Process & Importance of Planning
Process of Planning
- Recognizing Need for Action:
- Identify business opportunities and the necessity for strategic action based on current and future trends.
- Evaluate potential projects and assess risks before initiating any new ventures.
- Gathering Necessary Information:
- Collect detailed information relevant to business operations, including customer demographics, market conditions, and product value.
- Facts and figures gathered serve as a foundation for developing realistic plans.
- Laying Down Objectives:
- Define clear goals that management aims to achieve through planning.
- Objectives guide employees and unify efforts toward common goals, fostering clarity and direction within the organization.
- Determining Planning Premises:
- Make assumptions about future conditions essential for planning purposes.
- Forecast factors like product demand, production volume, costs, prices, labor supply, economic policies, consumer preferences, and technological changes.
- Examining Alternative Courses of Action:
- Evaluate multiple approaches to determine the optimal course of action.
- Consider various alternatives and weigh their pros and cons before making a final decision.
- Evaluation of Action Patterns:
- Assess the performance and feasibility of selected actions.
- Compare different action plans based on factors such as investment requirements and profitability potential.
- Determining Secondary Plans:
- Develop supportive plans that complement the main plan's implementation.
- Secondary plans cover areas like raw material procurement, equipment purchase, and personnel recruitment necessary to support the primary plan.
- Implementation of Plans:
- Execute the finalized plan by establishing policies, procedures, standards, and budgets.
- Ensure effective implementation to achieve business objectives and goals effectively.
In essence, the planning process involves identifying opportunities, gathering information, setting objectives, forecasting future conditions, evaluating alternatives, implementing the plan, and continuously monitoring and adjusting as necessary for optimal business performance.
Importance of Planning in Business
1. Increases Efficiency
Planning ensures optimal use of resources, reducing waste and duplication, and aiming for maximum returns at minimal costs, thereby boosting overall efficiency.
2. Reduces Business-Related Risks
By forecasting potential risks, planning enables businesses to take preventive measures and prepare for uncertainties, thus mitigating business-related risks.
3. Facilitates Proper Coordination
Efficient planning aligns the plans of different departments and various timeframes (short-term, medium-term, long-term), ensuring harmonious and coordinated efforts across the organization.
4. Aids in Organizing
Planning identifies the necessary resources and their required timeline, thus facilitating efficient organization and resource management.
5. Gives Right Direction
Planning provides clear instructions and guidance, outlining what needs to be done, how, and when, ensuring that everyone works towards the same objectives.
6. Keeps Good Control
Planning enables the comparison of actual performance with planned objectives, identifying deviations and implementing corrective measures, thus maintaining effective control.
7. Helps to Achieve Objectives
Planning helps organizations systematically work towards their goals, avoiding random activities and ensuring focused and efficient efforts.
8. Motivates Personnel
Well-structured plans include incentives that motivate managers and employees to work diligently towards achieving organizational goals.
9. Encourages Creativity and Innovation
Planning allows managers to explore creative and innovative solutions, leading to personal satisfaction and organizational success.
10. Helps in Decision-Making
Planning involves evaluating multiple strategies and selecting the best one, thus facilitating informed and effective decision-making.