Business Studies I Chapter 4 Planning

Following are the main points in the definition of planning:

(i) What to do? (ii) How to do it?

(iii) When to do it? (iv) Who is to do it?

Under the process of planning the objectives of the organisation are defined in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focussed towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organisation.

Plan is a sort of commitment to accomplish all the activities needed for the attainment of special results. In this way, rules are also plans as they are helpful for the attainment of special results.

The main strategic decisions may include the following:

(i) Whether the company will continue the existing business? or

(ii) Whether the company will combine some new products to the existing business? or

(iii) Whether the company will try to acquire the maximum market share in the existing business?

Following are the features of planning:

(i) Planning focuses on achieving objectives: Management begins with planning and planning begins with the determining of objectives. In the absence of objectives no organisation can ever be thought about. With the determining of objective, the way to achieve the objective is decided in the planning. In case, it is necessary to change the previously decided course of action for the attainment of objectives, there is no hesitation to do so. It is thus clear that planning is helpful in the attainment of objectives.

(ii) Planning is Primary Function of Management: Planning is the first important function of management. The other functions, e.g., organising, staffing, directing and controlling come later. In the absense of planning no other function of management can be performed. This is the base of other functions of management.

(iii) Planning is Pervasive: Since the job of planning is performed by the managers at different levels working in the enterprise, it is appropriate to call it all pervasive. Planning is an important function of every manager, he may be a managing director of the organisation or a foreman in a factory. The time spent by the higher level managers in the process of planning is comparatively more than the time spent by the middle-level and lower-level managers. It is, therefore, clear that all the managers working in an enterprise have to plan their activities,

(iv) Planning is Continuous:

Planning is a continuous process because:

(a) A plan is prepared for a particular period. Hence, there is need for a new plan after the expiry of that period.

(b) In case of any discrepancy plans are to be revised.

(c) In case of rapid changes in the business environment plans are to be revised.

(v) Planning is Futuristic: Planning decides the plan of action - what is to be done, how is it to be done, when is it to be done, by whom is it to be done, all these questions are related to future. Under planning, answers to these questions are found out. While an effort is made to find out these answers, the possibility of social, economic, technical and changes in legal framework are kept in mind. Since planning is concerned with future activities, it is called futuristic.

(vi) Planning involves decision making: Planning becomes a necessity when there are many alternatives to do a job. A planner chooses the most appropriate alternative. Therefore, it can be asserted that planning is a process of selecting the best and rejecting the inappropriate. It is, therefore, observed that planning involves decision making.

Following are the steps of planning process:

(i) Setting Objectives: Objectives are those end points for whose attainment all the activities are undertaken. In the planning process objectives are determined and defined first of all so that all the employees concerned can be informed about them to get their complete cooperation. Objectives have a hierarchy of their own, e.g., organisational objectives, departmental objectives, and individual objectives. They are determined and defined in the same hierarchical order.

(ii) Developing Premises: The basis of planning are those factors/assumptions which influence the possible results of different alternatives. Before taking a final decision about any alternative a forecast of these assumptions is made. The rate of success of planning will be in direct proportion to the rate of the success of forecasting. The assumptions/premises of planning are of two types:

(a) Internal Premises: Capital, labours, raw material, machinery, etc.

(b) External Premises: Governmental policies, business competition, tastes of customers, rate of interest, rate of taxes, etc.

(iii) Identifying Alternative Courses of Action: Generally, there is no work which has no alternative method of doing it. On the basis of the objectives of the organisation and the limitations of planning, alternative courses of doing a particular work can be discovered.

(iv) Evaluating Alternative Courses: At this stage, it is seen as to what extent a particular alternative course can help in the attainment of the objectives of the organisation. There is, however, one problem which confronts us while analysing these alternative courses. Every alternative course has its merits and demerits. In such a situation the planners should evolve a new alternative course by a mixture of different alternative courses.

(v) Selecting an Alternative: After a careful analysis of different alternatives the best one is selected. Sometimes the analysis yields more than one alternative course with similar merits. Keeping in view the uncertainties of future it is justifiable to select more than one good alternative course. One of such alternatives is adopted and the other is kept in reserve. In case the future forecast proves wrong and the first alternative course fails, the reserve one can immediately be brought into operation and failure can be averted.

(vi) Implementing the Plan: After having decided the chief plan and the subsidiary plans, they are to be implemented. After implementing the plans the sequence of different activities has to be decided. In other words, it is decided as to who will do a particular job and at what time.

(vii) Follow Up Action: The process of planning does not end with the implementation of plans. Plans are formulated for future which is uncertain. It is of great importance that there is a constant review of plans so as to ensure success in the uncertain future. The moment there appears to be changes in the assumptions on which the plans are based, there should be corresponding changes in the plans also. In this way we can say planning is a continuously moving process.

Yes, planning does involve huge cost. But whatever cost is involved in planning it is negligible in the comparison of its importance. Following points highlight the importance of planning:

(i) Planning provides Direction: Under the process of planning the objectives of the organisation are defined in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focussed towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organisation.

(ii) Planning reduces Risks of Uncertainty: Planning is always done for future and future is uncertain. With the help of planning, possible changes in future are anticipated and various activities are planned in the best possible way. In this way, the risk of future uncertainties can be minimised.

(iii) Planning reduces Overlapping and Wasteful Activities: Under planning, future activities are planned in order to achieve objectives. Consequently, the problems of when, where, what and why are almost decided. This puts an end to disorder and suspicion. In such a situation coordination is established among different activities and departments. It puts an end to overlapping and wasteful activities.

(iv) Planning promotes Innovative Ideas: It is clear that planning selects the best alternative out of the many available. All these alternatives do not come to the manager on their own, but they have to be discovered. While making such an effort of discovery, many new ideas emerge and they are studied intensively in order to determine the best out of them. In this way, planning imparts a real power of thinking in the managers.

(v) Planning Facilitates Decision Making: Decision making means the process of taking decisions. Under it, a variety of alternatives are discovered and the best alterative is chosen. The planning sets the target for decision making. It also lays down the criteria for evaluating courses of action. In this way, planning facilitates decision making.

(vi) Planning establishes Standards for Controlling: By determining the objectives of the organisation through planning, all the people working in the organisation and all the departments are informed about ‘when’, ‘what’ and ‘how’ to do things. Standards are laid down about their work, time and cost, etc. Under controlling, at the time of completing the work, the actual work done is compared with the standard work and deviations are found out and if the work has not been done as desired, the person concerned is held responsible.

According to Koontz and O’Donnell, “Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it.” In other words, planning refers to thinking before hand. It involves the anticipation of future course of events and give it a desired direction.

Planning is the first important function of management. The other functions, e.g., organising, staffing, directing and controlling come later. In the absense of planning no other function of management can be performed. This is the base of other functions of management.

Planning is known as a mental exercise as it is related to thinking before doing something. A planner has mainly to think about the following questions:

(i) What to do? (ii) How to do it?

(iii) When to do it? (iv) Who is to do it?

Planning is a continuous process because:

(a) A plan is prepared for a particular period. Hence, there is need for a new plan after the expiry of that period.

(b) In case of any discrepancy plans are to be revised.

(c) In case of rapid changes in the business environment plans are to be revised.

Planning is Futuristic: Planning decides the plan of action - what is to be done, how is it to be done, when is it to be done, by whom is it to be done, all these questions are related to future. Under planning, answers to these questions are found out. While an effort is made to find out these answers, the possibility of social, economic, technical and changes in legal framework are kept in mind. Since planning is concerned with future activities, it is called futuristic.

Since the job of planning is performed by the managers at different levels working in the enterprise, it is appropriate to call it all pervasive. Planning is an important function of every manager, he may be a managing director of the organisation or a foreman in a factory. The time spent by the higher level managers in the process of planning is comparatively more than the time spent by the middle-level and lower-level managers. It is, therefore, clear that all the managers working in an enterprise have to plan their activities.

At all the three levels of management.

At top level of management.

It is planning.

Yes, I do agree with this statement as planning determines the way to achieve organisational goals.

Planning is a pervasive function as it is required in all organisations and at all levels of management.

Under the process of planning the objectives of the organisation are defined in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focussed towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organisation.

Planning is always done for future and future is uncertain. With the help of planning, possible changes in future are anticipated and various activities are planned in the best possible way. In this way, the risk of future uncertainties can be minimised.

Decision making means the process of taking decisions. Under it, a variety of alternatives are discovered and the best alterative is chosen. The planning sets the target for decision making. It also lays down the criteria for evaluating courses of action. In this way, planning facilitates decision making.

Planning makes the work of controlling easier. Therefore, it is considered as the base of controlling. By determining the objectives of the organisation through planning all the people working in the organisation and all the departments are informed about ‘when’, ‘what’ and ‘how’ to do things. Standards are laid down about their work, time and cost, etc. Under controlling, the actual work done is compared with the standard work and deviations are found out and if the work has not been done as desired, the person concerned is held responsible. For example, a labourer is to do 10 units of work in a day (it is a matter of planning), but actually he completes 8 units. Thus there is a negative deviation of 2 units. For this, he is held responsible. (Measurement of actual work, knowledge of deviation and holding the labourer responsible falls under controlling). Thus, in the absence of planning controlling is not possible.

Through planning.

Following are the limitations of planning:

(i) Planning Creates Rigidity: Although the quality of flexibility is inherent in planning, but it must be admitted that only small changes are possible. Big changes are neither possible nor in the interest of the organisation. Since it is not possible to introduce desired changes according to the changed situations, the organisation loses many chances of earning profits.

(ii) Planning does not work in a Dynamic Environment: Planning is based on the anticipation of future happenings. Since future is uncertain and dynamic, therefore, the future anticipations are not always true. Therefore, it can be said that planning does not work in dynamic environment.

(iii) Planning Reduces Creativity: Under planning all the activities connected with the attainment of objectives of the organisation are pre-determined. Consequently, everybody works as they have been directed to do and as it has been made clear in the plans. Therefore, it checks their incisiveness. It means that they do not think about appropriate ways of discovering new alternatives.

(iv) Planning Involves Huge Costs: Planning is a small work but its process is really big. Planning becomes meaningful only after traversing a long path. It takes a lot of time to cover this path. During this entire period the managers remain busy in collecting a lot of information and analysing it. In this way, when so many people remain busy in the same activity, the organisation is bound to face huge costs.

(v) Planning is a Time Consuming Process: Planning is a blessing in facing a definite situation but because of its long process it cannot face sudden emergencies. In such a situation, if the manager thinks of completing the planning process before taking some decision, it may be possible that the situations may worsen or the chance of earning profit may slip away. Thus, planning is time consuming and it delays action.

(vi) Planning does not Guarantee Success: Sometimes the managers think that planning solves all their problems. Such a thinking makes them neglect their real work and the adverse effect of such an attitude has to be faced by the organisation. In this way, planning offers the managers a false sense of security and makes them careless. Hence, we can say that mere planning does not ensure success, rather efforts have to be made for it.

Yes, I do agree with this statement. No doubt planning is an important tool of management but it is not free from limitations. That is why, it can be said that it is not a remedy of all types of problems. Following are the limitations of it:

(i) Planning Creates Rigidity: Although the quality of flexibility is inherent in planning, but it must be admitted that only small changes are possible. Big changes are neither possible nor in the interest of the organisation. Since it is not possible to introduce desired changes according to the changed situations, the organisation loses many chances of earning profits.

(ii) Planning does not work in a Dynamic Environment: Planning is based on the anticipation of future happenings. Since future is uncertain and dynamic, therefore, the future anticipations are not always true. Therefore, it can be said that planning does not work in dynamic environment.

(iii) Planning Reduces Creativity: Under planning all the activities connected with the attainment of objectives of the organisation are pre-determined. Consequently, everybody works as they have been directed to do and as it has been made clear in the plans. Therefore, it checks their incisiveness. It means that they do not think about appropriate ways of discovering new alternatives.

(iv) Planning Involves Huge Costs: Planning is a small work but its process is really big. Planning becomes meaningful only after traversing a long path. It takes a lot of time to cover this path. During this entire period the managers remain busy in collecting a lot of information and analysing it. In this way, when so many people remain busy in the same activity, the organisation is bound to face huge costs.

(v) Planning is a Time Consuming Process: Planning is a blessing in facing a definite situation but because of its long process it cannot face sudden emergencies. In such a situation, if the manager thinks of completing the planning process before taking some decision, it may be possible that the situations may worsen or the chance of earning profit may slip away. Thus, planning is time consuming and it delays action.

Although the quality of flexibility is inherent in planning, but it must be admitted that only small changes are possible. Big changes are neither possible nor in the interest of the organisation. Since it is not possible to introduce desired changes according to the changed situations, the organisation loses many chances of earning profits.

Planning is a small work but its process is really big. Planning becomes meaningful only after traversing a long path. It takes a lot of time to cover this path. During this entire period the managers remain busy in collecting a lot of information and analysing it. In this way, when so many people remain busy in the same activity, the organisation is bound to face huge costs.

It refers to - planning reduces creativity.

No, efforts have to be made to get success.

No, planning does not always lead to success. Because planning is time consuming and it delays action.

It means choosing the best possible alternative after a careful analysis of various alternatives.

(a) Capital (b) Raw Material.

(a) Govt policies (b) Business competition.

A minimum preliminary criteria is determined.

(a) Setting objectives, (b) Developing premises.

It means a constant review of plans so as to ensure success in the uncertain future.

Following are the types of plans:

(i) Objectives: Objectives are those end points for the attainment of which all the activities are undertaken. It is a special target to be achieved by an organisation, e.g., it can be the objective of a school to impart education in the subject of commerce to 100 students during an year.

(ii) Strategy: Strategies refer to those plans which are prepared in view of the move of the competitors and whose objective is to make possible the optimum utilisation of resources. For example, if a rival organisation in an effort to increase the sale of its product is going to reduce the price of its product or is thinking about new methods of advertisement or is going to introduce some gift scheme to attract the consumers, we shall have to plan our strategy accordingly in the light of all these things.

(iii) Policies: Policies are those general statements which are decided for the guidance of the employees while taking decision. Like Personnel Policy: Under this policy it can be decided that the basis for the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.

(iv) Procedures: Procedures are those plans which determine the sequence of any work performance. For example, the recovery of money from the debtors can be done in the following order:

(a) Writing letters (b) Contacting on telephone

(c) Meeting personally (d) Taking legal action.

(v) Methods: Method is that plan which determines how different activities of the procedure are completed. A method is not related to all steps but only to one step of the procedure. It is more detailed than procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, increase in productivity and there is reduction in costs.

(vi) Rules: Rules tell us what is to be done and what is not to be done in a particular situation. In the presence of rules there is no need to take any decision. Whatever is said in the rules has to be followed without any thinking. For example, the rule ‘No Smoking in the Factory’ is applicable to everybody and it must be observed. Provision for punishment in case of non-observing of the rule can also be made.

Strategies refer to those plans which are prepared in view of the move of the competitors and whose objective is to make possible the optimum utilisation of resources.

Characteristics of strategy

The main features of strategy are given below:

(i) Formulated by Top Level Managers: Strategy is formulated by the top level managers, the remaining management looks after its implementation.

(ii) Flexible Nature: Strategy is flexible. It means that in case of need changes can be introduced in it.

(iii) Needed in Special Circumstances: Strategy is normally not required in ordinary situations. It is needed when the organisation is facing some particular danger. Under those special situations, strategy is formulated keeping in mind the priority of the business objectives.

(iv) Stress on Proper Utilisation of Resources: Laying down strategy does not mean only giving directions, but proper arrangements for the correct use of resources are also made.

(v) Proper Implementation is Necessary: An important thing about strategy is that it is not necessary to formulate a proper strategy only but it involves its proper implementation also.

Objectives: Objectives are those end points for the attainment of which all the activities are undertaken. It is a special target to be achieved by an organisation, e.g., it can be the objective of a school to impart education in the subject of commerce to 100 students during an year.
Policies: Policies are those general statements which are decided for the guidance of the employees while taking decision. Like Personnel Policy: Under this policy it can be decided that the basis for the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.

Methods: Method is that plan which determines how different activities of the procedure are completed. A method is not related to all steps but only to one step of the procedure. It is more detailed than procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, increase in productivity and there is reduction in costs.

Rules: Rules tell us what is to be done and what is not to be done in a particular situation. In the presence of rules there is no need to take any decision. Whatever is said in the rules has to be followed without any thinking. For example, the rule ‘No Smoking in the Factory’ is applicable to everybody and it must be observed. Provision for punishment in case of non-observing of the rule can also be made.

Difference between Standing and Single-use Plans

Budget describes the desired results in numerical terms. It can be understood with the help of following diagram:

Sales Budget

(For the Year Ending Dec., 31, 2012)

(i) Policies: Policies are those general statements which are decided for the guidance of the employees while taking decision. Their purpose is to lay down a limit within which a particular work can be done or a decision taken. Objectives decide what is to be achieved and the policies tell us how it can be achieved. Sometimes we hear the following in connection with policies:

Personnel Policy: Under this policy it can be decided that the basis for the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.

(ii) Procedures: Procedures are those plans which determine the sequence of any work performance. For example, the recovery of money from the debtors can be done in the following order: (a) Writing letters, (b) Contacting on telephone, (c) Meeting personally, (d) Taking legal action.

This is the procedure of collecting money from all the debtors.

(i) Objectives: Objectives are those end points for the attainment of which all the activities are undertaken. It is a special target to be achieved by an organisation, e.g., it can be the objective of a school to impart education in the subject of commerce to 100 students during an year.

(ii) Strategy: Strategies refer to those plans which are prepared in view of the move of the competitors and whose objective is to make possible the optimum utilisation of resources. For example, if a rival organisation in an effort to increase the sale of its product is going to reduce the price of its product or is thinking about new methods of advertisement or is going to introduce some gift scheme to attract the consumers, we shall have to plan our strategy accordingly in the light of all these things.

(i) Standing Plans: It refers to those plans which are formulated once and they are repeatedly used.

(ii) Single-use Plan: It refers to those plans which are formulated to solve some special problems and these plans end the moment the problem is solved.

Rules tell us what is to be done and what is not to be done in a particular situation. In the presence of rules there is no need to take any decision. Whatever is said in the rules has to be followed without any thinking. For example, the rule ‘No Smoking in the Factory’ is applicable to everybody and it must be observed. Provision for punishment in case of non-observing of the rule can also be made.

A programme means a single-use comprehensive plan laying down the what, how, who and when of accomplishing a specific job. Through programme the managers are informed in advance about various needs so that there is no problem in future. Introduction of a new product in the market is an example of a programme.

Difference between Policy and Rule:

Difference between Method and Budget

(i) Objectives (ii) Strategy.

It is strategy.

Under procedure.

It is related with rule.

It is a programme.

Policies are those general statements which are decided for the guidance of employees while taking decisions.

Policies are those general statements which are decided for the guidance of employees while taking decisions.

Policies are guide to thinking while procedures are guide to action.

Objectives are those end points for the attainment of which all the activities are undertaken.

Strategy.

Budget.

Method.

(i) Decrease in the efficiency of initiativeness

(ii) Restriction on creativity.

(i) Environment protection 
(ii) Safety of birds

(iii) Safety of health of society.

(i) Stability in prices
(ii) Regular supply of goods

(iii) Fulfilling social responsibility

(iv) Control on hoarding & Black-Marketing

(i) Reduction in social responsibilities due to non-cooperation in social work.

(ii) Increase in production due to efficient employees.

(iii) Deterioration in Health of employees due to prolonged working hours.

(iv) Reduction in employment opportunities for local persons.

(v) Increase in salary will increase social respect/standard of living.

(i) Bad effect on students health.

(ii) Deprivation of Morality.

(iii) Instigation of social evil.

 (i) Lack of feeling of ownness in an organisation.

(ii) Lack of manager’s faith in his employees.

(iii) Wastage of time.

Methods prescribes the way or manner in which a task has to be performed to achieve the desired objective. It deals with a task stating one step of a procedure and specifying how it is to be performed. 

The function of management performed by principal is organising. Organising is the management function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan.  

Besides investment decision, the finance function is concerned with
(a) Financing decision and
(b) Dividend decision.

The managerial function stated here is planning function. Planning is a systematic process of deciding in advance what is to be done in future. Planning has some limitations and they are:
(i) Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.
(ii) Planning involves huge costs: When plans are drawn up huge costs are involved in their formulation. These may be in terms of time and money. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans.

Policies are general statements that guide thinking or channelize energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms.

Planning is a systematic process of deciding in advance what is to be done in future.
Planning has some limitations and they are:
(i) Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.
(ii) Planning involves huge costs: When plans are drawn up huge costs are involved in their formulation. These may be in terms of time and money. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans.
(iii) Planning is a time-consuming process: Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.
(iv) Planning reduces creativity: Planning is an activity which is done by the top management. As a result, middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. Thus it reduces initiative and creativity.
(v) Planning does not guarantee success: The success of an enterprise is possible only when plans are properly drawn up and implemented. Any plan needs to be translated into action or it becomes meaningless. Thus mere plan does not guarantee success as there are a lot of factors related to it.

The process of management begins with setting objectives. They are the end points or goals or predetermined results towards which all business activities are directed. Me Farland defines “objectives are the goals, aims or purposes that organisation wishes to achieve over varying period of time.

(a) Planning is continuous: Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. At the end of that period there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process.

(b) Planning is futuristic: Planning essentially involves looking ahead and preparing for the future. The purpose of planning is to meet future events effectively to the best advantage of an organisation. Thus it is futuristic in nature.

The type of plan which is time bound and linked with measurable outcome is called Objectives. They must be measurable in quantitative terms, in the form of a written statement of desired results to be achieved within a given time period.

Planning helps organisation to achieve its goals by setting specific objectives along with the activities to be undertaken to achieve the objectives. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.

Planning is deciding in advance what is to be done. Its important features include:
(i) Planning focuses on achieving objectives: Planning involves certain steps like determination of objectives, and development of policies, programs and procedures to achieve the objectives of organisation.

(ii) Planning is a primary function of management: Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. This is also referred to as the primacy of planning.

(iii) Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department.

(iv) Planning is continuous: Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. At the end of that period there is need for a new plan to be
drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process.

(v) Planning is futuristic: Planning essentially involves looking ahead and preparing for the future. The purpose of planning is to meet future events effectively to the best advantage of an organisation. Thus it is futuristic in nature.

Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms
Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken.

Planning is deciding in advance what is to be done. Its important features include:
i) Planning focuses on achieving objectives: Planning involves certain steps like determination of objectives and development of policies, programs and procedures to achieve the objectives of organisation.
ii) Planning is a primary function of management: Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. This is also referred to as the primacy of planning.
iii) Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department.
iv) Planning is continuous: Plans are prepared for a specific period of time, maybe for a month, a quarter, or a year. At the end of that period, there is a need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process.

(i) Provides directions: Planning provides directions by deciding the goals and objectives to be achieved and how such goals to be achieved what action should be taken.
(ii) Reduces overlapping and wasteful activities: Planning reduces overlapping and wasteful activities by coordinating the activities of different. As the top management are aware of the desired goals and policies and plans they coordinate their efforts and work to achieve that goal without any delays and waste. 
(iii) Pervasive: Planning must be done at all levels of the management and in all departments of the organisation. Planning is required at all departmental levels and stage in an organisation.

Planning provide directions by stating in advance what to do, how to do, when to do, and who is to do it.

At all Three Levels.

Programme.

Procedure.

Rules

Rule.

Policy

It is a plan developed for a one-time event or project.

It is used for activities that occur regularly over a period of time.

Planning in an activity which is done by top management usually the rest of the organization just implements these plans. The result is that middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. Thus planning restricts creativity.

Planning can become limiting or restriction for the business during some changes in circumstances, which require a quick decision that may go against the set rules and procedure of a business. It can restrict an individual’s freedom, initiative and desire to be creative.

The planning process clearly defines and maps out the guidelines for smooth operations
of a business in order to achieve their main goals/objective. By stating in advance how work is to be done, planning provides direction to action. It ensures that objectives /goals are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.
Planning enables a manager to look ahead and anticipate changes. By deciding in advance the task to be performed, planning shows the way to deal with changes and uncertain events. Thus, planning helps to reduce the risks of uncertainty by preparing forecasts.

Planning means deciding the most feasible course of action and resources (Human and physical) required to reach a goal, in advance. Planning is a prerequisite for controlling because planning suggests ways or a controlled design for attaining future goals through controlling. For example, car manufacturers decide to control the production of cars for consumers depending upon the calendar dates of festivals and accordingly control the purchasing coasts of auto-components and raw materials, human resources, etc, by planning ahead.

1. ‘XYZ ltd. has devoted a lot of time and money to its plan.’
    Planning is a time consuming process. It also involves huge costs.
2. ‘The competition starts increasing, so it could not change its plan to beat its competitors because huge amount of money had already been devoted to the predecided plan.’
   Planning leads to rigidity. Following a pre-decided plan, when circumstance change,may not turn out to be in the organisation’s interest.

1. Objective: '.... bring the world cup after winning.'
2. Strategy: 'For this he prepares a long-term plan and thinks the ways how to beat the competitors.'
3. Method: 'He coaches the girls to pay in different ways like defensive, offensive, etc.'
4. Procedure: 'At the outset of a match he explains who will open the match, and how
   the ball will be passed by one player to another step by step.’

1. Planning: It involves setting objective and developing appropriate courses of action to achieve these objectives. Dreams (e.g. increase sales, earn more profits, etc.) can be turned into reality only if business managers think in advance on what to do and how to do it.
2. Business environment is dynamic as it keeps on changing.

1. Planning

Characteristic of planning:

Planning focuses on achieving objective as specific goals are set out in the plans along with activities undertaken to achieve them. Planning has no meaning unless it contributes to the achievement of predetermined organizational goals /objectives.

Limitations of planning:

1. Planning leads to rigidity: Once a well-defined plan is drawn, managers may not be able to change it. They do not have flexibility to be able to cope with the changed circumstances.
2. Planning reduces creativity: Planning is done by top management. Middle and lower management neither allowed to deviate from plans not are they permitted to act on their own. They only carry out orders. Thus, much of the initiative or creativity inherent in them gets lost or reduced.
3. Planning is a time-consuming process: Sometimes plans to be drawn up takes so much of time that there is not much time left for their implementation.

The different types of plans are:

1. Objective: 'One of his objectives was to earn 50% profit on the amount invested in the first year.’
   ⟹ An objective is the end which the management seeks to achieve within a given time period.
2. Policy: ‘It was decided that raw material like flour, sugar, salt etc. will be purchased on two month credit’.
   ⟹ Policy is a general guideline which brings uniformity in decision making for achievement of predetermined objectives.
3. Procedure: ‘He also decided follow the steps required for marketing the products through his own outlets’.
               OR
   ‘He appointed Harsh as a Production who decided the exact manner in which the production activities are to be carried out’.
   ⟹  It consists of sequence of routines steps on how carry out activities. It details the exact manner in which any work is to be performed.
4. Budget: ‘Harsh also prepared a statement showing the requirement of workers in the factory throughout the year.
                OR
   ‘Mohit inform Harsh about his sales target for different products, area wise for the forth coming quarter’
   ⟹  A budget is a plan which state expected results of a given future period in numerical terms. It may be expressed in time, money or physical units.
5. Rule: ‘while working on the production table a penalty of Rs. 150 per day was announced for not wearing the helmet, gloves and apron by the worker.’
   ⟹  A rule is a statement that specifies what is to be done or not to be done.

1. Planning
2. Steps involved in planning process:
   1. Setting organizational objectives: '........ increase profits by at least 25% in the next quarter.'
   2. Identifying and evaluating alternatives courses of action: 'It has many options: to increase the working hours of labourers without additional payment, or to employ from the local community, or to sell its products sell outside the schools and colleges.’
   3. Selecting the best possible alternatives: ‘It opted to employ children from the local community, and to sell products outside the schools and colleges.’
3. Values neglected:
   1. Child labour is banned.
   2. Bad effect on student's health.
   3. Moral values. 

1. Features of business environment:
   1. Business environment is dynamic as it keeps on changing.
   2. Business environment is uncertain as it is difficult for the managers to accurately foresee future trends in the environment.
2. Planning may not work in a dynamic environment.
   The organization has to constantly adapt itself to change in environment by making changes in its plans. However, since planning cannot foresee everything, there may be obstacles to effective planning.
3. Two types of plans:
   1. Strategy: 'While making its plan, the company takes into consideration the business environment.'
   2. Budget: ‘Competition in the market upsets its financial plans; then sales targets have to be revised … accordingly cash budgets also need to be modified since they are based on sales figures.’