Planning is the primary function of management. It is the methodology by which certain objectives are identified and strategies are devised for its subsequent realization. It is a preparatory step. It is a systematic activity which determines what, why, how, when, how, who and where is going to perform a specific job.

Characteristics of Planning:

Primary or Basic Function:

Planning is the foundation on which all other managerial functions rest. It serves as a guide and framework for organizing, staffing, directing and controlling. Hence planning is the basic or primary or fundamental function of management.

Intellectual Process:

Planning is a mental exercise involving creative thinking, sound judgment and imagination, and not guesswork. It is a process rather than behaviour at a given point of time. The process determines the future course of action. It involves processes of understanding goals and facts, perception, analysis, estimation and thought.

Future-Oriented:

Planning primarily involves looking into the future. It requires anticipating future situations that ought to lead to correct decisions about the future course of action. It is a mental predisposition for things to happen in the future. Through forecasting, future events and conditions are anticipated and plans are drawn accordingly.

Goal-Oriented:

Planning is made to achieve set the objective of the business. Specific goals or objectives are set out in the plans along with the activities to be undertaken to achieve the goals. Thus, planning is purposeful. If goals are not achieved then there is the failure of the plan. There is a wastage of individual efforts & energies. It provides a sense of direction to various activities.

Decision Oriented:

The need for planning arises only when alternatives are available.  Planning involves selecting a suitable course of action among various alternatives. Decision making that requires specific actions necessary to achieve future goals becomes an integral part of the planning process. Thus, decision making is an integral part of planning. The manager has to pick the best depending upon requirements & resources of the enterprises

Top Management Function:

Planning is undertaken at all levels of management as every level is concerned with determining a future course of action.

Flexible:

Planning is flexible as commitment is based on future conditions that are always changing. Since the future is unpredictable, planning must provide enough room to cope with the changes occurring in the future. Under the changed circumstances, the original plan of action must be revised and updated to make it more practical and up to date.

Pervasive:

Planning is required at all levels of management, in all departments and continuous managerial function that involves the complex processes of perception, analysis, conceptual thought, communication decision, and action. The scope of planning may differ from one level of management to another. The top-level management is concerned about planning the organization as a whole. The middle-level management may be more specific in departmental plans while the lower level management plans the implementation of the plan on day to day basis.

Continuous and Dynamic Activity:

Planning is a never-ending activity due to the dynamic business environment. In order to be successful at planning, one has to adjust to changes taking place in the environment and react accordingly. Plans are prepared for specific period f time and at the end of that period, they are reevaluated and redesigned as per new requirements and changing conditions. Continuity of planning is related to the planning cycle. It means that a plan is framed, it is implemented, and is followed by another plan, and so on.

Basis of Control and Efficiency:

As per, Koontz and O’Donnell (1986) ‘plans furnish the standards of control. Unplanned action cannot be controlled and any attempt to control without plans would be meaningless.’ It leads to the accomplishment of objectives at the minimum possible cost. It ensures optimum utilization of resources and avoids wastage of resources. Planning leads to saving of time, effort and, money and optimum utilization of men, money, materials, methods, and machines.

Steps Involved in Planning:

Planning function of management is an intellectual function which involves the following steps:-

Step – 1: Establishment of Goals and Objectives of the Organization

Every organization must have certain goals or objectives. Objectives may be set for the entire organization and each department or unit within the organization. How all departments would contribute to the organizational goals is the plan that is to be drawn up.

It starts with the setting of goals and objectives of the organization. The attention of the manager is always at the end result of all activities planned. All the objectives should be stated in a clear, precise and unambiguous language. At the same time, they should be specified in a quantitative manner with a specific time period. It avoids confusion. Some times the objectives of some criteria like the performance of personnel cannot be specified quantitatively, then clear expectations should be mentioned.

In short, the objectives should be specific, measurable, archivable, realistic and time-bound. If the end result is clear it becomes easier to work towards the goal. Objectives have to percolate down to each unit and employees at all levels.

Step – 2: Establishment of Planning Assumptions or Premises:

Planning premises are the assumptions about the likely shape of events taking place in the future. They form the basis of planning. Therefore, the manager is required to make certain assumptions about the future.

In determines probable causes of deviation of the actual plan and probable causes behind it. It also determines probable obstacles in the way of business. It determines which causes and obstacles can be avoided and corresponding actions are decided to avoid them to the maximum extent or to minimize the effect on the business.

The base material for the assumptions may be in the form of forecasts, existing plans or any past information about policies. The premises must be the same for all and there should be total agreement on them. All managers involved in the planning should be familiar with and use the same assumptions. So that there is no discrepancy. Accurate forecasts, become essential for successful plans.

Planning premises may be internal or external. Internal premises includes capital investment policy, management of labour relations, philosophy of the management, The external premises include socio-economic, political and economic factors. Internal premises are controllable and external are non- controllable.

Step – 3: Identifying Alternative Course of Action:

Once objectives are set, assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives. All the alternative course of actions have to be considered. The course of action may be routine or innovative. If the project is important, then more alternatives should be generated and thoroughly discussed amongst the concerned members of the organization.

Step – 4: Evaluating Alternative Courses:

Each course will have many variables which have to be weighed against each other. Each and every alternative is evaluated by considering its pros and cons in reference to the resources available and the requirements of the organization. The positive and negative aspects of each proposal need to be evaluated in light of the objective to be achieved. Feasibility and consequences of all the alternatives are studied.

Step – 5: Selecting an Alternative:

This is the step of decision making. The manager will have to apply permutations and combinations and select the best possible course of action. After scientific evaluation and using quantitative techniques, the best alternative is chosen. The selected alternative would be the most feasible, profitable and with least negative consequences.

When alternatives can not be subjected to mathematical analysis, the manager’s experience, judgment, and intuition play an important role. Sometimes, a combination of plans may be selected instead of one best course.

Step – 6: Formulation of Derivative Plans:

Derivative plans are the sub plans or secondary plans which help in the achievement of the main plan. They indicate time schedules, sequences of the tasks. These are detail plans which include policies, procedures, rules, programmes, budgets, schedules, drawings etc. These plans will flow from the basic plan and support, expedite the achievement of basic plans.

Step – 7: Securing Co-operation:

Next step is to take subordinates or those who have to implement these plans into confidence. Due to which subordinates may feel motivated since they are involved in the decision-making process. They give suggestions and improvements in the plan.

Step – 8: Implementing the plan:

The step is concerned with putting the plan into action. This step involves other departments of the organization. This step would also involve organizing for labour and purchase of machinery.

Step – 9: Follow up/Appraisal of Plans:

This step establishes a link between planning and controlling function. To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved. After choosing a particular course of action, it is put into action. The appraisal is done on the basis of feedback or information received from departments or persons concerned. It helps management to locate and correct deviations or modify the plan.

Next Topic: Significance of Planning

Management > General Management > Functions of Management > Planning – Primary Function of Management

The post Planning – Primary Function of Management appeared first on The Fact Factor.

What is a Statistic?

• Statistics has been defined differently by different authors and each author has assigned new limits to the field which should be included in the scope of statistics
• Seligman, defines “It is a science which deals with the method of collecting, classifying, presenting, comparing and interpreting the numerical data to throw light on inquiry.
• Horace Secrist defines “It is the aggregate of facts affected to mark extent by the multiplicity of causes, numerically expressed, enumerated or estimated according to a reasonable standard of accuracy, collected in a systematic manner for the predetermined purpose and placed in relation to each other”.
• Prof. Boddington defined “It is the science of estimates and probabilities”.
• Croxton and Cowden define “ It is the science of collection, presentation, analysis, and interpretation of numerical data from logical analysis”.
• A.L. Bowley defines, “It may be called the science of counting and may be called the science of averages”.
• According to King, “It is the method of judging collective, natural or social, the phenomenon from the results obtained from the analysis or enumeration or collection of estimates”.
  We can see that the definition given by Boddington is complete and covers all characteristics of Statistics.

Components of Statistics:

• Collection of Data
• Presentation of Data
• Analysis of Data
• Interpretation of Data

Importance of Statistics in Business and Management:

Accounting:

• Statistical sampling techniques are used during the conduction of audits for clients. It also helps in detecting the trend and make a projection for next year.

Finance and Investments:

• Statistical information can be used to study the trend in securities and that can be used to provide investment recommendations. Statistical methods help in selecting securities which are safe and have the best prospects of yielding a good income.

Marketing:

• Statistical analysis is frequently used in for making a decision in the field of marketing it is the first step to find out what can be sold and to whom. Then using statistical methods a suitable strategy is formulated. A statistical analysis of data on production purchasing power, manpower, habits of competitors, habits of consumer, transportation cost can be done before entering a new market.
• Nowadays electronic scanners at retail checkout counters are used to collect data and to study the buying behavior of the customer. The data obtained in this procedure is used to analyze it to formulate future marketing policies.

Production:

• Statistical methods are used in quality control during the production process. It is also used to control and manage the flow of production. Statistical methods are used in the scheduling of men and machines.

Banking:

• Statistical data gathering and analysis of the information, help banks in their own business and also give an idea of the general economic situation of every segment of business in which they may have interest. Using this analysis they can formulate their lending policies.

Control:

• The management control process combines statistical and accounting method in making the overall budget for the coming year including sales, materials, labor and other costs and capital requirement.

Purchase:

• Purchase department can fix their schedule of purchasing orders depending upon the trends in consumption of raw materials and inputs. Thus they decide what to buy? When to buy? And how much to buy?

Economics:

• Statistical techniques and analysis are used for forecasting the future of the economy. Time series like moving averages, indicators like inflation index are statistical methods. We can consider statistics as the backbone of economics.

Categories of Statistics:

• Statistics is broadly categorized into two parts based on their functions a) Descriptive and b) Inferential.

Descriptive Statistics:

Descriptive Statistics is the term given to the analysis of data that helps describe, show or summarize data in a meaningful way.

• Descriptive Statistics involves collecting, organizing, summarizing, and presenting data.
• It is useful in clinical research while communicating the results with experiments.
• The methods used in statistics are preparing tables, drawing graphs, measuring central tendency, and the variation of the data from the central value.

Characteristics of Descriptive Statistics

• Descriptive statistics do not allow us to make conclusions beyond the data we have analysed or reach conclusions regarding any hypotheses we might have made.
• They are simply a way to describe our data.
• It enables us to present the data in a more meaningful way, which allows simpler interpretation of the data.
• There are two general types of statistic that are used to describe data: Measure of central tendency (mean, median, and mode), and Measure of spread (range, quartiles, absolute deviation, variance, and standard deviation).
• The data is represented by tables, graphs, and charts.
• This provides a quick method to make comparisons between different data sets and to spot the smallest and largest values and trends or changes over a period of time.

Limitation of Descriptive Statistics:

• They only allow us to make summations about the people or objects that we have actually measured.
• We cannot use the data we have collected to generalize to other people or objects. Thus no general inference can be obtained.

Inferential Statistics:

Inferential Statistics are techniques and methods that allow us to use samples to make generalizations about the populations from which the samples were drawn.

• Inferential Statistics involve making an inference, hypothesis testing, relation determination, and making predictions.
• The data obtained in descriptive statistics are analyzed and a valid inference is made out of it for effective decision making for managers and professionals. In this type deductions and conclusions are made regarding the population under study by collecting a sample from the population.

Characteristics of Inferential Statistics:

• They are produced through complex mathematical calculations that allow scientists to infer trends about a larger population based on a study of a sample taken from it.
• Scientists use inferential statistics to examine the relationships between variables within a sample and then make generalizations or predictions about how those variables will relate to a larger population.
• Techniques that social scientists use to examine the relationships between variables, and thereby to create inferential statistics, include linear regression analyses, logistic regression analyses, ANOVA, correlation analyses, structural equation modeling, and survival analysis.
• Scientists used techniques like chi-square and t-test  which tell them the probability that the results of their analysis of the sample are representative of the population as a whole.
• Inferential statistics start with a sample and then generalizes to a population. This information about a population is not stated as a number. Instead, scientists express these parameters as a range of potential numbers, along with a degree of confidence.

Limitation of Inferential Statistics:

• It depends on the data provided (sample selected) and therefore, we cannot ever be completely sure that the values/statistics calculate are correct. There will always be a degree of uncertainty in this study.
• The inferential tests require the user to make educated guesses (based on theory) to run the inferential tests. Again, there will be some uncertainty in this process, which will have repercussions on the certainty of the results of some inferential statistics.

Hypothesis:

The idea you are testing is called the hypothesis. Statistics is used to confirm or refute some idea. Often in statistics, we confirm or refute the null hypothesis, denoted as H0. It is the hypothesis that essentially the results we get are random and are not due to some real relationship. In other words, if the null hypothesis is true, then the apparent relationship is really simply a random coincidence.

Now Watch the Following Video

Next Topic > Characteristics, Functions and Limitations of Statistics

Management > Managerial Statistics > Introduction to Statistics

The post Introduction to Statistics appeared first on The Fact Factor.