Management Planning Process: A Step-by-Step Guide

Management Planning Process: A Step-by-Step Guide

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Chanchal
Chanchal Aggarwal
Senior Executive Content
Updated on May 21, 2024 12:33 IST

The planning process involves setting goals, identifying actions, effectively allocating resources, and establishing timelines. It requires thorough analysis, a clear understanding of objectives, and periodic review and adjustment to ensure goals are met efficiently. 

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Planning is the first step an individual takes towards accomplishing their desired goals. Whether you want to go on a trip or achieve a specific target begins with solid planning. Similarly, planning is the first management function. It means deciding what to do, when to do and how to do. Planning is necessary for all public, private or solely-owned organizations. It is the first step in all endeavours involving resource allocation, increasing sales, generating more profits, mergers, etc. 

Understanding Planning in Management

Planning is a significant step that managers take at all levels. It involves thinking before doing. It is the blueprint of the course of the action required. The planning includes:

  • Setting objectives for a specific period.
  • Analyzing courses of action.
  • Selecting the best alternative to accomplish that objective.

The goal is to bridge the gap between where we are and where we want to be. 

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Planning Process in Management

The planning process in management involves specific steps; let us know about them.

Identifying the Need for Action

The first step is to evaluate the current state, understand why you need improvement, and recognize the hidden possibilities. The more information you collect at this stage, the more comprehensive and robust your plan will be. Managers can begin by analyzing opportunities in the internal or external environment. Techniques such as SWOT and risk analyses can also be used to find the best alternative. Once the manager finds the appropriate opportunity, the next step is to find and implement the right action.

Setting Objectives

The primary purpose of planning in an organization is to achieve specific goals. Hence, the second step in the planning process is to set objectives based on the identified opportunities. The first step is to create the final goal and then break it down into individual, departmental, and sectional objectives. Managers need to set realistic goals that are achievable within a stipulated time.

For example, Considering the rising demand for smartwatches, MNQ's goal is to increase its production rate by 50%. To achieve this objective on time, they need to plan for various aspects such as manpower, infrastructure, transportation, etc. The next step is to share that objective with the production, marketing, finance, and sales departments. This way, the company will face fewer challenges and achieve its goal on time. 

Making Planning Premises

Future circumstances should always be considered when planning; however, it is impossible to predict them ahead of time. Hence, this step involves making assumptions in advance based on past policies, ongoing trends, and forecasts. Planning premises anticipates a situation where expected actions would be performed. The planning premises can be categorized as internal and external assumptions. Internal assumptions such as quality management, policies, resource availability, etc. External assumptions include government policies, social and political environment, technological advances, etc. 

For example, MNQ company aimed to increase its smartwatch production by 50% next year. Before this, they analyzed the necessary data through forecasting. The organization set the objective by forecasting that due to the rise in the use of digital devices, demand for smartwatches will grow shortly. Hence, accurate forecasts are significant in drafting a planning premise. 

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Recognizing Alternatives

Managers have various ways of achieving the planned goal. In this stage of the management process planning, they need to find the best course of action. Collecting primary and secondary sources of information can lead to a variety of alternatives. Only those options that are directly and strategically related to the objective should be considered. Considering the pros and cons of each plan, the manager can find the best alternative. 

For example, to increase production, the manager can involve employees in gathering innovative ideas. This company can find alternatives such as leasing buildings and machinery, offering performance bonuses, using updated technology, etc. This will help the company achieve its goal in the anticipated time using the best alternative. 

Analyzing Alternatives

After finding an alternative course of action, evaluate each one in the planning process. This means checking each plan’s pros and cons and choosing which is more beneficial to achieving the objective. Factors such as cost and risk involved, time duration, etc., should be considered. 

For example- The manager will choose the alternative to increase production without increasing the overall cost.

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Selecting an Alternative

This is the decision-making stage, where the manager chooses and implements the best alternative. The manager formulates the rules, budget, policies, and programs to execute the plan accurately. The ideal plan would be one that can adapt to dynamic situations with maximum profitability and minor adverse effects. The final plan is based on scientific principles, mathematical theories, and the manager’s experience and intuition. Various plans can also be combined instead of choosing one course of action.  

For example- MNQ company will train employees to use new technology, proper communication, robust inventory management, and an employee-friendly environment as alternatives to increasing the production of their smartwatches. 

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Executing the Plan

This is the stage in the planning process where the plan is converted into action. The plan must be adequately explained and conveyed to the employees. It is also essential to consider employees’ suggestions and motivate them to execute the plan effectively. 

For example- The MNQ company starts searching for the right manpower, vendors for quality raw materials, area of production and connectivity, etc. 

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Follow-up Action

Once the plan is implemented, the next step is to check performance through periodic reviews. Check continuously whether the executed plan is delivering the desired results. If not, modify and revamp the plan. 

For example, MNQ company introduced a bonus policy for workers who work overtime or perform exceptionally well. Employees satisfied with their salaries and working conditions will likely perform at their best. This way, the company could increase its fit watch production without increasing production costs.

FAQs

What is a management planning process?

Management Planning Process is process which incorporates both short-term and long-term corporate strategies. It also provides an organizational mission statement to emphasize on the organization's vision and its direction.

Why is management planning important?

It provides direction, reduces uncertainty, establishes goals and standards for control, and facilitates decision-making by outlining clear objectives and the steps necessary to achieve them.

What are the types of plans in management planning?

There are strategic plans (long-term), tactical plans (short-term actions to support strategic plans), operational plans (day-to-day operations), and contingency plans (backup plans for unexpected events).

How do managers set objectives in the planning process?

Managers set objectives by defining specific, measurable, achievable, relevant, and time-bound (SMART) goals that align with the organization's mission and vision.

What tools are used in the management planning process?

Common tools include SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), PEST analysis (Political, Economic, Social, Technological), and Gantt charts for scheduling.

How does the management planning process align with organizational strategy?

It ensures that all planning activities are aligned with the organization’s overall strategy, helping to achieve long-term goals and maintain a competitive edge.

 

About the Author
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Chanchal Aggarwal
Senior Executive Content

Chanchal is a creative and enthusiastic content creator who enjoys writing research-driven, audience-specific and engaging content. Her curiosity for learning and exploring makes her a suitable writer for a variety ... Read Full Bio