Overview of Management Planning Examples
Management planning briefly refers to quoting the examples for the fundamental function of management referred to as planning. Also, to further get a clear image, one has to understand the basic concept of planning function studied as below:
Definition of Planning
Planning means chalking out future courses of action that must be followed and looking ahead. It is a systematic and preparatory step that determines when, how and who will perform a specific task. The management planning function is a detailed programme related to future aspects.
Planning is a process of determining in advance what is to be done, how it is to be done, where, when and by whom. It involves setting goals, examining various courses of action and deciding the ways and means of achieving them. It is a mental exercise and the primary planning function of management.
A phrase rightly said for planning is “Well plan is half done”. This explains that the function determines the available and prospective physical and human resources of a business to attain effective contribution, perfect adjustment and coordination.
Management planning is the basic function that includes the formation of detailed plans to achieve the objectives with optimum utilization of available resources.
According to Urwick, “Planning is a mental predisposition to do things in an orderly way, to think before acting and to act in the light of facts rather than guesses”. Planning is deciding the best alternative among others to perform different managerial functions to achieve predetermined goals.
According to Koontz & O’Donnell, “Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur”.
Characteristics of Planning Function
Various facts need to be known about planning to apply them properly in management planning which are discussed as characteristics follows:
Planning is goal-oriented purposeful
Planning determines both the long-term and short-term goals of an organisation. It not only decides the objectives but also chooses the ways and means of achieving them.
Thus, management planning is purposeful as the whole process aims at achieving goals most effectively and efficiently. The planning function of management has no meaning until it contributes to the achievement of objectives.
Primacy of planning
It is also called a basic or primary planning function of management because it lays down the base for other functions. All other management functions are performed within the framework of plans. Thus management planning precedes other functions which is also termed as the primacy of planning.
Planning is pervasive or universal
It is required in every organisation, whether business or non-business, profit or non-profit, military, club, school or hospital, etc. Planning needs to be done whenever any human activity takes place.
Management planning is also required at all levels of management like top-level plans for the overall organisation, middle-level plans for their respective departments and the lower level for day-to-day planning.
Planning is continuous
Planning is continuous as it goes on without any break or gap in an organisation till the end of its life. Managers cannot stop planning throughout the lifetime of the organisation.
Once the plans are made for a particular time, they are reviewed, and revised and corrections are made leading to re-planning. Thus the management planning cycle is never-ending in which plans are made, implemented and replanned.
Planning is futuristic
Planning is called looking ahead because it is done in advance for a future period. It involves predictions for which forecasting techniques are used. Management planning includes looking into the future, analyzing it and deciding a future course of action beforehand.
For an example of planning in the management process, an annual sales plan is made based on an estimate of future sales.
Planning involves choosing from alternatives
Management Planning involves making decisions because managers face many alternative options when they make plans. For this, they identify the most suitable option. Plans won’t’ be needed if there were not many choices available. Once a choice is made, detailed plans are made to implement it.
Planning is a mental exercise
Since management planning requires the application of mind and thinking skills it is termed as a mental exercise. It is an intellectual exercise for which managers need mental abilities such as imagination, reasoning, judgement, forecasting etc. It requires logical and systematic thinking rather than guesswork.
Types of Planning in Management
An organisation is involved in numerous and therefore, requires attention from both a controlling and management planning perspective. As a result, managers create types of plans to monitor or control activities and guide operations.
The major categories are frequency of use, hierarchy, organisational scope, time frame and contingency. The below discussion provides a deeper understanding of the types of planning in the management of each category:
Frequency of use
Standing plans
- Rules: reflects the actions or guidelines that do not permit analysis specifying what is not permissible and what is permissible
- Policies: guide decision making, general statements of intent, guide behaviour. for example, no employee can accept favours from an outside company that is powerful in value to take undue advantage over
- Procedures: just like rules they help to guide actions mentioning a series of steps that need to be followed while performing a specific task
Single-use plans
- Projects: short-term action plans used to complete various parts of a program
- Programs: a combination of rules, procedures and policies necessary to carry out the action
- Budgets: the plans described in numerical terms
Hierarchical Plans
There are three levels of organizational needs institutional, administrative and operating(technical core) linked with specific types of planning in management. These hierarchical plans are related or interdependent since they consider the fulfilment of organisational needs.
- Administrative plans: determines the allocation of organisational resources to internal departments of the company. They address the integration of the institutional level of a company like vision formulation.
- Strategic or institutional plans: they consider the organisation’s long-term missions, and articulate the company visions and value statements. It defines what business the company is in and what hopes it can be in. It involves a high-level overview of the entire business dictating long-term decisions.
- Operating plans: they cover day to day running or work of a company. It refers to the ongoing plans including policies for approaching problems, procedures for step-by-step processes and rules for specific regulations for accomplishing objectives.
Time frame plans
It describes the short, medium and long-range plans that differ in the distance from the future project:
- Long-term: more than five years
- Medium-term: one to five years usually
- Short term: several hours to a year
Organisational plans
- Functional level plans: focus on lower-level organisation units a day to day or routine operations like marketing, accounting, human resources and production
- Business plans: they focus on organisation divisions and their competitive position
- Tactical plans: they focus basically on where the actual work is done that supports high-level strategic plans. It includes tactics that the company use to achieve strategic plans.
Contingency plan
These plans are formulated when something needs to be changed or unexpected happens. Therefore, they are considered as special types of plans. Managers should anticipate changes when engaged in any type of planning in management above.
There are still a few unforeseen events for which the company might not be prepared. As the business world becomes complicated, contingency plans become an important aspect.
Importance of planning in management
The importance of planning in management is to know the steps in advance that the managers need to follow or guidelines to handle specific situations. Moreover, there are various other important factors to make easy for management planning:
Planning provides direction
Planning provides direction for actions by deciding in advance what is to be done and how. It ensures that goals and targets are clearly stated so that employees are aware of exactly what to do. Management planning ensures unity of direction and coordination of individual efforts. It helps the organisation to keep on the right track and move in the right direction.
Reduces the risk of uncertainty
Managers predict the future while doing planning and the future holds uncertainties. There can be opportunities or risks in future. If they predict any opportunity they prepare to avail them and if they have any likely risks they try to minimize them.
Thus, uncertainties cannot only be anticipated but also eliminated and preparations can be made to face them with the help of management planning.
Planning reduces wasteful activities and overlapping
Another importance of planning in management is that it serves as the basis of the coordination of individual efforts. It helps in avoiding confusion and duplication.
Management planning ensures clarity about the overall goals and the contribution that every individual has to make to the achievement. Planning identifies and eliminates useless activities, detects inefficiencies and takes corrective measures to improve them.
Promotes innovative ideas
It is often thought that management planning should be followed as it is by the subordinates and they are not allowed to deviate from it. The case is a little different as the managers are required to modify the given plans according to the changes in the business environment.
They must not follow the plans blindly rather should operate within the framework of plans and make changes. Thus, it promotes creativity and imagination leading to discretion.
Planning facilitates decision-making
Managers face many alternative options while making plans. They identify all the alternatives and compare and evaluate them to make a suitable choice. Thus management planning is said to be facilitating decision making.
They follow the principle of limiting factors while choosing among the various options. It means that they consider only suitable options and reject any outwardly unsuitable ones.
Establishing standards for controlling
Planning involves setting goals and standards against which the actual performance of workers is compared. Managers can find out if they have achieved the required target.
They can find out reasons if there are any deviations and also take corrective measures. Thus the whole process of internal control depends on the standards fixed by management planning.
The planning process in management
The Planning process in management is a decision making and the following are the logical steps for every manager to take:
Setting objectives
The first step of the planning process in management is to set up objectives both long and short-term. Long-term objectives refer to the reason for which an organisation exists whereas short-term goals include short-term targets for various management planning periods.
For example planning in the management process, the long-term objectives of a school may be to provide good academic services while the short-term can be to improve board results during a particular year.
Objectives should be stated clearly in precise words because if the results are clear, it is easier to achieve them.
Developing premises
The next step involves establishing premises or assumptions that have to be followed while making and implementing management planning. These are basic factors, environments or boundaries within which plans will be executed.
They are the events or conditions that will influence the plans in future. For example in planning in the management process, when a company makes a plan for production, it has to check the machines available, the number of workers available the availability of financial resources etc.
Identifying and evaluating alternative courses of action
Once objectives are set and assumptions are made, the next step is to find ways and means for achieving them. As there are many options, various alternatives need to be identified. It is necessary to collect and analyse all relevant information. Information can be collected from primary and secondary resources.
Primary resources refer to the first source which gives first-hand information whereas secondary resources refer to some data collected from indirect sources of information.
For example, if we find out from a producer of machines it is termed as a primary source while when collected about a machine from a friend or magazine, we are using a secondary source. Then the various alternatives should be compared based on the risk-return trade-off. Alternatives are evaluated in the light of their flexibility and consequences.
Selecting an alternative
This is a real point of decision-making. The best options have to be chosen under the circumstances. The most feasible, profitable and with the least negative consequences options have to be selected. Sometimes a combination of options may be selected instead of one best source.
Formulating derivative plans
After choosing alternatives the next logical step is to develop detailed plans to implement all the options. These derivative management plans include policies, rules, procedures, plans, schedules etc. related to the options chosen.
For example, when a company decides to develop a new product it has to make detailed plans about its design, machines, advertising, raw material, production, etc.
Securing cooperation and follow-up actions
The last action is to execute plans for which plans need to be communicated to the lower levels. Communication should be done in such a way as to get support and cooperation from those people who are responsible for implementing the management planning.
It is important to find out if the plans are properly implemented and if the activities are performed according to the plans. It is equally important to monitor the plans and keep reviewing or revising them.
Limitations of Management Planning Examples
Plans sometimes fail despite the best efforts due to the limitations of planning. These limitations are inherent in the process of management planning or they result from wrong judgements on the part of the planner.
Planning leads to rigidity
In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These management planning examples then decide the future course of action and managers may not be in a position to change it.
This kind of rigidity in plans may create difficulty. Managers need to be given some flexibility to be able to cope with the changed circumstances. Following a pre-decided plan may not turn out to be in the organisational interest when circumstances have changed.
Planning may not work in a dynamic environment
The business environment is dynamic and nothing is constant. The organisation has to constantly adapt itself to changes. Management planning examples make it difficult to accurately assess future trends if the economic policies are modified political conditions in the country change or there is a natural calamity.
For example, competition in the market can upset financial plans and sales targets may have to be revised accordingly cash budgets also need to be modified as they are based on sales figures.
Planning reduces creativity
Planning is an activity that is done by the top management. Usually, the rest of the members just implement these plans as a consequence, middle and other levels are neither allowed to deviate from plans nor are they permitted to act on their own. Then much of their initiative or creativity also gets lost or reduced.
Planning involves huge costs
When plans are drawn up huge costs are involved in their formulation. These may be in terms of time, money and effort.
For example, collecting and checking the accuracy of facts may involve lots of time. Detailed management planning requires scientific calculations to ascertain facts or figures.
The costs incurred may not sometimes justify the benefits derived from the plans. There are several incidental costs as well, like expenses for boardroom meetings, discussions with professional experts and preliminary investigation to find out the viability of the plans.
Planning is a time-consuming process
Planning is a lengthy process that involves many steps. Lots of information is required and it takes time to collect, analyse, compare, evaluate, and choose among alternatives.
Thus, management planning becomes costly too. Sometimes plan takes so much time to make that there is not much time left for its implementation. Time-consuming plans are worthless in case of emergencies.
False sense of security
The success of an enterprise is possible only when plans are properly drawn and implemented. Managers have a tendency to rely on previously tried and tested successful plans. It is not always true that just because management planning has worked before it will work again.
This kind of complacency and a false sense of security may lead to failure instead of success. Planning gives a false sense of security because the lower levels take the plans for granted and ignore the changes required. Thus, leading to the failure of plans.
Psychological barriers
Planning sometimes fails due to mental blocks in the minds of lower levels. Managers take more interest in the present than the future and ignore some important aspects of management planning. Also, they resist changes that are introduced by plans and don’t implement the plans correctly. They take plans lightly and planning fails as a result.
External limitations of planning
- New inventions and innovations in production technology
- Changes in consumers’ tastes and preferences
- Governmental policies and legislative enactments
- Competitors
- Labour union
- Natural calamities
Conclusion
Therefore, this might be concluded from the above discussions that management planning does reflect the proper sequence and order of work a company can follow that reduces costs and overlapping of events. Although there are a few limitations, they can still be minimized by using different types of plans in different situations depending upon the kind of organisation and level required.