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TYPES OF PLANS

 Plans may be classified as objectives, policies, strategies, procedures, rules,

programs and budgets.

OBJECTIVES:

• Objectives or goals are the ends towards which activities are aimed.
• Objectives not only represent the end point of planning, but the end
towards which organizing, staffing, directing and controlling are aimed
at.

• Enterprise objectives constitute the basic plan of the firm, and from these
the individual departments go ~bout having objectives of their own.
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• The individual departmental objective could be different from that of the

objectives of the firm, but one thing that should not be ignored is that all
the departmental objectives should necessarily contribute towards the
attainment of the objectives of the firm.

POLICIES:
• Policies are general statements which help the subordinates in their
decision making process.
• Policies are also stated as guidelines to thinking and often referred to as
solutions to recurring problems.
• Policies help managers by avoiding repeated analysis, there by saving a
lot of time and they also enable managers to delegate authority while
maintaining control. E.g. A policy of promoting from with in rather than
resorting to external recruitment.
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• The -difference between a policy and a rule is that, policies being
guidelines to thinking in decision making allow for some amount of
discretion where as, such flexibility of discretion does not exist in
implementing rules.
EXAMPLES OF POLICIES:
GIFT FROM SUPPLIERS:
• Except for token gifts of purely nominal or advertising value, no
employee shall accept any gifts from suppliers at any time.
ENTERTAINMENT:

• No officer shall accept favors or entertainment from an outside agency

which are significant enough to influence his selection of goods or
services for the company.
OUTSIDE EMPLOYMENT:
• Outside employment is prohibited, except which is social in. nature and
is not detrimental to the interests of the company for which he is
working.
STRATEGIES:
• Definition: "The determination of the basic long term goals and
objectives of an enterprise, and the adoption of courses of action and the
allocation of resources necessary to carry out these goals" -Chandler.

• Strategy is a grand plan made in the light of what an opponent might or

might not do.

• Strategies denote a general programme of action and deployment of

emphasis and resources to attain comprehensive objectives. E.g. Dell
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computers adopting virtual organization and bidding farewell to the
traditional channel of distributing products.

• Most business strategies are similar to the traditional military concept by

including competitive consideration.

PROCEDURES:
• Procedures are plans which establish a customary method of handling
future activities.
• Procedures are essentially guidelines to action, whereas policies are
guidelines to thinking.
• Procedures state the chronological sequence of required action and they
lay down the exact manner in which a certain activity must be completed.
• The relationship between procedures and policies can be explained with
the following example.
• Company policy is to give its employees leave travel concession.
• The procedure established to implement this policy will schedule
vacations to avoid disruption of work, maintain records to assure that
each employee gets his vacation and provide means of applying for
vacation.
• Procedure for issue of raw materials e.g. LIFO & FIFO.

RULES:
• Rules are often confused with policies or procedures although they are
entirely different.
• A rule requires that a specific and a definite action be taken or not taken
with respect to a situation.
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• It is thus related to a procedure, in that it guides action, but it does not
specify a time sequence.
• A procedure dealing with the handling of order may incorporate a rule
that all orders must be confirmed on the day they are received this rule
does not allow for any deviation.
• The difference between a policy and a rule is that a policy is a guideline
to thinking in decision making and it allows the use of discretion.
• Whereas although rules also serve as guides they allow no discretion in
their application.
PROGRAMMES:

• Programmes are a complex of objectives, policies, procedures, rules

assignment of tasks, steps to be taken, and resources to be employed and
are supported by necessary capital and operating budgets.
• A primary programme calls for many derivative programmes e.g. an
airline programme to modernize its fleet.
• The above programme needs several other derivative programmes like
creating maintenance facilities, training flight engineers, navigators and
pilots, creating new run-a-ways, arriving at new flight routes and
schedules etc.
• To ensure the success of this programme other programmes must be
devised and effected before any new air crafts are received and placed
into service.
• All these programmes need proper timing and co-ordination as a failure
in one area has a chain reaction on others, thus leading to incurring of
unnecessary costs and loss of revenues.
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• To ensure the success of such programmes we might even have to use
PERT and CPM techniques.
BUDGETS:
• A budget is a plan of expected results expressed in numerical terms.
• A budget is referred to as a numerised programme.
• A budget forces a company to make in advance, whether for a week or a
year a numerical compilation of expected cash flows, revenues and
expenses, capital outlays, man or machine hour utilization etc.
• A budget is one of the essential tools of control.