more serious and cannot be offset by effective organizing or controlling, the accuracy and precision is of outmost importance.
(f)Pervasiveness: Planning is a pervasive activity covering the entire enterprise and every level of management. Planning is not the exclusive responsibility of top management only. But it extends to middle and lower managements as well. Although top managers are mostly preoccupied with planning because of the wider scope of operational and decision making authority, planning is of equal importance to every manager.
Long Range Planning and Short Range Planning
Planning involves deciding a future course of action.Plans always has some time frame-the period in future that a plan covers. Based on the length of time involved, plans are usually classified as strategic or long range plans and operational or short range plans, strategic plans are designed to meet the broad objectives of the organisation to implement the mission that provides justification for the organisation’s existence. Operational plans provide details as to how strategic plans will be accomplished. However, it must be remembered that both strategic and operational plans are not mutually exclusive, but are complimentary. We will first discuss strategic planning and then proceed to operational planning.
Long Range Planning / Strategic Planning
The terms long range planning, Strategic planning, and Corporate planning are used synonymously by many authors. Strategic planning has its origin in military organizations where the objective is to envisage a variety of contingencies that may arise when large forces move into
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operation. Viewed in this backdrop, strategic planning in a business organisation envisages a comprehensive study of the various external and internal parameters that affect a company in charting a course of action to achieve the goals.
Strategic Planning helps the Management in:
ӹӹcoping effectively with future contingencies.
ӹӹproviding an early opportunity to correct mistakes.
ӹӹmaking decisions about the right things at the right time: and
ӹӹunderstanding what actions to take in order to shape the future.
George Steiner has defined strategic planning as “the process of determining the major objectives of an organisation and the policies and strategies that will govern the acquisition, use and disposition of resources to achieve those objectives”. Strategic plans reflect the socio-economic purpose of the organisation and the values and philosophy of the top management. In simple, they relate the organisation to the environment in which it operates by providing answers to the basic questions like:
ӹӹWhere are we now?
ӹӹWhere do we want to go? And
ӹӹWhy do we want to go there?
Organisations in the west have been exposed to the strategic planning since long. In India, many subsidiaries of the multinational corporations made a beginning in this direction. Indian companies (Private and public sector) have also realized the importance of strategic planning, thanks to the changed realities in the last few years. As a result, every company has now begun to speak in terms of corporate mission, strategic planning and organisational vision. Strategic planning serves the following two functions.
a. Anticipates Future Opportunities and Threats
An accurate assessment of the future opportunities and threats is crucial to the success of any business. Business environment is changing so fast these days that a deliberate corporate effort is called for to keep abreast with the changes. The changes that occur may be precursors of future
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