Planning process

The essentials

The planning process is a series of logical steps that managers follow to prepare a plan. It moves from deciding what is to be achieved, to choosing the best way of achieving it, to putting the plan into action and checking on it.

Key points

• Setting objectives: deciding what the organisation wants to achieve, such as increasing sales by a certain percentage.
• Developing premises: making assumptions about the future, such as expected demand, interest rates or government policy. Premises are the base on which plans are drawn up and should be the same for all managers.
• Identifying alternative courses of action: listing the different ways in which the objectives can be achieved.
• Evaluating alternative courses: weighing the positive and negative aspects of each alternative in the light of the objectives.
• Selecting an alternative: choosing the best, most feasible and profitable plan with the fewest negative consequences. This is the real point of decision-making.
• Implementing the plan: putting the plan into action; this involves the other functions such as organising and staffing.
• Follow-up action: monitoring the plan to see that it is being carried out and that activities follow the schedule.

Exam tips

• Remember the order: objectives, premises, alternatives, evaluation, selection, implementation, follow-up.
• Forecasting is an important tool for developing premises.

Common mistakes

• Placing 'selecting an alternative' before 'evaluating alternatives'. Alternatives must be evaluated first.
• Confusing premises (assumptions about the future) with objectives (desired results).