CS Foundation Business Managements Topic Type of PLANS & STRATEGY
Regularly, we are posting articles related to CS courses. So, in this article, we have taken “Types of Plans” of Business management from CS Foundation. These notes are short, crisp and easy to understand for all.
TYPES OF PLANS
A Plan is a commitment of resources to a particular course of action believed necessary to achieve specific results. From this point of view, there may be several types of plans, both major and minor. In order to put the organizational plan are single use plans such as budgets, programmes, projects. And other plans are standing or repeated use type as they are used time and again unless they are abandoned or modified. The standing plans include goals, objectives, policies, procedures, methods, and rules.
A higher level plan is followed by lower plans. For instance, goals and objectives are pursued by developing policies, procedures, methods, rules, etc. Now discuss the hierarchy of plans:
Objectives – Objectives are the ends towards which the activities of an enterprise are directed. They provide direction to various activities of the enterprises. They depict a future state of affairs which an organization strives to realize. Objectives serve as benchmarks for measuring the performance of various people working in the organization and overall effectiveness of the organization. They guide decision-making and action in the organization. Objectives are often expressed in quantitative, measurable and concrete terms.
Strategies – The term strategy has entered the management literature comparatively much later than its use in Military Science. In management, the concept of strategy is mostly taken in a slightly different form rather than in military form. The strategy is a plan of action to achieve specified business goals in the competitive environment. A strategy involves preparing the business for unforeseen and unpredictable events. Strategies are plans made in the light of the plans the competitors because the modern business enterprise operates in a competitive environment. Strategies are a useful framework for guiding an enterprise’s thinking and action.
An example of the strategy –
Stability Strategy – Decision to stay in the same line of business.
Growth strategy – Decision to add a new line of business to the existing one.
Competitive strategy – Decision to achieve a dominant position in the market. Example- increasing market share of the product through product improvement and competitive advertising.
Policies – Policies are the guiding principles which govern action usually of routine and repetitive nature. They are general statements which guide thinking and action of the organizational members. Policies represent the intentions of the top management. There could be policies in areas of sales, purchase, production, finance, etc. different firms have different policies as sales policies- we don’t sell on credit, it is our policy to deal with whole sellers only, etc.
Procedures – A procedure is a systematic way of handling regular events. It lays down a series of steps to be taken to do a particular job. The procedures involve planned sequence of operations for handling recurring business operations uniformly and consistently. The Procedures are generally set up for processing orders, shipping of goods, handling claims, a collection of payments, the appointment of employees, and so forth.
Methods – A method is a manual or mechanical way by which each operation is performed. Every procedure consists of certain methods to accomplish each phase of work. It is limited scope as compared to the procedure. As a method is more specific and detailed in how a task is to be done.
Rules – Rules are specific regulations which must be followed by the employees in an organization. The Rules generally refer to the administrative area of the procedure. Rules serve as boundaries of behavior. There is generally penalty or fine if they are not adhered to.
Programme – A programme is a sequence of activities directed towards the achievement of certain objectives. A programme is action based and result oriented. A programme lays down the definite steps which will be taken to accomplish a given task. It is a single use plan because it is not used in the same form time and again once the objectives have been achieved.
Budget – A budget is a single use plan since it is prepared for a particular period of time. A budget is a statement of expected results expressed in quantitative terms. Budgets present the objectives of the enterprise in financial and/or quantitative terms. The budget provides standards by which the actual performance can be measured. This helps in taking corrective action which is an important part of controlling.
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