Establish goals
Planning begins with decisions about what the organization want to achieve during a specified period. The goals of an organization and (various subunits have to be decided and spelt out in clear terms. I is always desirable to express the goals in quantitative terms for the key areas of the business like production, profit, productivity, market share, employee relations, social responsibilities, etc. For instance, instead of saying that the objective of business is to achieve a fair rate 0 return on the investment, it may be given a quantitative expression, say 10 or 15 percent return on the investment. The time frame in which the objectives have to be achieved must also be specified. Besides, adequate attention has to be paid to the resources required to achieve the objectives. Thus, what to achieve, when, how and with what resources are a few important questions that should be answered at this stage.
Establish planning premises
Planning premises, in simple, are the assumptions that should be made about the various elements of the environment. Planning assumptions or premises provide the basic framework in which plans operate. Appropriate assumptions have to be made on various aspects of the environment - both internal and external to the organization. Otherwise, it win be like fighting a battle without a clear assessment of the enemy's strengths and weaknesses.
Decide the planning period
How far in the future should a plan be made is another pertinent question in the process of planning. Businesses vary in their planning periods. In some cases plans are made for a short period, varying from a few months to a year, while in some other cases, they are mad to cover a longer period, to cover a period of more than a year. The period may extend up to 5 - 10 years and even beyond. Companies normally plan for a period that can be reasonably anticipated. The lead-time involved in the development and commercialization of a product and time required to recover the capital investment (pay - back period) influence the choice of the length of the plan. Again, in the same organization different plan periods may exist for different purposes. This gives rise to the two important concepts - operational planning and strategic planning while operational plans focus on the short-term, strategic plans focus on the long-term.
Develop alternatives and select the course of action
The next logical step in planning involves the development of various alternative courses of action, evaluating these alternatives and choosing the most suitable alternative. Objectives may be achieved by different courses of action (alternatives). For example, technical know-how may be developed by in-house research, collaboration with a foreign company or by tying up with a research laboratory. Similarly an organization can grow by expanding its scales of operations or through acquisitions and mergers. Technical feasibility, economic viability and the impact on the society are the general thumb rules to select the course of action. The alternative courses are evaluated in the light of the premises and the overall goals of the organization.
Derivative plans
The plan decided upon after a thorough analysis of various alternatives suggests the proposed course of action. To make it operational, it has to be split into departmental plans. Plans for the various operational units within the departments have to be formulated. The plans thus developed for the various levels down the organization are called derivative plans. For instance, production and marketing of 10,000 units of a product and thus achieving a return of 10 percent on the investment may he the enterprise's plan relevant for the whole organization. Its effective execution is possible only when specific plans are finalized for the various departments like production, marketing, finance, personnel and so on with clear-cut objectives to be pursued by these departments.
Review periodically
The results and the ease with which it is implemented measure success of the plan. Therefore, provision for adequate follow-up to determine compliance should be included in the planning work. To make sure that the plan is contributing for the results, its review at regular intervals is essential. Such a review helps in taking corrective action, if necessary, when the plan is in force.
Kavungya answered the question on March 26, 2019 at 11:40