The various stages in the process of planning are as follows:

1. Goal setting:

Plans are the means to achieve certain ends or objec­tives. Therefore, establishment of organizational or overall objectives is the first step in planning. Setting objectives is the most crucial part of planning. The organizational objectives should be set in key areas of operations.

They should be verifiable i.e., they should as far as possible be specified in clear and measurable terms. The objectives are set in the light of the opportunities perceived by managers. Establishment of goals is influenced by the values and beliefs of executives, mission of the organization, organizational resources, etc.


Objectives provide the guidelines (what to do) for the preparation of strategic and procedural plans. One cannot make plans unless one knows what is to be accom­plished. Objectives constitute the mission of an organisation. They set the pattern of future course of action.

The objectives must be clear, specific and informative. Major objectives should be broken into depart­mental, sectional and individual objectives. In order to set realistic objectives, planners must be fully aware of the opportunities and problems that the enterprise is likely to face.

2. Developing the planning premises:

Before plans are prepared, the assumptions and conditions underlying them must be clearly defined these assumptions are called planning premises and they can be identified through accurate forecasting of likely future events.


They are forecast data of a factual nature. Assessment of environment helps to reveal opportunities and constraints. Analysis of internal (controllable and external (uncontrollable) forces is essential for sound planning premises are the critical factors which lay down the bounder for planning.

They are vital to the success of planning as they supply per tenant facts about future. They need revision with changes in the situa­tion. Contingent plans may be prepared for alternate situations.

3. Reviewing Limitations:

In practice, several constraints or limitations affect the ability of an organization to achieve its objectives. These limitations restrict the smooth operation of plans and they must be anticipated and provided for.


The key areas of Imitations are finance,” human resources, materials, power and machinery. The strong and weak points of the enterprise should be correctly assessed.

4. Deciding the planning period:

Once the broad goals, planning premises and limitations are laid down, the next step is to decide the period of planning. The planning period should be long enough to permit the fulfillment of the commitments involved in a decision.

This is known as the principle of commitment. The planning period depends on several factors e.g., future that can be reasonably anticipated, time required to receive capital investments, expected future availability of raw materials, lead time in development and commercialization of a new product, etc.


5. Formulation of policies and strategies:

After the goals are defined and planning premises are identified, management can formulate poli­cies and strategies for the accomplishment of desired results. The res­ponsibility for laying down policies and strategies lies usually with management. But, the subordinates should be consulted as they are to implement the policies and strategies.

Alternative plans of action should be developed and evaluated carefully so as to select the most appropriate policy for the organization. Imagination, foresight, experience and quantitative techniques are very useful in the development and evalua­tion of alternatives.

Available alternatives should be evaluated in the light of objectives and planning premises. If the evaluation shows that more than one alternative is equally good, the various alternatives may be combined in action.


6. Preparing operating plans:

After the formulation of overall operat­ing plans, the derivative or supporting plans are prepared. Several medium range and short-range plans are required to implement policies and strategies.

These plans consist of procedures, programmers, sche­dules, budgets and rules. Such plans are required for the implementation of basic plans.

Operational plans reflect commitments as to methods, time, money, etc. These plans are helpful in the implementation of long range plans. Along with the supporting, plans, the timing and sequence of activities is determined to ensure continuity in operations.


7.Integration of plans:

Different plans must be properly balanced so that they support one another. Review and revision may be necessary before the plan is put into operation. Moreover, the various plans must be communicated and explained to those responsible for putting them into practice.

The participation and cooperation of subordinates is necessary for successful implementation of plans. Established plans should be reviewed periodically so as to modify and change them when­ever necessary.

A system of continuous evaluation and appraisal of plans should be devised to identify any shortcomings or pitfalls of the plans under changing situations.