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Planning in organizations and public policy is both the organizational process of creating andmaintaining a plan ; and the psychological process of thinking about the activities required tocreate a desired goal on some scale. As such, it is a fundamental property of intelligent behavior .This thought process is essential to the creation and refinement of a plan , or integration of it withother plans, that is, it combines forecasting of developments with the preparation of scenarios of

how to react to them. An important, albeit often ignored aspect of planning, is the relationship itholds with forecasting . Forecasting can be described as predicting what the future will look like,whereas planning predicts what the future should look like. [1]

The term is also used to describe the formal procedures used in such an endeavor, such as thecreation of documents, diagrams, or meetings to discuss the important issues to be addressed, theobjectives to be met, and the strategy to be followed. Beyond this, planning has a differentmeaning depending on the political or economic context in which it is used.

Two attitudes to planning need to be held in tension: on the one hand we need to be prepared for what may lie ahead, which may mean contingencies and flexible processes. On the other hand,

our future is shaped by consequences of our own planning and actions.

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Definition

The process of setting goals , developing strategies , and outlining tasks andschedules to accomplish the goals.

In preparing for battle I have always found that plans are useless, but planning isindispensable.Dwight D. Eisenhower

The Strategic Planning Process

In today's highly competitive business environment, budget-oriented planning or forecast-based planning methods are insufficient for a large corporation to survive andprosper. The firm must engage in strategic planning that clearly defines objectives andassesses both the internal and external situation to formulate strategy, implement thestrategy, evaluate the progress, and make adjustments as necessary to stay on track.

A simplified view of the strategic planning process is shown by the following diagram:

The Strategic Planning Process

Mission &

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Objectives

EnvironmentalScanning

StrategyFormulation

StrategyImplementation

Evaluation& Control

Mission and Objectives

The mission statement describes the company's business vision , including theunchanging values and purpose of the firm and forward-looking visionary goals thatguide the pursuit of future opportunities.

Guided by the business vision, the firm's leaders can define measurable financial andstrategic objectives. Financial objectives involve measures such as sales targets andearnings growth. Strategic objectives are related to the firm's business position, andmay include measures such as market share and reputation.

Environmental Scan

The environmental scan includes the following components:

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• Internal analysis of the firm• Analysis of the firm's industry (task environment)• External macroenvironment ( PEST analysis)

The internal analysis can identify the firm's strengths and weaknesses and the external

analysis reveals opportunities and threats. A profile of the strengths, weaknesses,opportunities, and threats is generated by means of a SWOT analysis

An industry analysis can be performed using a framework developed by Michael Porter known as Porter's five forces . This framework evaluates entry barriers, suppliers,customers, substitute products, and industry rivalry.

Strategy Formulation

Given the information from the environmental scan, the firm should match its strengthsto the opportunities that it has identified, while addressing its weaknesses and externalthreats.

To attain superior profitability, the firm seeks to develop a competitive advantage over its rivals. A competitive advantage can be based on cost or differentiation. MichaelPorter identified three industry-independent generic strategies from which the firm canchoose.

Strategy ImplementationThe selected strategy is implemented by means of programs, budgets, and procedures.Implementation involves organization of the firm's resources and motivation of the staff to achieve objectives.

The way in which the strategy is implemented can have a significant impact on whether it will be successful. In a large company, those who implement the strategy likely will bedifferent people from those who formulated it. For this reason, care must be taken tocommunicate the strategy and the reasoning behind it. Otherwise, the implementationmight not succeed if the strategy is misunderstood or if lower-level managers resist its

implementation because they do not understand why the particular strategy wasselected.

Evaluation & Control

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The implementation of the strategy must be monitored and adjustments made asneeded.

Evaluation and control consists of the following steps:

1. Define parameters to be measured2. Define target values for those parameters3. Perform measurements4. Compare measured results to the pre-defined standard5. Make necessary changes

Purpose of planning

◆ Reducing risk

◆ Reducing uncertainty◆

Supporting better decision making

◆ Establishing trust

◆ Conveying information

Nature of Planning :-I think the planning has the following inherent characteristics:1. Planning is an intellectual process :- Planning as an intellectual process, theconscious determination of course of action. Thus, it is an intellectual stimulation. Itpossesses an element of day-dreaming. In the initial stage it may involve whatmight be called vision. It involves foreseeing future developement, making forecasts

or predictions and then taking decisions. Thus, it becomes an important mentalexercise.2. Planning contributes to the objective :- A plan starts with the setting of objectives and in order to realize it develops policies, procedures, and strategies,etc. Obviously, without setting the goals to be reached and lines of action to befollowed, there is a continuous and never-ending activity of a manager to keep theenterprise going.3. Planning is a selecting process :- Planning is a selective process. It involvesthe study and a careful analysis of various alternatives and then selecting the bestone. It not only pertains to defining a problem which immediately confronts themanager, but often it mentally searches the possibilities for problems that mightappear in the future.4. Planning forms the premises for the decision of the future :- Plansbecome premises, for the decisions of the future. Detailed planning may includeseveral plans, which are mutually exclusive. It provides series or sets of decisionthat can be made under various possible circumstances. Thus, planning aids inmaking specific decisions, since it includes all of the important alternatives, which5. Planning pervades all managerial activities :- Planning is a pervasive

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activity convering the entire enterprise with all its segments and its every level of management. It is not the exclusive responsibility of top management but itextends to middle and lower management as well. It is a primary function of themanagement and its level and extent, etc. Will depend upon the level of management.

6. Planning is directed towards efficiency :- The main purpose of planning is toincrease the efficiency of the enterprise. It is an attempt on the part of a managerto anticipate the future in order to achieve better performance. It has become animportant function due to uncertain and ever changing environmental of business.7. Planning is a continuous and flexible process :- Because of uncertainties of the future the planner must be ever alert and should form his plans in such a wayas to adopt them to changing circumstances without inconvenience and unduecosts.