The increased importance of planning in a business enterprise is the direct result of the changing environment in which the enterprise operates. The modern manager must continually anticipate changes which will require discarding old ways and adopting new ones. Thus, the need for planning results from various changes in the environment. The aspects of this changing environment are:
1.Changes in technology
2.Changes in government policy.
3.Changes in overall economic activity, including prices, employment of labor, raw materials etc.
4.Changes in the nature of competition.
5.Changes in social norms and attitude
Scientific managers, starting with Taylor have advocated that the planning function be separated from actual performance. Because line executives have limited time available, the function tends to be delegated to specialists. This delegation helps to set aside time for planning and avoids continual â€œfighting of fires,â€ caused by the failure to think in advance. However, the use of planning specialists increases the need for means by which a set of plans by one group of specialists can be coordinated with plans set by another of specialists.
The planning process can be viewed systematically as composed of five elements. Each of these elements may be handled by different groups of people, as indicated in the following outline of the model:
1.Setting Primary and Intermediate Goals:
The primary goals are affected by the personal values of the top management. The principal goal setters in a business firm are the board of directors, president, executive committees, and stockholders. The intermediate goals help to clarify the primary goals and are usually set by Vice-president, General managers and functional specialists. Examples of intermediate goals are diversification of a product line, concentration on production of a limited line of products, reasonable prices, volume production and so on.
2.Search for opportunities:
The search or scanning element is primarily a data collecting function in which a group of specialists directs its attention toward discovering in the environment opportunities for the firmâ€™s activities. Element includes forecasting events in the future and identifying changes in demand competition, technology, finances and industrial structure. The principal searchers are market researchers, economic forecasters, research and development scientists, and other technical specialists who influence planning.