Strongpreneur#Business Growth Strategies
April 16, 2019 141
Strongpreneur#Business Growth Strategies
April 16, 2019 141
Planning is one of the management functions. Planning is usually considered to be the first task of management in any organization. Others are organizing, staffing, directing, coordinating, motivating and controlling. Planning precedes all other activities; it is continuous in nature and very closely related to other management functions.
What does a manager mean when he says our plan is to establish a plant in South Africa next October? We do not have much cause to worry since things are going according to plan? Our plan is to build up enough stock now, so as to be able to cope with the expected increases in demand during the Christmas and New Year periods?
The word plan in each of these cases refers to a predetermined course of action which identifies:
Therefore, the process by which this plan is derived is called planning.
Planning can be defined as the analysis of relevant information from the present, and an assessment of probable future developments, so that a course of action may be determined, that enables the organization to meet its stated objectives.
This definition does not consider the setting of objectives as part of the planning process. The objectives are taken as given. Planning is simply the process of determining the course of action by which the predetermined objectives can be achieved.
In this sense, planning has been defined as a process which involves selecting the objectives and policies, programmes and procedures for achieving them – either for the enterprise or for any organized part thereof. It is clear that the formulation of objectives is part and parcel and in fact an integral part, of the planning process.
Planning is more fruitful when formularized. Several studies have shown that companies which engaged in formal strategies planning performed better than others which did not.
In most manufacturing industries, however, three months is usually regarded as a short-term planning period. A producer of candles may plan his production for the next six months. A furniture maker may prepare a cash budget for the next three months while a university may formulate short-term plans on a semester basis.
In universities, planning is usually broken up into short-range (covering one term or semester), intermediate (covering one or two years) and long-term plans covering four or five years. Examples of the long-range plans are the Third and Fourth National Development Plans, covering the period 1975 – 1980 and 1981 – 1985 respectively.
Although we have discussed these three types of plans are though they are independent of one another, they are in fact closely interrelated. When a long-range plan is made, it is usually implemented by formulating short-range plans whose implementation will guide the company towards the achievement of the long-range plans. In this sense, therefore, short-range plans, usually derive from and dovetail into the long-range plans. In the course of implementing the short and medium range plans, it may become necessary to modify the long-term plans.
Planning involves decision-making, which is the selection of a course of action from amongst competing alternatives. Planning involves several steps.
The analysis of the problem ensures that in attempting to solve it, the manager does not solve only a part of it, or pursue the shadow. This is probably why it is often claimed that a problem once diagnosed is half-solved.
Forecasts may be made about the future state of competition, the company’s strengths and weaknesses, government’s economic policies, and the general state of the nation’s economy. The forecasts may also be extended to other key internal and environmental variables.
These forecasts are normally based on trends identifiable from relevant historical and current data, that may be obtained from the company’s internal records, or from reliable external information sources. No matter how reliable the historical and current data may be, forecast trends based on them are usually no more than estimates or informed guesses. Actual future developments may deviate from forecast trends, because history never actually repeats itself, and because of the inaccurate assumptions made in arriving at the forecast figures. To overcome these problems, plans based on any forecasts should be flexible, so that modifications can be made as the future unfolds.
The next step to identify in the planning process is finding alternative courses of action from which a choice will eventually be made. This is the beginning of the decision-making aspect of planning. Decision-making is the process of selecting a preferred course of action from amongst competing alternatives. At this stage in the planning process, all known possible ways of attaining the objectives that have been set are identified.
Alternatives may be obtained by inviting suggestions from key executives, individually, or in brain-storming sessions. The experiences of competitors, management textbooks, journals, and magazines may also be a useful source of ideas about alternatives.
In determining the alternative to select, the manager tries to obtain information on each alternative, so that comparisons of alternatives can be done more objectively. This may involve some extensive research, depending on the executives concerned, and the perceived importance of the plan. Based on the information obtained, each alternative is analyzed thoroughly, except those alternatives that may be dropped immediately, because they are clearly not feasible.
In determining the alternative to select, the organization’s decision-makers will consider:
If two or more alternatives are equally capable of achieving the desired results, and if they have the same benefits, then the chapter of them is the better solution. Similarly, if there are two alternatives with the same cost and benefits, the one that achieves more of the objective is preferable.
For instance, if the purchase of different types of machines is being considered, the choice may take into consideration:
Therefore, a comparison of the relative advantages and disadvantages of each alternative will then lead to a decision.
At this level, the decision is included in the budget of the company. Once a plan has been formulated, it is usually to express it in the form of a budget. Budgeting is the translation of plans into financial terms.
A critical issue in the success of planning is plan implementation. The management decisions, which have become the official policy of the organization, must be implemented; that is, translation of the plans into concrete terms. It is therefore possible for planning to be done by an external consultant, while the implementation will usually be the responsibility of internal personnel.
In the implementation process, management formulates derivative plans for the operationalization of the major plan. In other words, this stage involves crucial questions concerning:
All of which must be spelled out in understandable terms.
Selecting an alternative is a policy issue, while the implementation, for which guidelines are provided by the planners, is purely administrative. During the implementation of the plan, management should constantly review earlier decisions in the light of new information and experience.
At this stage, management assesses the decisions earlier made and determines whether the outcomes are within the range of expectations. Questions that must be answered include the followings:
Planning is a continuous process because of the uncertainty element involved. The rationale for evaluations to identify and eliminate detractions and oversights that may hamper goal is an achievement.
The answers to the above questions provide the basis for modifying the plans, and so to make the planning cycle begins all over again.
As we have seen, the benefits of planning are many. There are, however, limits to these benefits. The extent to which planning is done should be dictated by the expected benefits.
There are some disadvantages inherent in planning. Since planning is based on assumptions and forecasts of the future, the resulting plans can only be as realistic as the assumptions and forecasts on which they were based.
This is because it is easier to forecast the near future than the distant one, short-term plans tend to be more dependable than long-range plans.
Another limit to planning is the cost involved. Planning could be very expensive, in terms of the time it consumes and the financial and human resources devoted to it. Planning should ideally terminate at a point, where the marginal cost of planning equals the marginal revenue derivable from it.
Plans have a tendency to place their users in a straight proper guideline. This is the case when plans are regarded as immutable laws that must be followed tenaciously, irrespective of the prevailing circumstances. The way out of this problem is either to make the plans flexible so that they can be altered when the circumstance warrants that, or to have more than one plan, each of which is based on a different set of assumptions about the future. As the future unfolds, that plan which seems most realistic is adopted.
A fourth problem, which is not inherent in planning, but peculiar to developing countries, is that of availability and reliability of data. Census figures are not reliable; there are no dependable figures about the supply of, and demand for, goods and services. Even employment statistics and demographic information are either completely unavailable or very unreliable. These difficulties compound the problems in planning.
A final problem in planning, which is again unique to some developing countries is infrastructural. Communication between towns is difficult and time-consuming. Transportation problems are also acute due mainly to bad roads. Agencies specialized in collecting and analyzing data for business organizations are either rare or unreliable. Computers and other facilities for information storage, analysis and retrieval are difficult to come by. All these mean that planning is more time-consuming, more costly and more difficult.
In spite of these difficulties, it is better to plan, no matter how inaccurate the plans may be, than not to plan at all.
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