Steps for Planning Process

1. Analyze Opportunities: This is the first step of planning process and based on SWOT (Strenths, Weaknesses, Opportunities and Threats). Environmental scanning is done to generate data.
• Strengths and weaknesses are internal to organization. They come from technology, structure, people.
• Opportunities and threats come from the external environment. They come from political, economic, technological, social, cultural forces.
• Resources assessment is done to find out resource availability.
• Issue Analysis: The main issues to be dealt with in the plan are pinpointed.
2. Set Goals: Goals are results to be achieved. They provide direction to the plan. They are set for entire organization and for divisions and units. Goals should be SMART (Specific, Measurable, Agreed upon, Realistic and Time bound).
3. Develop Premises: Premises are key assumptions about the future environment in which the plan is to be carried  out. Forecasting is important for premises.
• Premises can be about sales, products, price, costs, technology, tax rates, etc.
• Premises are developed about all the critical aspects of plan.
4. Determine and Evaluate Alternatives
• Alternative courses of action are determined for achieving objectives efficiently. Most attractive alternatives are identified for evaluation.
• Alternatives are evaluated in terms of contribution to goals achievement. Quantitative tools are used for evaluation. Computer can be a great help.
5.  Select a Course of Action: The best course of action is selected. Costs, profits and judgement are important selecting a course of action. Two or more alternatives can also be selected. The limiting factor determines selection. It can be time, cost, quality or resource availability.
6. Formulate Action Plans: Action plan for each activity is prepared. Such plan sets targets. The integrated action plans become programme. Action plans answers:
• What will be done?
• Who will do it?
• When will it be done?
• How will it be done?
7. Prepare Budget: Action plans are converted into financial plan. Budgets are prepared for each activity to find out how much will it cost. Budgets serve as standards for control.