BCom Notes Part II Management Various Steps of Planning
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Various Steps of Planning
Describe in detail the various steps of Planning. Planning Process
The process of planning involves the following steps:
1. Analyzing Environment
At the outset, the internal and external environment is analyzed in order to identify company’s strengths and weaknesses (in internal environment) and opportunities and threats (existing int the external environment). This is also known as SWOT (strengths, weaknesses, opportunities and threats) analysis.
2. Establishing Objectives Or Goals
In the light of the environmental scanning (study), clear or probable opportunities that can be availed are identified. In order to avail them, objectives or goals are clearly defined in specific term along with priorities in all the key areas of operations. Major problems associated with such objectives are also identified and defines, so that there may be special emphasis on their planned solutions.
3. Seeking Necessary Information
All relevant facts and data are collected from internal and external sources. For example, availability of supplies, physical and human resources of the company, finances at disposal, relevant government policy, general economic conditions and relevant specific market situation. Then such investigated and collected information and factors are analyzed. Such information analysis is used in two ways – first, to make necessary modifications in objectives or goals and secondly to take help from them in premising (considering) assumptions.
4. Premising Or Establishing the Planning Premises
In order to develop consistent and coordinated plans, it is necessary that planning is based upon carefully considered assumptions and predictions. Such assumptions and predictions are known as planning premises. The assumptions under which plans are supposed to operate should be clearly brought out. Such presumptions and forecasts are prepared for various areas, such as sales, prices, wages, taxes, changes in fashions and habits, purchasing power, standards of living, population competitors and so on.
5. Identifying and Developing Alternative Courses of Action
After establishing objectives or goals and taking other related steps, feasible alternative programs or courses of action are searched out. Impossible or highly difficult propositions are left out.
6. Evaluating the Alternatives
Probable consequences of each alternative course of action in terms of its pros and cons (e.g. costs, benefits, risks, etc) are assessed and than relative importance of each of them is found out by looking at their overall individual strengths and limitations especially in the light of the present objectives and the environment of the company.
7. Choosing the Most Appropriate Alternative Or Course of Action
After weighing the pros and cons of each of the alternative courses of action and realizing their individual relative importance, the most appropriate alternative in the light of the overall consideration is selected to be followed. In other words, the alternative which appears to be most feasible and conducive to the accomplishment of company’s predetermined objectives, is chosen as a final plan of action – as strategy.
8. Preparing the Derivative Plans
Derivative plans involve short range, operating plans that are useful in day-to-day operation and provide a working basis for such operations. Such plants are developed in the form of schedules, budgets, programs, procedures, methods, rules, policies etc. The derivative plans are prepared in different departments and their timing and sequence are also specified. Such plans are prepared in concrete terms showing specific results to be attained within specified time limit and by utilizing the allocated resources. An integrative mechanism has also to be provided for effecting coordination between and among different derivative plans being executed by different departments.
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