Planning is defined as- a long look ahead, broad look around, and a searching look within. Planning is very important in an uncertain environment. These days the word ‘Strategy’ has taken the place of the word ‘Planning’.

Strategy is competitive planning as it takes care of competitors and SWOT model, i.e. Strength – Weakness – Opportunities – and Threats.Advantages of Planning

Planning makes companies competitive. Planning deals with risk factors and eliminates waste. It reduces cost. It helps the company to face future challenges. It smoothes the advancement of controlling. Planning gives direction and helps in formulating specific strategies. It improves efficiency and introduces various systems in the organization. Planning can warn about deviations and helps in assessing performance.

Limitations of Planning

Planning can minimize the risk, but cannot eliminate the risk. The success of planning depends upon implementation (planning on paper is as good as no planning). It depends on reliability and authenticity of information. It depends on internal and external variables which are beyond the control of the planner. Difficulty of accurate premises (future is not known, may lead to error).internal and external in flexibilities. Planning process is quite costly and time consuming.

Essentials of a good Plan

Planning must be continuous and creative. Planning process must be communicated to the lowest possible level. Planning should be time bound and must exist at all levels in the organization. It must motivate people towards its implementation, so it must have an inbuilt rewards system for effective execution. Planning should not be rigid (it must be flexible to respond to sudden changes in internal and external environment). It must coordinate the efforts of all departments (must respect the process of unification of efforts). Planning must have an inbuilt controlling process. People are the essence of planning (the success of every plan depends upon people, so this factor should be kept in mind while framing plans).

Hierarchy of Plans

Any planning process generally has the following 7 components, though its nature and scope depends upon the type of plan, purpose of the plan and the time factor. These components are: Objectives, Policies, Procedures, Programs, Rules, Budgets, and Strategies.

Some examples of the recent corporate strategies are: Joint Ventures, Alliances, Tie-Ups, Take-Over, Acquisitions, Mergers, Demerger, Core Competence, Diversification, Brand-Building, Employee Stock Option, etc.