Planning

Planning as deciding in advance: its features, importance and limitations, the steps in the planning process, and the types of plans.

Key ideas

Planning is deciding in advance what to do and how to do it; it bridges the gap between where we are and where we want to be.
It focuses on objectives and is the primary function; it is pervasive, continuous, futuristic, a mental exercise, and involves decision making.
It gives direction, reduces the risk of uncertainty, cuts overlapping and waste, encourages new ideas, eases decisions and sets standards for control.
Its limits: rigidity, a poor fit in a fast-changing environment, less creativity, high cost, time taken, and no guarantee of success.
Planning premises are assumptions about the future, such as forecasts of demand, on which plans rest.
Single-use plans (programme, budget) serve one occasion; standing plans (policy, procedure, method, rule) are used again and again.
A policy guides thinking and leaves room for judgement; a rule says exactly what must or must not be done and leaves none.

Remember

Steps of planning	set objectives → develop premises → identify alternatives → evaluate them → select one → implement → follow up
Sales target from a premise	last year’s sales × (1 + growth% ÷ 100)
Budgeted revenue	target units × price
Budget difference	actual spending − budget: above zero over budget, below zero under
Strategy	a comprehensive plan for the objectives, including how resources are allocated
Procedure vs method	the sequence of steps for a routine task vs the way one step is done
Budget	expected results in numbers: both a plan and a control device

Watch out

Putting developing premises before setting objectives: objectives always come first.
Calling a policy a rule: a policy leaves room for judgement, a rule does not.
Taking the growth alone as the target: add it to last year’s sales.

Worked example

Put these steps of the planning process in order: (a) identifying alternative courses of action (b) selecting an alternative (c) evaluating alternative courses

Working: identifying alternative courses of action → evaluating alternative courses → selecting an alternative

Answer: a, c, b