Wednesday, January 27, 2010
Process of Planning
The Planning is not one shot activity but an endless process as follows:
- Setting objectives or goals
- Situational Analysis
- Environmental Opportunities
- Course of Action
- Budget Allocations
- Implementation and Review
Objectives are the prime parts of the plan or, planning involves determination of desired future.
Example: you might want to hire some salesmen to increase your market coverage
An organisation must be realistic in assessing its own strengths and weaknesses in the planning process
Example: Rail road (Pen Central) lost its business because they focus only on weakness not strengths so that their sound strategy could be built on its strengths.
Environmental Considerations and Opportunities :
It is said that planning leads to success and to achieve this success, new opportunities must be explored.
Example: Technology developments and economic situation are vital considerations.
Course of Action:
Based on the assessment of internal and external conditions and keeping the objectives and goals in mind, an appropriate course of action must be taken.
Designing a course of action gives a formal structure to the plan itself.
In order to choose course of action, various alternative courses of action must be developed.
The alternatives must be realistic in terms of achievement.
Once the best or optimal course of action is chosen, the next step in the planning process is to set specific targets and allocate resources; these allocations must be stated in quantitative terms
Fixed Budget: Is only for a stated period of time that does not provide allowance for any change in output
Zero-Based Budget: First used by Texas instruments in 1969, by examining the cost-benefit of all activities and ranking them according to the importance to the overall performance of the organization
Implementation and Review:
The last step in the planning process involves putting the plan into action and see whether it is working.
Co-operation of all the members of an organization, to achieve this co-operation, participation must be encouraged.
A follow-up (top to bottom) procedure and other control mechanism must be provided to increase the effective implementation of a plan.