Discuss its implications on planning process
Planning:
Planning is that the intellectual anticipation of possible future situations, the choice of desirable situations to be achieved (objectives), and therefore the determination of relevant actions that require to be taken so as to succeed in those objectives at an inexpensive cost.
In other words, planning implies brooding about the longer term and trying to assume control over future events by organizing and managing resources in order that they cater to the successful completion of
the objectives set forth.
Basic Questions in planning:
| QUESTIONS | PLANNING STAGES AND ACTIVITIES |
| Where do we stand today? | Diagnosis: analyzing the current situation in the sector and its environment |
| Where would we like to be in the future? Which directions should we adopt? | Policy formulation: choice of goals and strategies |
| How (at what pace? at what cost? through which specific measures? etc) shall we get there? | Planning targets and plan operationalization: defining precise objectives and the ways and means of attaining them |
| Are we moving in the right direction? Which adjustments are needed? | Monitoring: measuring and evaluating progress and taking corrective action |
Implications on the planning process:
In 1962, a study by the American management associations reported that 5 years appeared to be the norm of long-range planning although planning periods ranging to 25 years and more did exist. In analyzing case studies, the AMA report concluded that companies appeared to base their period on a future that will reasonably be anticipated. Yet, in 1973, a study made for the design Executives Institute and involving a sample of nearly 400 firms disclosed that 86 percent of the firms having long-range plans used a period of time of three to five years, and just one percent planned for extended than 10 years. Moreover, it had been surprising that 19 percent of the firms surveyed had no long-range plans.
- Selecting the proper time
There should be some logic in selecting the proper time range for company planning. generally, since planning and therefore the forecasting that underlies it is costly, a corporation should probably not plan for an extended period that’s economically justifiable; yet it’s risky to plan for a shorter period. the solution is to the proper planning period seems to dwell the “commitment principle”. Logical planning encompasses z period of your time within the future necessary to foresee, also as possible, the fulfillment of commitments involved in decisions made today.
- planning period
Perhaps the foremost striking application of this principle is that the setting of a planning period long enough to anticipate the recovery of costs sunk during a course of action. But since other things than costs are often committed for various lengths of your time, and since a commitment to spend often precedes an expenditure and should be as unchangeable as sunk costs, it seems inadequate to ask for recovery of costs alone. Thus, a corporation may commit itself, for varying lengths of your time, to a personnel policy, like promotions from within or retirement at age 65, or to other policies or programs involving commitments of direction and not immediately measurable in terms of dollars.
- Expenditure:
One can readily grasp the logic of designing for enough within the future to foresee, also as possible, the recovery of capital sunk during a building or a machine. Since capital is that the lifeblood of an enterprise and is generally limited in reference to the firm’s needs, its expenditure must be amid an inexpensive possibility of recovering it, plus a return on investment, through operations. for instance, when lever brothers sank $45 million into a replacement factory on the West Coast, they, in effect, decided that the detergent business would permit the recovery of this investment over a period of your time. If this era was 20 years, then logically the plans should base upon a projection of business for such a time. Of course, they could have introduced some flexibility and reduced their risk (as they did) by spending extra funds to form the plant useful for other purposes.
- long-range planning
What the commitment principle implies is that long-range planning isn’t really planning for the future decisions but rather planning of the longer-term impact of today’s decisions. In other words, a choice may be a commitment, normally of funds, direction of action, or reputations. And decisions lie at the core of designing. While studies and analysis precede decisions, any sort of plan implies that some decision has been made. Indeed, an idea doesn’t really exist intrinsically until a choice is formed.
Under these circumstances, then, the state manager will recognize the validity of gearing longer-term considerations into present decisions. to try to otherwise is to overlook the essential nature of both planning and deciding.
- Comprehensive planning
because the commitment principle indicates, there could also be different time spans for any plan and planning decision, counting on the character of the commitment involved. Therefore, it’s never been logical to seem at short-range medium-range, and log-range planning as essentially different processes. As acknowledged above, planning is planning, no matter the time span of the commitment involved.
As a result, an increasing number of companies and other organizations are characterizing their major enterprise planning effort as simply “comprehensive” or “strategic” planning. This makes considerable sense because the core of major overall planning is setting major objectives and determining the essential direction to be taken in accomplishing them. it’s likely, therefore, that such planning is comprehensive in nature and oriented to strategic planning.
- Flexibility in Planning
The above discussion has indicated that the commitment principle must be considered in the light of flexibility of designing. If plans are often changed to satisfy future requirements which either weren’t or couldn’t be foreseen, the design period is often shorter than otherwise would be the case. due to future uncertainties and possible error in even the foremost expert forecast, the perfect of designing is to be flexible-the ability to vary direction when forced to try to do so by unexpected events, without undue cost.
- Reviewing plan Regularly:
The more planning decisions commit for the longer term, the more important it’s that managers periodically check on events and expectations and redraw plans as necessary to take care of a course toward a desired goal. Unlike the pliability principle, which applies to the adaptability built into plans themselves, this principle applies to flexibility within the planning process. Built-in flexibility doesn’t automatically revise plans; managers, like navigators, must continually check the course and redraw plans to satisfy the desired goal.