The planning process

The planning process has these steps, in order:

• Setting objectives: for the whole organisation, then for each department and unit.
• Developing premises: the assumptions about the future on which plans are built (demand, prices, policies), based on forecasts. Everyone who plans should use the same premises.
• Identifying alternative courses of action: listing all the possible ways to reach the objective.
• Evaluating the alternatives: weighing the pros and cons of each, their risk and return.
• Selecting an alternative: choosing the best plan. This is the real point of decision making.
• Implementing the plan: putting it into action.
• Follow-up action: monitoring whether activities go according to schedule, and correcting them if not.

Example: a firm wants to raise sales by 10%. A manager who lists 'enter new markets', 'widen the range' and 'give discounts' is at the step of identifying alternatives; when the options are judged, that is evaluating; when one is picked, that is selecting.