Planning- Planning is a process of determining the goals and objectives and evolving strategies, policies, programmes and procedures for the achievement of these goals.
Information Planning- The Information Planning can be described as the perception of opportunities, problems and alternatives surrounding the achievement of the objectives.
The Planning functions- The planning function is a decision-making process because it is only done where possible alternatives exists. The information manager or management accountants’ role an planning is to provide information to management to assist in the evaluation of alternative causes of action.
Business or organisational planning has often been described as being composed of four parts – formulation of objectives, setting of policies, preparation of long range plans, and preparation operating budgets.
Objectives- There is probably no function of management dealt less by management in general than is the function of setting objectives. Yet, in the long run, it is probably one of the most important managerial functions. Unless top management has a clear sense of mission and knows what it is trying to accomplish, decisions are determined by personalities and by apparent opportunity rather than by objectives which should have a more enduring quality to them.
Business objectives might include the following considerations-
(1) What direction should intended business growth take?
(2) Which business opportunities should be considered as potential
alternatives to existing ones?
(3) What rate of growth should be sought for in sales, profits assets
and so on?
(4) What should be the profit objectives?
(5) How should future expansion be financed?
When the objectives are defined in specific terms that is, a particular return on the investment or share of the market, the accounting function can be of great value to management through the internal reparting function comparing results with the predetermined gbjectives.
Policies- Policies may be defined as broad guides to future action. Expressed in another way, policies can be formulated only after objectives have been determined because policies constitute the broad means whereby objectives will be met.
Long-range Plans- Plans which extend over a year in length are generally referred to as long-range plans. They have become more necessary because of
(a) the growing scale and complexity of business operation
(b) the rapid transformation of many labour costs from variable to fixed
(c) the tendency for qualified personnel to become a scarce resource.
Long-range plans often go wrong because of the unwillingness of financial managers to forecast. To combat this, some firms are asking for forecasts expressed in three ways: optimistic, pessimistic
and the most likely predictions to which varying weights of possibility may be assigned. This is being done to allow the forecaster a greater amount of leeway in his prediction and to permit the forecast to be utilised in computerised mathematical decision-type programs to provide alternative projections which are available management.
Operating Budgets- An operating budget is usually prepared on an annual basis and contains detained projections of the anticipated revenues and expenses of the organisation.