Streamlined Planning Process

1. Perception of Opportunities

The planning process involves a series of steps that ultimately result in the execution of an idea through the establishment of a sequence of activities. Each stage of this process plays a crucial role in contributing towards the overall planning process.

The ability to perceive opportunities is crucial for the planning process, as it serves as a starting point for formulating plans. This involves a preliminary examination of potential opportunities, a clear understanding of the organization's strengths and weaknesses, a comprehension of why uncertainties must be addressed, and a vision for what the organization hopes to achieve. By assessing its surroundings, the organization can set objectives that align with its environment, capitalizing on opportunities while mitigating threats. While this initial stage does not require detailed environmental analysis, it does involve identifying available opportunities before proceeding with other planning steps.

2. Establishing Objectives

During this stage, the organization sets its major objectives for both its overall operations and individual units. These objectives clearly outline the expected outcomes and act as the endpoint for all planning efforts. They also highlight key focus areas and define the accomplishments that various plans should strive for. To ensure success, the organizational objectives must be identified in all crucial result areas, which are determined based on the organization's overarching goals.

Once the objectives of an organization are established, it becomes easier to identify the key result areas such as profitability, sales, research and development, manufacturing, and others. These objectives provide direction to all major plans and define the objectives of major departments. The objectives of these departments then control the objectives of subordinate departments, creating a hierarchy of objectives within the organization.

3. Planning Premises

Once organizational goals have been identified, the next critical step is to establish the planning premises. Planning premises refer to the expected external and internal conditions under which planning activities will be carried out. These assumptions serve as a foundation for the planning process. External planning premises include factors such as political, social, technological, and competitors' plans and actions, as well as government policies. On the other hand, internal planning premises include an organization's policies, various types of resources, and its ability to withstand environmental pressures. In developing plans, both external and internal factors must be taken into account.

Consistent planning premises are key to achieving coordinated planning. Forecasting plays a major role in developing these premises, which vary depending on the level of planning. At the top level, planning premises tend to focus externally, while as one moves down the hierarchy, they become more internal. It's important to note that major plans, both past and present, will have a significant impact on the future, and managers at lower levels must consider these premises when developing their own plans. In fact, a superior's plans for a particular area of authority become the premises for subordinates' planning.

4. Identification of Alternatives

Organizational objectives and planning premises give rise to various alternatives to achieve a particular objective. For instance, if an organization aims to expand, it can do so through multiple avenues such as diversification, mergers and acquisitions, or expanding its existing product line. However, the challenge lies in reducing the number of alternatives to select the most viable ones for further analysis. In this regard, the planner must establish preliminary criteria such as minimum investment or compatibility with the organization's current business operations to eliminate alternatives that do not meet the necessary requirements. For instance, a company may disregard projects involving an investment of less than Rs. 40 crore based on predetermined criteria.

5. Evaluation of Alternatives

When evaluating various feasible alternatives, it is important to consider how each option contributes to the overall objectives of the organization while taking into account its resources and limitations. However, this can be challenging as each alternative may have positive aspects in some areas but negative aspects in others. For instance, one alternative may be highly profitable but require a significant investment with a long gestation period, while another may be less profitable but involve less risk. Additionally, predicting the outcome of any alternative is difficult due to numerous external factors that can affect it, making the evaluation process complex. As a result, more advanced planning and decision-making techniques have been developed to address these challenges, which will be discussed further in a later chapter.

6. Choice of Alternative

After carefully evaluating various options, the most suitable one is chosen. However, in some cases, multiple options may appear equally advantageous. In such situations, the planner may opt for more than one alternative. This is also necessary because the future course of action is not always predictable. Even if a particular course of action seems ideal given the current circumstances, changes to the planning premises may render it unsuitable. Therefore, it is essential for the planner to have contingency plans in place, which can be implemented in case of unforeseen changes.

7. Formulation of Supporting

Supporting Plans. Once the basic plan is in place, supporting plans are developed to ensure its success. These derivative plans may include purchasing equipment, sourcing raw materials, recruiting and training staff, or creating new products. By aligning with the main plan, these supporting plans effectively bolster its implementation and overall success.