Planning is not a random process but one that generally follows certain steps. However the steps
vary depending on the nature of the plan i.e. whether major or minor. In an exam situation
always use an example to illustrate the planning process such as plan to buy company car, plans
to introduce computers etc.
Step 1: Identification of opportunities
This step includes a preliminary look at possible future opportunities and deciding what the
strengths and weaknesses of the organization are. The manager must have a careful scan of
competition, customers, and the external environment.
Step 2: Establishing objectives
Here the manager must answer the question of "where the organization wants to go, how and
when to get there". Objectives must be established for the entire organization and then for each
unit.
Step 3: Consider planning premises
Need to establish in what environment internal or external the firm's plans will operate.
Questions like what kind of markets will there be? what quantity of sales? what prices? costs?
wage rates? tax rates and policies. In premising the manager establishes and obtains agreement to
utilize and disseminate critical planning premises, which are forecast data of factual nature
applicable to the organizations plans, laws and policies.
Step 4: Determine alternative courses
The alternative courses of action should be determined. For each plan there can be several and
different ways of approaching the objectives
Step 5: Evaluate the alternatives
The alternative courses should be examined and the strengths and weaknesses determined in the
light of the objectives. The risks and returns involved in each alternative should be examined.
Step 6: Select one course of action
This is the point of decision making, deciding which out of the alternative course of action
should he selected for adoption.
Step 7: Formulate derivative plans
To support the basic plan, some derivative plans are required - for example most plans may go
with the hiring of staff and this needs other smaller plans.
Step 8: Numberise the plans by budgeting
The plans must be given meaning by converting them into budgets, for example by showing the
incomes, costs and expenses to be expected. Budgets when well formulated become important
standards against which planning progress can be measured.
Kavungya answered the question on May 17, 2019 at 14:16
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