Planning is the process of decision making because it involves selecting a definite course of action from among established alternatives. Plans give the organization its objectives and set up the best procedures for reaching them. Planning is looking ahead and concerned with the future. When planning we have to follow the following steps.
Planning Steps in Management
1. Determine objectives
Planning starts with the determination of objectives. Objectives are the goals which the management tries to achieve. Planning has no utility if there is no objective. An example of an objective is to raise profits by 25 percent over a 12-month period.
2. Communicate objectives
The success and failure are belonging to the objective you defined. Once the objectives have been determined it is essential that they should be properly formulated and communicated to all members of the organization.
3. Developing premises
Premises are the assumptions and predictions about the future. The assumptions are the basis of planning. It helps in making realistic assumptions about sales, costs, prices, products, wages, taxes, change in fashion and habits, standard of living etc. in future.
4. Identify resources
As we start our planning, we should know what is available to us. Setting of objectives depend on available resources. If available resources such as labor, equipment and materials are not identified, objectives will be sure to fail. Potential objectives should be accomplished by the available resources.
5. Establish policies
A policy may be defined as a guideline that helps in attaining the objectives of the organization. A policy tells the members of the organization how to deal with the particular situation. Policies should be flexible.
6. Choose alternatives
Usually, there are several alternatives for any plan. One alternative may be impossible another may be expensive or one may be less desirable than others. The manager must be aware of all the alternatives. He should try to find out all the possible alternatives.
7. Create procedures and rules
A procedure is a systematic way of handling regular events. It involves a selection of a course of action and tells how a particular action is to be carried. While rules are a course of required action. They determined a course of action followed under a given situation.
8. Establish budgets
A budget is a statement of expected results expressed in numerical terms such as man-hours, machine-hours production units or other measurable numerical terms. It relates to a future period and is based on objectives to be accomplished. Examples of budgets are revenue and expense budget, capital budget, cash budget and balance sheet budget.
Programs are of arrangement of objectives, policies, procedures, rules, assignment, schedules etc. Any assignment given by managers to his subordinates must be carry out in time. They are concerned with time schedule. Examples of programs are building program, expansion program, development of new product program, and advertising program.
10. Establish standards
Establishing standard is very imperative. Standards are the plans which have to be achieved in the course of business action. Generally there are two types of standards, measurable which can be measured and non-measurable which cannot be measured. By establishment of these standards controlling becomes easy.