The various steps involved in the planning process are:
- Analysis of the environment: Planning begins from the analysis of the environment. A planner has to analyze the external and internal environment. For this SWOT analysis is most suitable. Strength and Weaknesses are the internal factors whereas opportunities and threats are the environmental factors which are to be analyzed.
- Setting the objectives: The second step of planning is to set objectives and goals for the organization as a whole and for each department. The planner has to determine overall organizational objectives and the departmental objectives. So managers should have an opportunity to contribute their ideas for setting their own objectives and of the organization.
- Develop premises: Planning premises are the assumptions about the future on the basis of which the plans will be ultimately formulated. They provide environmental components, facilities and boundaries for the implementation of plan in practical operation. Forecasting is an essential part of premises. The planning premises are cost of producion, capital investment, cost per unit, employee morale, goodwill etc.
- Determine and evaluate alternatives: The fourth step is to search and identify the alternative course of action. A number of alternatives are available to a planner for the attainment of stated objectives. But the most relevant alternatives must be listed down so that selection is made easier. Once various alternatives are identified, they must be well analyzed with their strong and weak points.
- Selection of Best alternative: When the alternatives are determined the planner now selects the best alternative. It helps to achieve the objectives and targets. The planner has to select the best and the fittest alternative by considering internal and external environmental factors.
- Formulation of a derivative plan: Derivative plans are the backing plans which are very essential. Once the basic plan has been formulated, it must be translated into day to day operation of the organization. The derivative plan are meant to support the achievement of basic plans.
- Budget formulation: After decisions are made and plans are set the next step is giving them sufficient funds to carry them out. Optimum budgeting must be done for every course of action.
- Implementation of a plan: Once the plans are set up, now the plans must be well informed and shared with the employees and managers expecting full commitment and trust. Finally, the plans must be carried out.
- Follow up action: Obviously once a plan is carried out it generates certain output. Reviewing the planning process gives feedback to the planner so that corrective measures can be taken if any weaknesses are identified.
