STEPS IN THE PROCESS OF PLANNING

There is no standard planning process. Each enterprise has to develop its own modus operandi for planning depending on its size, nature and environment. However, the main steps in planning process are as follows:
1. Analysing the Environment The first step in planning is a thorough analysis of the external and internal environment of the enterprise. Analysis of external environment will help to identify the opportunities and constraints for the enterprise. To be effective, planning must enable the organisation to adapt itself to the environmental changes (market conditions, government policies, technological developments, cultural norms, etc.). Therefore, managers must carefully analyse and interpret the complex environmental forces. It is necessary to collect and analyse relevant information as the quality of information determines the quality of planning. Analysis of the internal environment (resources and requirement will help to identify the strengths and weaknesses of the enterprise.
2. Establishing Objectives. Plans are formulated to achieve certain objectives. Therefore, establishment of organisational objectives is an important step in planning. The organisational objectives should be established in the light of perceived opportunities and resources of the organisation. They should be clearly specified and measurable as far as possible. They should be spelled in key areas of operations and for different divisions and departments.
3. Determining Planning Premises. Planning is done for future which is uncertain. Therefore, certain assumptions are made in preparing plans. These assumptions or conditions underlying planning should be clearly defined through scientific forecasting of future events. Planning premises are the limitations that lay down the boundary for planning.
Planning premises can be of several types. Controllable or internal premises are under the control of management, e.g., resources, techniques and policies of the enterprise. On the other hand, uncontrollable or external premises are beyond the control of the enterprise. These relate to rate of population growth, general economic conditions, government policies, political situation, etc.
4. Developing Alternative Courses of Action. There can be several ways of achieving the same objectives. The various available alternatives should be identified. For example, in order to increase sales an enterprise may intensify sales efforts, explore new markets or develop new products. In order to develop all possible alternatives, a manager must have imagination, skill and experience.
5. Evaluating Alternatives. The various alternatives are compared and weighed in the light of objectives and premises. Each alternative has its merits and demerits but all alternatives cannot be equally appropriate or practicable. Each alternative should be closely examined to determine its suitability. Several statistical and mathematical techniques are used to evaluate alternative courses of action.
6. Selecting the Best Course. After evaluating the various alternatives, the most appropriate alternative is selected. This is the point at which the plan is adopted. Sometimes, the evaluation may suggest that more than one alternative is good. In such a case, a manager may choose several alternatives and combine them in action.