Chapter 2
KEY ELEMENTS OF PLANNING

Planning cannot be properly divided into specific stages as far as it’s, first of all, a creative process where all operations are interdependent and often paralleled. Besides, planning never stops: it is recurring from the goal of activity to a current moment constantly checking, what actions must be done to achieve the goal based on the current conditions.
However, we can sort out some key elements of planning for the sake of convenience.
1-st element of planning – defining the goal of activity
We have already mentioned that the goal must be the most sincere (i.e. prevailing) desire of the planning subject. Nevertheless, there’s one more essential condition of stable and successful activity. This condition implies that no goal should conflict with the basic rules of interaction of the main elements of the environment. In other words, the company’s activity directed to achieving its goal should not discord with the environment. Otherwise, such enterprise will either get no success or its first success will cause a decline as the greater its first success is going to be the more devastating will be the response of the environment.
2-nd element – diagnostics of the situation
This element deals with a definition of the condition of the object of planning and of the environment. If the object of planning appears to be an already-existing company the process of diagnostics is performed with the help of its marketing department, which provides the manager with all the necessary information. The goal of this element of planning can be identified as collection of information, which helps to decide by what means and in what way the goal can be achieved.
As a rule, the diagnostics can help you find the answers to the following questions:
- What’s the condition of the environment and of the object of planning?
- What are the main factors and reasons of the current state of affairs?
When analyzing environment the factors of direct and indirect effect are to be considered, i.e. persons and organizations you will have to contact directly with while achieving your goal and the factors which are not subject to any influence by the object of planning.
When planning activities for a specific company the following factors of the environment must be taken into consideration:
Environment of indirect effect:
a. Political environment. A company is affected by political events. This environment contains legal procedures, state institutions, which influence different organizations and persons, limit their discretion within the society. In order to plan your actions well you must have a good knowledge of the laws regulating fair practices of competition, consumers’ interests, etc.
b. Economic environment. In order to pursuit one’s business it is important to consider purchasing power of certain persons and companies. The general level of purchasing ability depends on general situation on the market (economic depressions and expansions, stability, availability of established economic ties and relations, credit availability, etc.).
c. Sci-tech environment. Old technologies give way to new ones. That’s why the latest achievements in any branch evoke a wide response in the whole sector of economics. Therefore, one must pay much attention to the leading tendencies within the research and technology complex.
d. Cultural environment. People live in a specific society, which forms their basic opinions, values and standards of behavior. They accept the ideology, the world view which determines their self-attitude and mutual relations almost without noticing. Cultural environment is a very important factor affecting a company as long as it predicts consumers’ behavior, people’s attitude towards their work, social conventions when dealing with business partners to a great extent.
e. Demographic factor. Demography is a science, which studies population in terms of its size, density, ethnic structure etc. Demographic factors such as human migration, structural change of family unit may modify considerably the pattern of demand for different goods and services.
f. Natural environment. Relationships with nature are an essential factor for planning. One must aim at one’s company causing as little harm to the environment as possible. Certainly, nowadays it is hardly possible to avoid using such things as automobiles and chemicals, which pollute the environment. However, the companies, which little care about environment and don’t want to live at peace with it, such as coal and chemical industries, not only destroy the world around us, they first of all destroy themselves, their employees, their enterprise.
Environment of direct effect:
Here we deal with the analysis of prospective persons and organizations the company will have to contact directly.
Suppliers – business companies or independent persons, providing the company with necessary materials, resources for the production of specific goods and services. Situation with suppliers can influence the company’s activity greatly.
Marketing mediators – firms assisting the company in promotion, sales and distribution of its goods among customers.
Marketing mediators can be divided into 4 groups:
- intermediate sellers – business firms helping the company search for clients and/or sell the goods directly;
- physical distribution firms helping the company make the stock of their goods and promote them from manufacturing facilities to destination points;
- financial institutions – banks, credit companies, insurance companies etc., helping the company finance their transactions and get insurance support;
- marketing agencies – firms dealing with marketing research, advertising agencies, media firms and marketing consulting firms helping the company target their goods properly and promote them to the corresponding markets.
Customers. The sound analysis of prospective customers is the keystone of success. One must be confident that people really need the goods or the services the company has to offer and, moreover, that they are willing to buy them.
Competitors. Any company in its activity comes across a great number of various competitors.
The variety is wide, indeed:
- desires-competitors – contradicting desires a consumer might wish to satisfy (e.g., to spend a vacation at home or go to Hawaii);
- generic competitors – the basic ways of meeting some specific desires (e.g., read a book or watch a TV);
- product form competitors – variations of one and the same type of goods capable of complying with some specific desire (e.g., different types of vehicles: for rural areas, for urban areas, sport cars etc.);
- brand competitors – different brands of one and the same type of goods (music centers of identical brand characteristics "Sony" and "Sharp").
The understanding of the exact way of the consumers’ decision making process may simplify detection of competitors. Special attention here is paid to competing brands.
Responsive groups of consumers – any groups showing real or potential interests towards the company and influencing its ability to achieve intended goals.
Any company finds itself amidst 7 types of responsive groups:
- financial circles;
- media responsive groups;
- state institutions responsive groups;
- civil groups (consumers’ organizations, environmental groups – in our country their influence is hardly noticeable);
- local responsive groups – local public;
- general audience;
- internal responsive groups – staff, counselors, members of the Board.  Positive attitude of the staff towards their company is gradually expanded over other responsive groups.
Internal environment.
After the diagnostics of external environment has been carried out one should pass over to the diagnostics of the internal environment of the object or whatever one is dealing with.
The absence of any material resources cannot put an obstacle to the beginning of the activity – good plan will find a way to take shape in material resources. However, if an enterprise already exists it should be diagnosed in order to define its condition and the reasons of such before we start working.
First of all the analysis of the company’s management is done including the methods of motivation and stimulation of employees (in other words, peculiarities of human resources management). If a company has difficulties they are first of all connected with this level – with senior management.
Secondly, the marketing strategy of the company is to be considered as well as the degree of marketing department conformity to the condition of the environment and to the company’s peculiarities.
Besides that, the organization of production must be examined as well as the applied technology and the quality of products.
Finally, the company’s financial activity must be surveyed: the policy of borrowed assets management, organization of accounting and financial reporting.
The diagnostics results, in case an already-existing company is being analyzed, must reveal the following:
- condition of the environment, principles of interaction of its specific components (economic entities etc.), these principles result from the main law of the material world (the law of Karma);
- the company’s condition at the current moment in time, indication of bottlenecks, faulty operations, lack of resources, lack of demand;
- detecting reasons for improper company’s activity (most often that’s caused by the violation of the proper interactions with environment and incompatibility of the company’s goal with the motives of its employees).
Therefore, the diagnostics is dealing with only 1% of the information that’s been manifested in the material world. There can be no doubt that this information is very important, but very often it attracts too much attention. The thing is that the events of the material world depend not on what has already happened, but on what’s happening on the level of fine energies. That’s why, if a goal can be imagined, i.e. incarnated on the level of fine energies, it can be accomplished in the material world with the help of proper planning. The revealed condition of an object is nothing but an implication, a base point for its further development.
The planning subject in this case is trying to correct the current state of an object instead of achieving his goal. As long as the goal is lost, the company’s activity “goes on the drift”.
To recapitulate, diagnostics is nothing but the definition of a base point of planning, of a departure point for the move towards the goal and determining its rules, which perform as a security safeguard for an object.
Strategy and tactics
At the previous stages of planning we have determined the goal and the base point of our activity. The aim of planning at this stage is to keep moving to the goal, i.e. specify in what way we can achieve our aim and what is required for that.
In what way can we do it ? Strategy can be nominally divided into tactical targets, i.e. intermediate points of the progress to the goal.
Necessary resources
Here we define what is required for accomplishing tactical targets. For instance, different resources of the company: information, team (staff), organizational structure (staff functions), material resources, financing.