10 Components or Elements of Planning (with Examples)

The successful achievement of the objectives of any institution highly depends on planning. So, important components and elements are included in planning, on whose basis, the future execution of the institution may be possible.

Components or Elements of Planning
Components or Elements of Planning

We know that planning is a process consisting of various elements or components. The scope of planning is determined by the combination.

Components or Elements of Planning

Following is a brief analysis of the elements or components of the Planning.

1. Objectives

Destinations of all activities are called objectives. Targets are also the destination points, like objectives, but determined quantitative objectives for the specific certain time period are called targets.

Objectives are those targets, which an organization intends to obtain during various time periods. Objectives mean those basic points for all activities of the business are directed to achieve them.

Objectives act as the important aims for planning. The objectives are the end and planning is means. This is the basic point and first stage of planning. The objective is the foundation of planning.

Related: 12 Essential Steps in Planning Process (Explained).

The objectives create the flow of activities, provides motivation to employees to work sincerely and also help in the accomplishment of the activities in the future.

Nowadays, social responsibility is also an objective of the institution. The significance of the theory of Management by objectives MBO. has increased for the achievement of the objectives.

Now, the important question is, what are the objectives of the institution? In response to this question, it may be said that there is not a single objective of the business, these are manifold, like – short-term and long-term, general and specific, internal and external, departmental and organizational, economic and social, etc.

But, the main objectives can be classified into two main categories:

1. General Objectives

General objectives are called in long-term objectives also.

These are of various types, like – commodity development, sales improvement, improvement in the management system, increasing the work efficiency, public welfare and profit increase, etc.

Related: Identification of Business Opportunities: Objectives, Challenges, Factors.

2. Specific Objectives

These are called short term objectives also. These are of also various types, like – advertisement, cost control, quality improvement, price control, and merit rating, etc.

Determination of objectives and targets has several advantages, like – uniformity in Planning, the creation of a base of control in the standard form, coordination of various targets, which do not become contradictory and the activities remaining coordinated.

The goals make improvements in organizational and individual activities and state clear reasons for the increase in control.

2. Policies

The principles guiding the decisions are called policies.

In other words, policies mean those general particulars and guiding principles, which specify the general limitations and line of direction, meaning thereby that whereas the objectives specify, what to do, the policies specify, how these are to be achieved.

Mainly the policies are those which guide the idea in taking the decision.

The policies should be clear and well decided and should be written in clear language. These should be in accordance with the objectives.

Related: 13 Main Characteristics or Nature of Planning – Explained.

Besides, the policies should be developed in consultation with those persons who have the execute them and should be practical also.

Policies are mainly of the following types:

1. Basic Policies

Such type of policies is prepared by top-level management itself for the guidance of the subordinates.

These policies are mostly in the published form of handbooks or organizations own Publications.

2. General Policies

These policies are in consonance with the basic policies and are prepared by high middle-level management.

These policies are the guidelines for various departments and areas, employees, supervisors, and foremen.

3. Departmental Policies

The policies relating to various departments of the organizations are departmental policies.

The Purchase policy of purchase departments, finance policies of finance departments, and production policies of production departments are an example of these policies.

4. Call Policies

These policies are formulated on the request or demand of the subordinates (employees and workers).

Hence, these are called Call Policies. Policies and objectives are not the same, because the policies are generally flexible, whereas the objectives lack flexibility.

Related: 12 Importance of Planning in Business (Explained).

Policies are the general statements, whereas objectives are the specific statements. The results of the policies are complicated, whereas the results of not fulfilling the objectives are highly complicated.

Policy formulation has several advantages, like, the decision becomes uniform, it saves time, it facilitates administrative control and also checks the misuse of powers.

3. Procedure

Procedure implies the determination of the sequence of activities for accomplishing any particular work.

In other words, procedures tell, how the work will be performed, in what stages it will be distributed and when and by whom it will be performed.

The procedure is the action of related activities, which builds a time schedule and decide the method of performance of the work.

Related: 14 Principles of Planning – Explained with Examples.

For example, the procedure of distribution of dividends, procedure for the requirement, the procedure for organizing the company meetings, the procedure for increasing the capital of the company, etc.

Policies and procedures have the following differences.

  1. Policies provide guidance in decision making, whereas procedures provide guidance in the performance of works.
  2. Policies are generally decided and developed at the level of top-level management, whereas procedures are decided in developed at the lower level.
  3. Procedures are developed on the basis of the policies.
  4. The policies frame the boundaries of the area of operation, whereas the procedures decide the way to achieve the specified objectives.
  5. Policies for various departments may be different, whereas the procedure simultaneously affects the working methods of several Departments.

The advantages of procedure are, that the work becomes easy, the works done frequently remain uniform, increases the economics, as lesser supervision is required due to procedures and it also acts as the source of controls.

Bonus: 12 Importance of Effective Communication in Business.

4. Rules

Rules mean those directive elements or plans of work or behavior, which are to be followed compulsorily, by all the persons in the organization.

In other words, this is such a schedule which tells, what specific and certain activity is to be carried out in particular circumstances. Rules are those schemes, which guide the necessary activities.

These are selected from various alternatives, like other schemes.

Related: 14 Elements of Good and Effective Planning (How they work).

For example, smoking is prohibited, all orders may have complied within 48 hours and the dividends may be distributed to the shareholders within 30 days of the declaration of dividend in the Annual General Meeting of the company, etc. If it is not done so, the concerned officer is penalized.

Rules, policies, and procedures are closely interrelated. Rules are related to the procedures, because these are the guides for the activities, although they do not mention time Sequencing.

Actually, the procedure is a chain of rules. A rule may or may not be part of the procedure.

Rules and policies have a difference. Policies are flexible, but rules are to be implemented, in totality.

5. Programme

Programme means the determination of the sequence of various activities of work. In other words, determination of the sequence of various works to be done in any Institution and priorities is called programme.

The programme is the series of necessary efforts for achieving an objective, which is systematic and order of priorities.

Programmes may be of many types, short term programmes, like – training programmes, market research programmes, sales promotion programmes.

Related: Top 10 Difficulties or Limitations of Planning (With Examples).

Long-term programs like the formulation of 5 Year programme for improvement of efficiency of the supervisors, formulating a programme for expansion of the institution, programme for mechanization in particular departments, modernization, renovation of the office, etc.

A programme has the following stages.

  1. Identification of necessary activities.
  2. Division of activities in various steps or stages.
  3. To make each person, personally responsible for activities of the particular type.
  4. To determine sources for every step.
  5. To determine the time to be taken for every work.
  6. To decide target dates for every part of the programme.

This way, the programme is also an important component of planning. However, various programmes affect each other.

So, precautions should be taken in the preparation of the programmes for various departments and sub-departments of the institution.

6. Methods

Generally, methods explain the specific ways of the performance of each activity or stage of procedures. In other words, methods mean the specified process of performing any function of the institution.

Components or Elements of Planning
Components or Elements of Planning

The objectives, available facilities, time, expenditure to incur on the efforts, capital are used into consideration. Methods are the authentic ways to accomplish the activities relating to production, tool room, workshop repetitive and routine. etc.

Standards methods decide the best way for the assigned work.

Related: 22 Types of Planning – Explained (Business Management).

As a result, planning is facilitated. Methods check arising of confusions specifies communication and also helps in work operation according to the planned strategies.

That way adoption of methods has various advantages.

Following are the differences between methods and procedures.

  1. Procedures determine various steps, whereas methods are related only to a specific step.
  2. Methods determine the best way for accomplishing a specified step of the procedure.
  3. Procedures are related to various departments, whereas methods are related to one department only.

7. Budget

In simple words, budget means advance determined plan for the targets, efforts, and cost for executing any particular programme.

In other words, the budget in the form of a plan is the calculative analysis of the expected result.

Budget is an estimate of future requirements which is sequentially systematic, in which few activities of an organization for a specified time are incorporated.

There are various budgets for various activities of the institution, likeproduction budget, purchase budget, sales, budget, cash budget, publicity budget, honorarium budget, equipment budget, etc.

Related: 12 Main Characteristics of Decision Making (With Examples).

For these budgets, a consolidated budget is also prepared, which is called a master budget, the budget is prepared for various periods, like – annual budget, half-yearly, budget and monthly budget, etc.

Budget, in the form of planning, is a description to clarify future results in numerical terms. Budgets are also expressed in terms of labour hours, units of the commodities, machinery, currency, and facilities, etc. besides monetary form.

The budgets are used to establish control of business activities. Budget is a firm determination of the managers regarding the volume of sources required for implementation of the plans, so as to achieve the determined targets.

Every manager may be held responsible for works, according to the budget. Besides, budgets are also essential for enforcing controls and also for control activities of the management.

Budgets are always for the future and not for the past.

Related: Centralization and Decentralization in Management (Full Guide).

8. Time Schedule

Deciding of time for every stage of the programme is called a time schedule. If the work is not completed in time, it has no significance.

The advantages at each Programme may be derived only by completing it in the specified time.

Hence, time scheduling for each stage of the programme is essential. Time scheduling is decided at the time of planning itself.

For it, techniques, like PERT and CPM are used.

9. Standards

Standards mean those yardsticks, on whose basis, work performance is evaluated.

Yardstick or context is a unit for standard measurement in the form of Level. Establishing standards frame out measurement yardsticks.

The advantage is that we are able to assess, whether we have been able to achieve targets or not.

Besides, standards are also determined in respect of quantity, quality, cost, expenditure, time, etc.

Related: 15 Essential Elements of Control Process in Management (Updated).

10. Strategies

Strategies mean preparing one’s own plans, by keeping the competitors in view, so that the objectives of the institution may be achieved, by sustaining the competition.

In the words, when plans are prepared to meet the challenges of competitors in view, it is called strategies.

In other words, Strategy is that behavior of the officers, which aim at achieving success in objectives of oneself or the organization and whose basis, actual or possible functions of others.

Bonus: Top 12 biggest Challenges Businesses face Today (Update).

Strategies are of two types.

1. Internal Strategies

This is a system, which is related to the institution or internal parts of the Enterprise.

2. External Strategies

This is a system, which is made by keeping in view, the competitive ability of other Businessman or other Institutions, price policy, marketing arrangements, etc.

Strategies may be formulated for various functional areas, like production strategy, market strategy, financial strategy, publicity strategy, sales promotion strategy, etc.

Strategies are very useful and important for planning, because the competitors may not be defeated by simple plans.

For that, market requirements level of consumer satisfaction and probable risk are to be always kept in view.

Thus, now you know the Components or Elements of Planning.

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