Every organization must plan its business activities. The services or products offered are not the only things managers need to think about. Planning all organizational activities in the short and long term is a careful step in laying the foundations of any business company.
Main stages in the planning process
Uncertainty and rapid changes in the environment, increasing competition, limited resources of organizations, and their pursuit of high efficiency require planning as a mandatory and important government function. It determines the goals to be pursued, the means to achieve them following the capabilities of the organization and the impact of the external environment and coordinates all activities of employees of the company.
Planning is a process in which management looks to the future and finds alternative courses of action. Reference: “Planning a project in Agile Management: Research and deliverables”, https://bvop.org/learn/pmplanning/
Through it, the organization determines what it wants to do, when and how to do it, and who will do it specifically.
Planning is carried out both for each activity and each level of management of the organization.
The significance of the organization’s plan can be sought in the following main directions:
The plan is an effective management tool for decision-making. It sets out in detail what needs to be achieved and how it needs to be achieved, and thus sets out the guidelines and frameworks within which each management decision must be taken;
A plan is an effective tool for evaluating the activities of the organization as a whole and all departments and staff. Periodic comparison of the results with the set goals and objectives reveals how well it has worked. This allows timely actions to be taken to correct weaknesses;
The plan is the basis for the formation of a staff remuneration system. Each member of the staff of the organization (or group) receives the obligation to perform a specific task (within a certain period), which is necessary to achieve the goals set in the plan. The assessment of the degree of the set tasks is a reliable basis for the formation of fair, individual, or group remuneration;
The plan helps motivate the managers involved in its development. Once involved in the creation of the plan, managers at different levels of management feel obliged to do their best to implement it;
A plan is a tool for raising the qualification of managers
The managers and staff involved in developing the plan better understand the individual components of the organization’s operations and how they are effectively combined. Thus, they get a clear idea of the composition of the organization, the problems are the tasks of individual units;
The plan informs the staff about the goals and tasks before it and is the basis for evaluating their results. The plan informs each staff member what the organization’s goals are and what it is specifically expected to accomplish, how to evaluate individual and overall results. Comparing the results with the set goals and objectives allows each member of staff at any time of plans to make their assessment of the fruitfulness of their efforts, as well as the overall activities of the organization;
Types of plans according to the validity period:
- Long-term – for 3, 5, 10 to 25 years. Their development is the responsibility of top managers and is performed by special staff. They reflect in general important for the organization problems related to its development and market position.
- Medium-term – are created for a period of 1 to 3 years. They concretize long-term plans.
- Short-term plans – cover a period of up to 1 year. They are specific and include the activities of the lowest levels of management in the organization. They can be used to plan current production activity, advertising campaigns, etc.
Main stages of planning
- Analysis of the current situation
- Formation of the system of goals
- Evaluation and analysis of future prerequisites
- Identifying alternative courses of action
- Evaluation of alternatives
- Choosing an alternative
- Drawing up support plans
- Budget development
The analysis of the current situation is the starting stage of the planning process. In care, management analyzes the strengths and weaknesses of the organization, as well as the favorable opportunities and threats from the environment. This is necessary for setting realistic tasks and choosing the right path to achieve them.
Formulating goals is one of the most important stages. It builds a complete system of hierarchically related goals for all levels of government. In addition to the desired results, the time for achieving them is also determined here.
In assessing the analysis of future prerequisites, possible future changes are identified, both externally and internally in the organization. All this is done with the help of the organization based on existing long-term company plans.
The next step is to identify alternative ways to achieve the goals. This is necessary because the same goal can be achieved in different ways. At this stage, only the most promising alternatives are selected.
A careful evaluation of the alternatives follows. The main criterion for this is the probability of achieving the set goals at low cost and high profit.
At the sixth stage, based on the assessment, a choice is made of the path that the organization will take to achieve its goals. At this stage, the management decision is made, determining the set of activities that will be performed. With that, the plan is made.
For the actual implementation of this plan, it is necessary to draw up support plans and the obligations to be distributed among units and departments. This is done at the next stage – plans are drawn up for the purchase of the necessary materials, equipment, for hiring and training of workers to develop a new product and others.
At the last stage in the planning process, the budgets for both the main and the auxiliary plans are developed. They determine both the costs and the allocated funds and the revenues.