CONCEPT OF PLANNING
Throughout human history, people have tried to achieve specific purposes, and in this effort some sort of planning has always found a place. In modern times, the former Soviet Union was the first nation to devise an economic plan for growth and development. After World War II, national economic planning became a popular activity, particularly among developing countries, with the goal of systematic and organized action designed to achieve stated objectives within a given period. Among market economies, France has gone the furthest in planning its economic
affairs. In the business world, Henri Fayol, the French industrialist, is credited with the first successful attempts at formal planning.
Accomplishments attributed to planning can be summarized as follows:
1. Planning leads to a better position, or standing, for the organization.
2. Planning helps the organization progress in ways that its management considers most suitable.
3. Planning helps every manager think, decide, and act more effectively and progress in the desired direction.
4. Planning helps keep the organization flexible.
5. Planning stimulates a cooperative, integrated, enthusiastic approach to organizational problems.
6. Planning indicates to management how to evaluate and check up on progress toward planned objectives.
7. Planning leads to socially and economically useful results.
Planning in corporations emerged as an important activity in the 1960s. Several studies undertaken during that time showed that companies attached significant importance to planning. A Conference Board survey of 420 firms, for example, revealed that 85 percent had formalized corporate planning activity.2A1983 survey by Coopers & Lybrand and Yankelovich, Skelly, and White confirmed the central role played by the planning function and the planner in running most large businesses.
Although the importance of planning had been acknowledged for some time, the executives interviewed in 1983 indicated that planning was becoming more important and was receiving greater attention. A 1991 study by McDonald’s noted that marketing planning is commonly practiced by companies of all sizes, and there is wide agreement on the benefits to be gained from such planning 1996 survey by the Association of Management Consulting Firms found that business persons, academics, and consultants expect business planning to be their most
pressing management issue as they prepare to enter the next century.
Some companies that use formal planning believe that it improves profits and growth, finding it particularly useful in explicit objective setting and in monitoring results.6 Certainly, the current business climate is generating a new posture among executives, with the planning process being identified by eight out of ten respondents as a key to implementing the chief executive officer’s (CEO) chosen strategy. Today most companies insist on some sort of planning exercise to meet the rapidly changing environment. For many, however, the exercise is cathartic rather than creative.
Growth is an accepted expectation of a firm; however, growth does not happen by itself. Growth must be carefully planned: questions such as how much, when, in which areas, where to grow, and who will be responsible for different tasks must be answered. Unplanned growth will be haphazard and may fail to provide desired levels of profit. Therefore, for a company to realize orderly growth, to maintain a high level of operating efficiency, and to achieve its goals
fully, it must plan for the future systematically. Products, markets, facilities, personnel,
and financial resources must be evaluated and selected wisely.
Today’s business environment is more complex than ever. In addition to the keen competition that firms face from both domestic and overseas companies, a variety of other concerns, including environmental protection, employee welfare, consumerism, and antitrust action, impinge on business moves. Thus, it is desirable for a firm to be cautious in undertaking risks, which again calls for a planned effort. Many firms pursue growth internally through research and development.
This route to growth is not only time-consuming but also requires a heavy commitment of resources with a high degree of risk. In such a context, planning is needed to choose the right type of risk. Since World War II, technology has had a major impact on markets and marketers.
Presumably, the trend of accelerating technological change will continue in the future. The impact of technological innovations may be felt in any industry or in any firm. Therefore, such changes need to be anticipated as far in advance as possible in order for a firm to take advantage of new opportunities and to avoid the harmful consequences of not anticipating major new developments.
Finally, planning is required in making a choice among the many equally attractive alternative investment opportunities a firm may have. No firm can afford to invest in each and every “good’’ opportunity. Planning, thus, is essential in making the right selection.
Throughout human history, people have tried to achieve specific purposes, and in this effort some sort of planning has always found a place. In modern times, the former Soviet Union was the first nation to devise an economic plan for growth and development. After World War II, national economic planning became a popular activity, particularly among developing countries, with the goal of systematic and organized action designed to achieve stated objectives within a given period. Among market economies, France has gone the furthest in planning its economic
affairs. In the business world, Henri Fayol, the French industrialist, is credited with the first successful attempts at formal planning.
Accomplishments attributed to planning can be summarized as follows:
1. Planning leads to a better position, or standing, for the organization.
2. Planning helps the organization progress in ways that its management considers most suitable.
3. Planning helps every manager think, decide, and act more effectively and progress in the desired direction.
4. Planning helps keep the organization flexible.
5. Planning stimulates a cooperative, integrated, enthusiastic approach to organizational problems.
6. Planning indicates to management how to evaluate and check up on progress toward planned objectives.
7. Planning leads to socially and economically useful results.
Planning in corporations emerged as an important activity in the 1960s. Several studies undertaken during that time showed that companies attached significant importance to planning. A Conference Board survey of 420 firms, for example, revealed that 85 percent had formalized corporate planning activity.2A1983 survey by Coopers & Lybrand and Yankelovich, Skelly, and White confirmed the central role played by the planning function and the planner in running most large businesses.
Although the importance of planning had been acknowledged for some time, the executives interviewed in 1983 indicated that planning was becoming more important and was receiving greater attention. A 1991 study by McDonald’s noted that marketing planning is commonly practiced by companies of all sizes, and there is wide agreement on the benefits to be gained from such planning 1996 survey by the Association of Management Consulting Firms found that business persons, academics, and consultants expect business planning to be their most
pressing management issue as they prepare to enter the next century.
Some companies that use formal planning believe that it improves profits and growth, finding it particularly useful in explicit objective setting and in monitoring results.6 Certainly, the current business climate is generating a new posture among executives, with the planning process being identified by eight out of ten respondents as a key to implementing the chief executive officer’s (CEO) chosen strategy. Today most companies insist on some sort of planning exercise to meet the rapidly changing environment. For many, however, the exercise is cathartic rather than creative.
Growth is an accepted expectation of a firm; however, growth does not happen by itself. Growth must be carefully planned: questions such as how much, when, in which areas, where to grow, and who will be responsible for different tasks must be answered. Unplanned growth will be haphazard and may fail to provide desired levels of profit. Therefore, for a company to realize orderly growth, to maintain a high level of operating efficiency, and to achieve its goals
fully, it must plan for the future systematically. Products, markets, facilities, personnel,
and financial resources must be evaluated and selected wisely.
Today’s business environment is more complex than ever. In addition to the keen competition that firms face from both domestic and overseas companies, a variety of other concerns, including environmental protection, employee welfare, consumerism, and antitrust action, impinge on business moves. Thus, it is desirable for a firm to be cautious in undertaking risks, which again calls for a planned effort. Many firms pursue growth internally through research and development.
This route to growth is not only time-consuming but also requires a heavy commitment of resources with a high degree of risk. In such a context, planning is needed to choose the right type of risk. Since World War II, technology has had a major impact on markets and marketers.
Presumably, the trend of accelerating technological change will continue in the future. The impact of technological innovations may be felt in any industry or in any firm. Therefore, such changes need to be anticipated as far in advance as possible in order for a firm to take advantage of new opportunities and to avoid the harmful consequences of not anticipating major new developments.
Finally, planning is required in making a choice among the many equally attractive alternative investment opportunities a firm may have. No firm can afford to invest in each and every “good’’ opportunity. Planning, thus, is essential in making the right selection.
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