3.

Functions of Management a) Planning Concept, Nature, Importance, Steps, Limitations, Management by objectives Introduction: One of the primary responsibilities of managers is to decide where the organization should go in the future and how to get it there. Without clear goals and plans, employees cannot perform up to their potential and the organization flounders. In some organizations, typically small ones, planning is informal. In others, managers follow a well-defined planning framework. The company establishes a basic mission and develops formal goals and strategic plans for carrying it out. Companies such as Royal Dutch/ Shell, IBM, etc undertake a strategic planning exercise each year- reviewing their missions, goals and plans to meet environmental changes or the expectations of important stakeholders such as the community, owners or customers. Many of these companies also develop contingency plans or scenarios for unexpected circumstances and disaster recovery plans for what the organization would do in the event of a major disaster such as a hurricane, earthquake, or terrorist attack. Managers challenge: Of the four management functions- planning, organizing, leading and controlling, planning is considered the most fundamental. Everything else stems from planning. Yet planning also is the most controversial management function. How do managers plan for the future in a constantly changing environment? The economic, political and social turmoil of recent years has left many managers wondering how to cope and has sparked a renewed interest in organizational planning, particularly planning for unexpected problems and events. Managers need to develop effective plans that can grow and change to meet new conditions. There is a need to explore new approaches to planning that emphasize the involvement of employees, customers, partners and other stakeholders in strategic thinking and execution. Concept of Planning: Planning begins with a goal or an end-state or targeted outcome that the organization wishes to achieve. A plan is the means devised for the achievement of that goal. For example, a firm may have a goal of selling its product in a new market and the plan is a combination of marketing techniques designed to reach that goal.

Planning is an intellectual process of thinking resorted to decide a course of action which helps achieve the pre-determined objectives of the organization in the future. Plan and Planning: There is a fundamental difference between the words plan and planning. Planning is an activity. It can be considered as consisting of a process, hence various subactivities. On the other hand, plan is a commitment to a particular course of action believed necessary to achieve specific results. For example, Government of India prepares Five-year plans which consist of various actions to be taken, results to be achieved and resources to be used. These are plans which are prepared through planning process. This process involves taking various actions to arrive at what is to be achieved, how to be achieved and when to be achieved.

A goal is a desired future state that the organization attempts to realize. Goals are important because organizations exist for a purpose and goals define and state that purpose. A plan is a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks and other actions. Goals specify future ends; plans specify todays means. The word planning usually incorporates both ideas; it means determining the organizations goals and defining the means for achieving them.

Definition of Planning:
Planning is deciding in advance what to do, how to do it, when to do it and who is

to do it. It bridges the gap from where we are to where we want to go. - Koontz and ODonnel
Planning is deciding the best alternative among others to perform different

managerial operations in order to achieve the predetermined goals.- H. Fayol

Planning is the selecting and relating of facts and making and using of

assumptions regarding the future in the visualization and formulation of proposed activities believed necessary to achieve desired results.- Terry

Nature of Planning: The basic nature of planning may be understood in terms of it being a rational approach, an open-system approach and its pervasiveness. Planning is a rational approach for defining where one stands, where one wants to go in future and how to reach there. In organizational context, planning as a rational approach tries to fill the gap between actual status (current performance) and desired status (desired performance). The current and desired status is usually expressed in terms of objectives which can be achieved by an action or set of actions. For completing an action, various types of resources- human as well as non-human are required. Planning adopts an open system approach. The identification of the gap between current and desired status in future and the action required to bridge this gap is influenced by a variety of environmental factorseconomic, political-legal, technological, socio-cultural and competitive. These factors are dynamic in nature and change with the times. Planning is pervasive and extends throughout the organization. Every manager has a planning function to perform. It is done at all levels of management regardless of the size of the organization and the nature of its activities.

Importance of Planning: 1. Planning establishes the objectives necessary for all group efforts. 2. Planning gears the organization to take suitable actions to face environmental changes and achieve its objectives successfully 3. Planning helps in defining objectives in more meaningful terms so that managerial actions are possible. 4. Planning helps in coordination. Well-considered overall plans unify interdepartmental activities and consequently restrict the area of freedom in the development of purely departmental plans.