Principles of Planning
Principle of Contribution to Objective
Developing and facilitating the realization of organizational goals and objectives is the aim and purpose of plans, and their components. To accomplish organizational objectives more effectively and economically, long-term plans need to be interwoven with medium-term ones, which, in turn, need to be linked to short-term ones.
Principle of Limiting Factors
The factors that limit the development of alternative plans, strategies, policies, procedures, and standards must be taken into consideration when developing alternative plans, strategies, policies, procedures and standards.
Principle of Pervasiveness of Planning
All levels of management are involved in planning. Long-range planning and strategic planning are the responsibility of top management, while intermediate and short-range planning are the concerns of middle and operative management.
Principle of Navigational Change
- To maintain a course towards a desired goal, managers should periodically check on events and redraw plans. Navigators must continuously check whether their ships are following the right path in the vast ocean to reach the destination in time. A manager should also ensure that his plans are being implemented properly.
- When unexpected events occur, he should change the direction of his plans. Plans are more effective if they contain a certain degree of flexibility. Managers are responsible for adapting and changing plans in response to a constantly changing environment that cannot be predicted in advance.
Principle of flexibility
- Organizational plans should incorporate flexibility. The possibility of error in forecasting and decision-making, as well as the uncertainty of the future, force managers to be flexible in their planning.
- Flexibility means management should be able to modify a plan as circumstances change, without delay or cost, so that activities keep moving towards established goals. An unexpected slump in demand for a product will therefore require changes to both the sales plan and the production plan.
- Only when these plans possess the characteristics of flexibility can they be changed. Planning with flexibility in mind makes it easier to adjust plans to future uncertainties or changing environments.
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Proper planning prevents poor performance
When you plan your actions carefully, you are less likely to make mistakes or get poor results. Planning ahead allows you to anticipate potential problems and prepare solutions. By avoiding costly errors and missing deadlines, you’ll be able to achieve better performance as a result. Planning will help you achieve your goals more effectively and set yourself up for success.
Budgeting supports the planning process by encouraging all of the following activities except
- a. increasing the motivation of managers and employees by providing agreed-upon expectations
- b. requiring all organizational units to establish their goals for the upcoming period
- c. directing and coordinating operations during the period
- d. improving overall decision making by considering all viewpoints, options, and cost reduction possibility.
Following are some activities that budgeting encourages as part of the planning process:
- Preparing a budget for the period and setting financial goals.
- The allocation of resources to achieve these objectives and goals.
- Finding out how much it will cost to achieve these goals and objectives.
- Establishing goals and objectives and monitoring their progress.
- Assessing potential financial risks and addressing them.
- Staying on track with financial goals and objectives by adjusting plans and strategies as needed.
Budgeting does not typically support the coordination and management of operations during the period. Operational management is typically responsible for this.
In order to reach financial goals and objectives, budgeting is an integral part of any organization’s planning process. The purpose of a budget is to allocate resources and track progress towards reaching financial goals within an organization. Budgeting allows the budget to be adjusted in order to address possible financial challenges and risks throughout the period. By doing so, the financial goals and objectives of the organization can be maintained even in the face of unexpected obstacles.
Further, budgeting encourages the tracking and monitoring of financial performance, which makes it possible to quickly identify areas of underperformance or overperformance. In order to optimize the organization’s financial performance, plans and strategies must be adjusted timely.
Using a budget to establish financial goals and objectives, allocate resources, track progress, and identify and address potential financial risks or challenges is a key part of the planning process.