Meaning of Planning: It refers to thinking before band.

Steps in the Process of Planning:

i. Setting Objectives: Objectives are those end points for whose attainment all the activities are undertaken. In the planning process objectives are determined and defined first of all so that all the employees concerned can be informed about them to get their complete cooperation. Objectives have a hierarchy of their own, e.g., organisational objectives, departmental objectives, and individual objectives. They are determined and defined in the same hierarchical order.

ii. Developing Premises: The basis of planning are those factors/assumptions which influence the possible results of different alternatives. Before taking a final decision about any alternative a forecast of these assumptions is made. The rate of success of planning will be in direct proportion to the rate of the success of forecasting. The assumptions/premises of planning are of two types:

a. Internal Premises: Capital, labours, raw material, machinery, etc.

b. External Premises: Governmental policies, business competition, tastes of customers, rate of interest, rate of taxes, etc.