Discuss the process of planning. In your opinion the process of planning and controlling are inter-linked or not? Explain with suitable examples.
Ans. In the context of business enterprises (and other organisation in genera) planning is defined as the process of determination of the desired future destination and direction in terms of objectives and aspirations of the organisation, as also the ways and means of achieving them over a specific period of time. It involves visualisation of the likely future conditions in the environment relevant for purposes of making decisions on the desired objectives as also the courses of action required to attain them.
For an on-going enterprise, planning includes analysis and assessment of past performance, present position, future expectations and aspirations, status of resources, strengths and weaknesses, present and likely future conditions in the behavior of relevant variables in external environment. All these activities provide the basis for the enterprise to set its future objectives envisaging an image of what the enterprise would like to be, where it would like to go, what it would have to do, how and when. It is partly directed to make the enterprise adopt with the changing conditions of the environment, and partly to influence those conditions and changes so as to make them fit into the desired conditions of the enterprise. Planning is a conscious blue-printing of the desired degree of continuity, stability and change in the future functioning of the enterprise backed by adequate commitment of resources, efforts and action initiatives.
To ensure that a plan is effective and succeeds in achieving its objective, it must have the following components:
1. Planning must start from top. Objectives for the entire company are defined by the top management and then they percolate down throughout the organisation. Thus, logically, planning too must start at the top. For instance, one of the objectives of the top managemtnt of Beautiful Books Ltd. (a company specialising in publishing books on Indian culture and history) is to increase its turnover from Rs. 1.15 crore to Rs. 5 crore in 1987-99. The marketing director accordingly draws up a plan for increasing sales in existing markets and the new markets to be penetrated. From this overall plan, each area marketing manager will make his annual, quarterly and monthly plans. And in turn each area sales supervisor will draw the plan for his entire sales team.
2. Planning must be flexible. Planning is needed to anticipate and prepare for the unknown events of the future. To the extent that the future is uncertain and events may or may not occur, planning must be flexible. Flexibility implies ability to keep moving towards objectives despite unexpected occurrences. Flexibility is especially needed where there is high degree of uncertainty and risk the lead time involved in implementing the plan is long, and cost of making mistakes is high. The R&D cell of a television manufacturing company designed a completely indigenous circuit for black and white television after 18 months of experimentation and used 100% move funds than were allocated to it. The success of the circuit is critical to the company as its entire marketing strategy for the coming 2-3 years is based on this. If the circuit is successful, the company will be able to establish its strong position in the market. However, if the circuit shows signs of failure the company is ready with its plans to airlift the circuits at a day’s notice from its Japanese collaborator. Thus one way to allow for flexibility is by developing alternate or contingency plans.
3. In the short-run, careful detailed planning without allowing for much flexibility will improve operational efficiency. But under emphasis on inflexibility or rigidity may do more harm than good. Every manager has to find his own level on balance in allowing for flexibility.
Short-term planning must be integrated with long range planning. The long range plans, must be broken down into short-term plans on the basis of which the managers can take action. There can always be a difference of opinion on what constitutes the long and short-term. Some define five years as the long-term and anything up to one years as the short-term. In reality the definition will vary according to the nature and scope of organisational activity for which planning is being undertaken.
4. Plans are good only if the people down the line properly implement them. An effective way to ensure this is to involve the people responsible for implementation in the entire process of planning.
However, despite all the above precautions, plans sometimes fail because of environmental and internal limitations. Government policies, regulations, laws, statutory obligations, and rapid social and technological changes pose external limitations on the company’s planning effort. Within the company, cumbersome procedures, capital inflexibility, in terms of investments already made, inadequate or inaccurate information are the possible barriers which a company may face. In my opinion planning and controlling are inter-linked which is most important part in the organisation.
