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Unit 3: Planning

4. Contingency plans: Intelligent and successful management depends upon a constant pursuit Notes
of adaptation, flexibility, and mastery of changing conditions. Strong management requires
a “keeping all options open” approach at all times - that’s where contingency planning
comes in.
Contingency planning involves identifying alternative courses of action that can be
implemented if and when the original plan proves inadequate because of changing
circumstances.

Keep in mind that events beyond a manager’s control may cause even the most carefully
prepared alternative future scenarios to go awry. Unexpected problems and events
frequently occur. When they do, managers may need to change their plans. Anticipating
change during the planning process is best in case things don’t go as expected. Management
can then develop alternatives to the existing plan and ready them for use when and if
circumstances make these alternatives appropriate.

Task Develop a plan for responding to disasters, considering the fact that you
are the operations manager at an upcoming paint company.

3.3 Steps in the Planning Process

Planning is a vital managerial function. It is intellectually demanding. It requires a lot of time
and effort on the part of planners. They must adopt a systematic approach so as to avoid pitfalls,
errors and costly mistakes which may upset the whole business later on. Such a systematic
approach may consist of the following steps:

1. Establishing objectives: The first step in the planning process is to identify the goals of the
organisation. The internal as well as external conditions affecting the organisation must
be thoroughly examined before setting objectives. The objectives so derived must clearly
indicate what is to be achieved, where action should take place, who is to perform it, how
it is to be undertaken and when is it to be accomplished. In other words, managers must
provide clear guidelines for organisational efforts, so that activities can be kept on the
right track.

2. Developing premises: After setting objectives, it is necessary to outline planning premises.
Premises are assumptions about the environment in which plans are made and
implemented. Thus, assumptions about the likely impact of important environmental
factors such as market demand for goods, cost of raw materials, technology to be used,
population growth, government policy, etc. on the future plans are made. The demand for
fuel efficient vehicles in the late 1980s has compelled virtually all automobile manufacturers
in India to go in search of collaborative agreements with foreign manufacturers from
Japan, Germany, USA, etc. Plans should be formulated by the management, keeping the
constraints imposed by internal as well as external conditions in mind.
3. Evaluating alternatives and selection: After establishing the objectives and planning
premises, the alternative courses of action have to be considered. Liberalisation of imports
and the use of high technology in recent times has encouraged manufacturers to produce
colour television sets, electronic sets, electronic equipments, videos, computers, fuel-
efficient vehicles, etc. Thus, changes in government policy, technology, competition, etc.
pose several alternatives before manufacturers, from time to time, regarding the product
they should manufacture. Such alternatives have to be carefully evaluated against factors
like costs, associated risks involved, benefits likely to arise, availability of spare capacity,

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