Principles of ManagementUnit 410 min read

Planning: Process, Types, Techniques & Tools

Unit 4 of Principles of Management explores the planning function—its definition, steps, types (strategic, tactical, operational), techniques (SWOT, PESTEL, forecasting), and tools (Gantt charts, CPM, PERT). It also covers challenges, advantages, and real-world applications in Nepali businesses like Nabil Bank’s loan p

Padhai · Based on the official syllabus and past papers
Updated 3 Oct 2026

What is Planning?

Planning is the primary function of management that involves:

Setting objectives (goals).
Developing policies, procedures, and strategies to achieve them.
Allocating resources (human, financial, material) efficiently.
Anticipating future problems and opportunities.

Why is Planning Important?

mindmap
  root((Why Plan?))
    Benefits["1. Provides Direction & Focus"]
    Benefits["2. Reduces Uncertainty & Risk"]
    Benefits["3. Encourages Innovation & Creativity"]
    Benefits["4. Facilitates Coordination & Control"]
    Benefits["5. Maximizes Resource Utilization"]
    Benefits["6. Helps in Decision-Making"]

Types of Planning

Planning is classified based on level, time span, and scope:

Classification of planning types by scope and time horizon

Type	Definition	Example (Nepal)	Time Frame
Strategic	Long-term planning for organization-wide goals (e.g., expansion).	Nepal Telecom (NTC) planning 5G network rollout by 2025.	3–10 years
Tactical	Mid-level planning to support strategic goals (e.g., departmental plans).	Daraz planning warehouse locations for faster delivery.	1–3 years
Operational	Short-term, day-to-day planning (e.g., production schedules).	Himalayan Java planning daily coffee bean orders for Kathmandu outlets.	<1 year
Contingency	Backup plans for unexpected events (e.g., natural disasters).	Pathao having alternative driver routes during traffic jams.	As needed

Steps in the Planning Process

Planning follows a logical sequence:

Hierarchical breakdown of the 7-step planning process with key sub-components

Worked Example: Kathmandu Traffic Management Plan

Objective: Reduce traffic congestion in Thapathali by 20% in 2 years.
Data: Traffic police collect peak-hour data (7–9 AM, 5–7 PM).
Alternatives:
- Build an underpass (cost: Rs. 500M, time: 3 years).
- Implement a smart traffic light system (cost: Rs. 100M, time: 6 months).
Choice: Smart traffic lights (faster, cheaper).
Implementation: Install sensors, train traffic police.
Control: Monitor congestion via Google Maps API and adjust timings.

Techniques of Planning

1. SWOT Analysis

Generic SWOT framework showing internal/external factors with example categories

How Nabil Bank Uses SWOT:

Strength: Trusted brand → Opportunity: Expand mobile banking.
Weakness: Old IT → Threat: Lose customers to digital banks → Solution: Invest in Nabil eBanking.

2. PESTEL Analysis

A tool to assess external macro-environmental factors:

Factor	Example for Daraz (Nepal)
Political	Government’s e-commerce tax policies.
Economic	Inflation affecting customer spending.
Social	Rise of smartphone users (60% in 2023).
Technological	AI chatbots for customer service.
Environmental	Plastic waste from packaging.
Legal	Data privacy laws (e.g., PDPA 2018).

3. Forecasting Techniques

Method	Description	Example
Qualitative	Based on expert opinions (e.g., Delphi technique).	Nepal Rastra Bank forecasting inflation using economist surveys.
Quantitative	Uses historical data (e.g., time-series analysis).	Daraz predicting demand for Diwali sales using past 3 years’ data.
Simulation	Models hypothetical scenarios (e.g., Monte Carlo analysis).	NTC testing network load during IPL matches.

Worked Example: Himalayan Java’s Sales Forecast

Past Data: January–December 2023 sales = Rs. 50M/month (avg).
Trend: +10% growth/year.
Forecast for 2024: Rs. 55M/month (Jan) → Rs. 60.5M (Dec).
Action: Order 20% more beans from suppliers.

Tools & Techniques in Planning

Timeline showing how different planning types interact chronologically

1. Gantt Charts

gantt
  title Daraz’s New Warehouse Setup (2024)
  dateFormat  YYYY-MM
  section Construction
  Land Acquisition   :a1, 2024-01-01, 30d
  Foundation Work    :after a1, 20d
  section Equipment
  Forklifts Ordered  :2024-02-01, 15d
  Software Setup     :2024-03-01, 20d

Why Daraz Uses Gantt Charts:

Tracks parallel tasks (construction vs. software setup).
Identifies delays (e.g., if land acquisition takes 40 days instead of 30).

2. Critical Path Method (CPM) & PERT

CPM: Used for cost-focused projects (e.g., building a factory).
PERT: Used for time-focused projects (e.g., launching a new product).

Example: Toyota Kirloskar’s New Plant in Nepal

Critical Path: Land purchase → Permits → Machinery installation (takes 18 months).
Non-Critical: Employee training (can happen while building).

Advantages & Disadvantages of Planning

Advantages	Disadvantages
✅ Reduces uncertainty (e.g., NTC plans for power outages).	❌ Rigid (plans may fail if market changes).
✅ Improves decision-making (e.g., banks use risk models).	❌ Time-consuming (e.g., SWOT analysis takes weeks).
✅ Encourages innovation (e.g., Daraz’s AI chatbots).	❌ Costly (e.g., hiring consultants for PESTEL analysis).
✅ Facilitates control (e.g., Nabil Bank tracks loan defaults).	❌ Resistance to change (employees may ignore plans).

## In the Real World

Nabil Bank’s Loan Planning
- Idea Used: Risk assessment models (quantitative planning).
- How: Uses credit scoring (based on income, past loans) to decide loan approvals.
- Impact: Reduces non-performing loans (NPLs) by 15% annually.
Daraz’s Inventory Forecasting
- Idea Used: Time-series forecasting (quantitative planning).
- How: Predicts demand for T-shirts using past sales data + festive season trends.
- Impact: Reduces stockouts by 30% and overstocking by 20%.
Pathao’s Driver Routing Algorithm
- Idea Used: Optimization models (operational planning).
- How: Uses traffic data + driver availability to assign the nearest driver.
- Impact: 30% faster pickups in Kathmandu.

## Exam Tip

Define Planning Clearly:
- Avoid vague answers. Instead of "Planning is setting goals," write:
  
  "Planning is a systematic process of defining objectives, analyzing alternatives, and formulating action plans to achieve organizational goals efficiently."
Compare Techniques in Tables:
- Examiners love SWOT vs. PESTEL or Gantt vs. CPM comparisons. Use Markdown tables to score full marks.
Use Nepali Examples:
- Nabil Bank, Daraz, NTC, Pathao, Himalayan Java are safe bets. Avoid generic examples like "Coca-Cola."
Draw Diagrams:
- Flowcharts (planning process), Gantt charts, or SWOT mindmaps can earn extra marks if labeled correctly.
Link Theory to Practice:
- Always end with a real-world application. Example:
  
  "Like NTC uses PESTEL to plan 5G rollout, a startup in Nepal should analyze political stability (e.g., election years) before expanding."
Common Mistakes to Avoid:
- ❌ Saying "Planning is only for big companies." → Wrong! Even small tea shops plan daily orders.
- ❌ Confusing tactical and operational planning. Remember: Tactical = departmental, Operational = daily tasks.

Based on the PU BBA (PU) syllabus for Principles of Management, unit 4.

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