Principles and types of planning

1. Principle of Contribution (cooperation): The purpose of planning is to ensure the effective and efficient achievement of corporate objectives, in-fact, the basic criteria for the formulation of plans are to achieve the ultimate Objectives of the company. The accomplishment of the objectives always depends on the soundness of plans and the adequate amount of contribution of company towards the same.

2. Principle of Sound and Consistent Premising: Premises are the assumptions regarding the environmental forces like economic and market conditions, social, political, legal and cultural aspects, competitors actions, etc. These are prevalent during the period of the implementation of plans. Hence, Plans are made on the basis of premises accordingly, and the future of the company depends on the soundness of plans they make so as to face the state of premises.

3. Principle of Limiting factors: The limiting factors are the lack of motivated employees, shortage of trained personnel, shortage of capital funds, government policy of price regulation, etc. The company requires monitoring all these factors and needing to tackle the same in an efficient way so as to make a smooth way for the achievement of its ultimate objectives.

4. Principle of Commitment (obligation): A commitment is required to carry-on the business that is established. The planning shall has to be in such a way that the product diversification should encompass the particular period during which entire investment on that product is recovered.

5. Principle of Coordinated Planning: Long and short-range plans should be coordinated with one another to form an integrated plan, this is possible only when latter are derived from the former. Implementation of the long-range plan is regarded as contributing to the implementation of the short-range plan. Functional plans of the company too should contribute to all others plans i.e. implementation of one plan should contribute to all the other plans, this is possible only when all plans are consistent with one another and are viewed as parts of an integrated corporate plan.

6. Principle of Timing: Number of major and minor plans of the organization should be arranged in a systematic manner. The plans should be arranged in a time hierarchy, initiation and completion of those plans should be clearly determined.

7. Principle of Efficiency: Cost of planning constitutes human, physical and financial resources for their formulation and implementation as well. Minimizing the cost and achieving the efficient utilization of resources shall have to be the aim of the plans. Cost of plan formulation and implementation, in any case, should not exceed the organizations output's monetary value. Employee satisfaction and development, and social standing of the organization are supposed to be considered while calculating the cost and benefits of plan.

8. Principle of Flexibility: Plans are supposed to be flexible to favour the organisation to cope-up with the unexpected environments. It is always required to keep in mind that future will be different in actuality. Hence companies, therefore, require preparing contingency plans which may be put into operation in response to the situations.

9. Principle of Navigational Change: Since the environment is always not the same as predicted, plans should be reviewed periodically. This may require changes in strategies, objectives, policies and programmes of the organization. The management should take all the necessary steps while reviewing the plans so that they efficiently achieve the ultimate goals of the organization.

10. Principle of Acceptance: Plans should be understood and accepted by the employees, since the successful implementation of plans requires the willingness and cooperative efforts from them. Communication also plays a crucial role in gaining the employee understanding and acceptance of the plans by removing their doubts and misunderstanding about the plans also their apprehensions and anxieties about consequences of plans for achievement of their personal goal.

Types of planning