Planning -Definition, Type, Strategies, advantage, and planning premises

Planning is the process of determining the objectives of the administrative effort and of devising means calculated to achieve them. In other words, Planning is the preparation for action. It is an endeavor to apply foresight to human activity, and is based on knowledge and research.

Planning is the selection and relating to facts and making using of assumptions regarding the future in the visualization and formalization of proposed activities believed necessary desired result.

Definition of Planning

Mcfarland has defined as “a concept of executive action that embodies the skills of anticipating, influencing and controlling the nature and direction of change.”

According to Koontz and O’donnell, “Planning involves selecting enterprise objectives, departmental goals and programmes, and determining the ways of reaching them.”

According to Philip Kotler, “Planning is deciding in the present what to do in future. It is the process whereby companies reconcile their resources with their objectives and opportunities.

Types of Plan

Planning may be of different types. We can classify some of the important types of plans according to the nature of planning below:

  • Financial and Non-financial Plans
  • Formal and Informal Plans
  • Specific and Routine Plans
  • Strategic and Functional Plans
  • Long-range and Short-range Plans
  • Administrative and Operational Plans

1. Financial and Non-financial Plans

Most plans cannot be translated into action if there is no finance. Planning loses all its significance is sufficient financial resources are not mobilized.

Plans that requires financial resources are considered financial plans. Plans relating to the physical resources of an organization may be called Non-financial plans.

2. Formal and Informal Plans

More thinking by managers refers to informal Plans. When an informal plan is finalized and prepared for implementation, it is considered to be a formal plan.

3. Specific and Routine Plans

Any plan made with a particular object is known as a specific plan. Day-to-day normal activities require some type of regular plan known as a routine plan.

4. Strategic and Functional Plans

Strategic planning is the overall planning of the enterprise objectives determined by the top management.

A plan made in a functional area like production, purchase, marketing is referred to as a functional plans.

5. Long-range and Short-range Plans

It depends upon the organisational structure, nature of business the kind of industry etc. the modern concern is to plan for a decade or two.

A short plan refers to a period covering six to twelve months. A long turn plan usually involves a time interval of between three and five years.

6. Administrative and Operational Plans

Administrative plan provides the base for operative plans. Administrative planning is done by the top and middle-level management.

Operational planning by the lower-level management.

Strategies of Planning

The term strategy has originally come from greece around 400BC and it refers to the technique of directing a military force in the light of the enemy force’s action.

In management, it has the same competitive implications. It is also regarded as interpretative plans. Strategy is related to the environment and its impact on the organisation.

Policies of Planning

Policies made by the management should be reasonable and stable, flexible, based on proper and correct information and sound judgment and to accomplish their purpose be communicated. Policies should be in writing. Policy statement must be definite, clear and easily understandable.

According to Alford and Betty, “the mode of thought and the principles underlying the activities of an organisation or an institution.” It is regular decision is applicable to repetitive situations.

Planning Premises

Premises are made about market conditions, price trends, tax policy, government policy, business cycles etc.. the assumptions or premises are for a future setting or happenings. A plan is based on certain assumptions called premises.

Planning premises, their choice, evaluation and usefulness depends upon the abilities of the planner. Premises represent the plan environment.

Planning premises are :-

  • External and Internal
  • Tangible and Intangible
  • Controllable, Semi-controllable and Uncontrollable

Importance of Planning

The following points are the importance of planning.

  • Selection of Optimum Goals
  • Tackling Increasing Complexities
  • Meeting Environmental Changes
  • Safeguard Against Business Failures
  • Unity of Action
  • Effective Co-ordination and Control.

1. Selection of Optimum Goals

Planning involves rational thinking and decision-making concerning a proposed course of action. It also implies selection of one course of action and rejection of outer possible courses of action.

The selected course of action is naturally the one that promotes the overall organisational goals within the frame work of the resources availability and economic, social and political factors.

2. Tackling Increasing Complexities

An organisation is a heterogeneous group of human beings who differs from one another in many respects. It is unlikely that they will work effectively and harmoniously in the interest of the organisation. So, Planning is essential to any goal-directed activity.

3. Meeting Environmental Changes

Business environment changes move rapidly and sweepingly than can be imaged. Changes in social values, increase in competition, new product discoveries, change in consumer tastes and preferences have each the potential to upset any organisation.

Management should discern and exploit the emerging situation by adjusting and adapting the inputs and transformation process to suit the environment changes.

4. Safeguard Against Business Failures

Business failures are blamed on cut-throat competition, unpredictability of consumer tastes and preferences, rapid technological changes and abrupt economic and political development.

In general, failure of business is caused due to rash and unscientific decision-making, which is a direct result of lack of proper plans.

5. Unity of Action

Planning enables the people within an organization to work effectively and harmoniously for accomplishment of common goals.

It provides them a stake in their own future and thus induces them to do their utmost to meet the challenge.

6. Effective Co-ordination and Control

Planning makes it easy to exercise effective control and co-ordination. This facilities proper and timely measurement of actual performance and its comparison with the planned performance.

In case, actual performance is not as per the plans. Factors responsible for the same can be ascertained. In he absence of planning, there will be no scientific standards to measure and evaluate performance.


At last words, Planning involves rational thinking and decision-making concerning a proposed course of action. It also implies selection of one course of action and rejection of outer possible courses of action.

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