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An Introduction to Planning Premises

The anticipated context in which plans are projected to operate is referred to as Planning Premises. They include future assumptions or forecasts, as well as known factors that will influence the path of plans, such as current policies and existing firm plans, which govern the fundamental character of supporting plans.

Let us now know in detail about this important study in this article. We will study the meaning, types, and importance of Planning Premises. First, let us briefly discuss what is ‘Planning’. 

Meaning of Planning 

The process of conceptualising and specifying an action step by step is known as Planning. This allows you to objectively assess how and when the objectives can be met. As a result, Planning entails determining your intended aim or objective and considering the tasks and activities required to reach that goal. It is a necessary step to take before embarking on any new personal or professional endeavour.

Planning - A Fundamental of Business 

Planning is a part of everything that we do or intend to do. We do planning in our everyday life, whether we have to plan for going to a movie or organising a family function. However, the definition of planning takes another level when it comes to business and management. Planning is the fundamental function of management, where one has to decide what to do, when to do it, and how to do it. In planning, you establish goals that are backed by policies and procedures for an economic or social unit.

Planning Linked with Forecasting 

Planning is a very specialised procedure. It is an essential tool in a variety of industries, including management, manufacturing, and business. To fulfil its objectives successfully, each field necessitates a distinct form of plan.

The link between Planning and forecasting is a crucial, yet frequently overlooked, part of Planning. Forecasting is to forecast the company's future while taking into account an external element. Planning, on the other hand, forecasts how a company's future should look in numerous circumstances.

An overview of Planning Premises

The Planning process is based on projections about the future. Though the past influences present plans, plans are designed to attain future objectives. As a result, forecasting future events leads to effective Planning. Because future occurrences cannot be predicted with certainty, assumptions are made about them. These occurrences could be known facts (tax law changes announced in the budget) or expected events that may or may not occur (entry of competitors in the same market with the same product).

Planning is a Scientific and Intellectual Process 

Though these assumptions are generally based on scientific analysis and models, managers also make assumptions about future occurrences based on their intuition and judgement. The process of identifying the factors (assumptions) that influence plans is known as premising, and the tools for doing so are known as forecasting. Planning is an intellectual process that is designed for the future by making certain assumptions about the future.

Planning premises are the assumptions one makes or the anticipated environment in which our plans are meant to execute. In this article, we will define planning premises and look at what goes into developing premises in planning.

What is Planning Premises?

A planning premise is a set of assumptions that are derived from forecasting the future. It is a logical and systematic estimate of the future factors that can affect planning. Planning premises provide a background against which the estimated events take place. These are the events that affect planning. Establishing planning premises is a critical element in the planning phase, which ensures that all managers in the organisation are in sync with each other. To explain planning premises, let us consider a few examples from business and government planning:

In the budget, there is an announcement of even changes in the tax laws. These are known conditions on which planning is based.

A competitor might enter the same market as yours with the same kind of product. This is an anticipated event; the possibility of that happening is not particular.

Importance of Planning Premises

The premise of planning is the framework on which planning is based. Amid uncertainty surrounding business and management, it is these planning premises that imply not just assumptions about the future but also predictions. They are the bedrock on which managers plan the future course of action. Without proper planning premises, the planning does not have a solid foundation. If panning premises change, the plans need to change as well. Here are the primary reasons for establishing planning premises:

They help in well-organised planning.

The risk of uncertainty is reduced considerably.

There is a reduction in the risk of flexibility.

Managers can do effective coordination.

It also increases profitability.

Types of Planning Premises

Planning premises in management are vital in making important decisions that are based on certain predictions about the future. Managers build the superstructure of planning based on their ability to identify the crucial, strategic, or limiting factors that allow them to select the proper planning premises. Planning premises in business management can be classified based on many factors, as described below:

Internal and External Premises 

The premises which exist within the boundaries of the business are internal premises. Some of the internal premises are men, money, material, and methods. Your planning would be based on how competent is your workforce and how much money you have at your disposal. 

External premises are derived from the environment that surrounds the business. They are centred around the market like money market, product market, government policies, growth in population, etc.

Tangible and Intangible Premises 

Any premise which can be quantitatively measured is a tangible premise. These premises can be quantified in terms of time, money, and units of production. 

On the other hand, intangible premises cannot be quantified. Some of the intangible premises are public relations, business reputation, the morale of employees, etc. 

Controllable, Semi-Controllable, and Uncontrollable Premises 

Those premises which can be controlled by the management to a large extent come under controllable premises. Management has a lot of control over their future commitments when it comes to material, machines, and money.

The business can partially control some premises or assumptions about the future. These fall under semi-controllable premises. Few examples of such planning premises are trade union relations, product demand, etc.

Those premises which can not be controlled by the management of an organisation come under uncontrollable planning premises. Some examples are weather conditions, natural disasters, etc.

Constant and Variable Premises

These premises which do not change irrespective of actions taken are constant premises like men, money, etc. These premises behave similarly under all circumstances.

Based on the course of action taken, some premises change which is termed as Variable premises. These premises cannot be controlled or predicted, for example, the sales volume of a firm, union and management relations, etc.

Establishment of Planning Premises

Developing Planning Premises needs the planners to do realistic forecasting. Determining planning premises involves 

Calculating the probability of events.

Analysing changes in consumer behaviour, technology, government policies, etc.

Implementing systematic investigation to develop the basis for planning.

Predicting future events is a complex process; hence, premises must consider limited assumptions that are most critical for the plant. A typical process of developing premises in planning is:

Selecting the Premise - Not all the factors in the environment affect the operations of the business. The management must list down those premises which directly influence the development of organisational plans.

Reviewing Limitations - Several practical factors limit the abilities of an organisation to achieve its goals. Such limitations should be anticipated and provided for. A few examples of such limitations are power, labour, money, and material.

Developing Alternative Premises - Since it is not possible to predict all the factors that can affect organisational planning, managers must develop a set of alternative premises. These premises are established based on separate assumptions of future events. The alternative plans are developed since premises keep changing, some change slowly and some fast.

Verifying Premises - In an organisation, there are different departments and planning happens at different levels as per the judgement of people in that department. All these premises are sent to the top management for their approval. The premises developed by line managers and staff are more consistent with each other than those of the top executives.

Communicating Premises - The premises developed through this process are then supported by budget and various programs. Then the premises are communicated to all those who are part of the planning process at different levels of business. Documents like ETOP (environmental threat and opportunity profile) contain planning premises.

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Hope the students have benefitted from this study. We have discussed planning and planning premises in business studies in detail. We have attached other links for the beneficial study, students will surely benefit from the same. Now check out these Frequently Asked Questions in order to have a clear understanding of the topic.


FAQs on Planning Premises

1. What are Planning Premises?

The Planning process is based on projections and forecasts of the future. Plans in the present are guided by the past, but plans in the future realise the aims. As a result, forecasting future events leads to effective plans. Because future events are unknown, assumptions are made regarding these events.

These events could be existing conditions (such as tax law changes announced in the budget) or predicted occurrences that may or may not occur (entry of a competitor in the same market with the same product).

Though these assumptions are generally based on scientific analysis and models, managers also make assumptions about future occurrences based on their intuition and judgement. Premises are established by identifying the factors (assumptions) that influence plans, and forecasting is the process of establishing Premises.

2. What are the types of Planning Premises?

There are two types of Planning Premises-

1. Premises (internal and external)

Internal Premises are provided by the company. It covers labour force skills, firm investment strategies, managerial style, and sales forecasts, among other things.

External Premises are derived from the outside world. That is, the environment is economic, technological, social, political, and even cultural. The business has no control over the external environment.

2. Premises that are controllable, semi-controllable, and uncontrollable

The management has complete control over the controllable Premises. Materials, machines, and money are only a few examples.

Premises that are partially controlled are known as semi-controllable. Marketing strategy is one of them.

As the term implies, uncontrollable Premises are ones over which management has no control. Consider meteorological conditions, consumer behaviour, natural disasters, and conflicts, to name a few.

3. Tangible and intangible Premises

Quantifiable Premises are ones that can be measured in some way. They can be measured in terms of money, time, and manufacturing units. Intangible Premises are those that cannot be quantified in any way. Examples include a company's reputation, public relations, employee morale, and motivation. Both tangible and intangible Premises must be considered when Planning.

4. Premises that are constant and those that are variable

Constant Premises are ones that behave in the same way regardless of the action taken. They are distinct, well-known, and comprehended. The behaviour of constant Premises is unaffected by changes, and this is overlooked in Planning. Men, machines, and money are examples of such elements.

The term "variable Premises" refers to Premises that change depending on the course of action.

3. What is the importance of Planning Premises?

The importance of Planning Premises are listed below:

Choosing the Best Objectives

Planning entails deliberation and decision-making on a recommended course of action. It also entails the choice of one course of action and the rejection of other options. The preferred course of action is naturally the one that supports the overall organisational goals within the framework of the resources available and economic, social, and political considerations.

Tackling Increasing Complexities

An organisation is a diverse group of people who differ from one another in a variety of ways. It is doubtful that they will collaborate efficiently and harmoniously in the organisation's best interests. As a result, Planning is critical to every goal-oriented action.

Unity of Action 

Planning allows workers in a company to work together successfully and harmoniously to achieve similar goals. It gives individuals a stake in their own future, motivating them to do everything possible to achieve the challenge.

Defend Your Company From Failure

Cutthroat competition, the unpredictability of consumer tastes and preferences, quick technology advances, and abrupt economic and political development are all blamed for business failures. In general, business failure is driven by hasty and irrational decision-making, which is a direct outcome of a lack of effective Planning.

4. What are the strategies and policies of Planning?

Planning Techniques

The term "strategic" dates back to circa 400 BC in Greece, and it relates to the tactic of directing a military force in light of the enemy's actions. It has the same competitive ramifications in management. It's also known as interpretive Planning. The environment and its impact on the organisation are central to strategy.

Policies relating to Planning

Management policies should be acceptable and stable, flexible, based on proper and precise information and competent judgement, and communicated to achieve their goals. Policies should be written down. The policy statement must be precise, unambiguous, and simple to comprehend.

5. How to successfully implement Planning?

You must be able to implement your strategy in order to oversee the performance of your firm. There is a great deal of effort put into it, such as:

Having a plan in place that takes into account both short- and long-term objectives. Having a strategy also implies you're prepared for what's next. It can also assist you in making adjustments if and when the action items require it. By designing a calendar, you may properly implement your strategy.

After you’ve developed a calendar, your objective should be to track your goals and action items. Weekly or monthly strategy meetings are required to bring everyone on the same page and ensure that everyone is on the same page. In such cases, having a checklist is beneficial.

While keeping track of your progress is important, it's also critical to revisit your plan and make any necessary revisions or changes. Getting feedback from your team is critical to ensuring that all of your needs are satisfied and that the strategy has been assessed from various angles. Long-term plans, for example, frequently encounter unanticipated adjustments (can be internal or external). You can make changes on the fly and stay up with new trends if you are flexible and eager to adapt.

6. What are some of the limitations of Planning Premises?

Planning premises are built on assumptions about future events; thus, they have their limitations. Some of the limitations of planning premises are listed below :

Lack of accurate information at the time of creating planning premises.

Lack of skills on the part of the manager who is devising the planning premises.

The rapidity of change in the internal or external environment can mar the accuracy of planning premises.

7. What are the aspects that affect the development of the Premises?

There are mainly two factors that affect the development of planning premises:

How probable is the impact of factors - This means the factors being studied for developing planning premises might affect or do not affect the premises. These factors might be high, medium, or low.

The intensity of the impact of these factors - Those factors which affect the development of planning premises can have a high, medium, or low degree of impact.

Based on the above two factors, we get the following combinations:

Critical factors - These are factors that have a highly probable impact and a high degree of impact.

High priority factors - These factors are less important than the critical ones. They have either:

Medium probability of impact and a high degree of impact OR

High probability of impact but a medium degree of impact.

Factors to be watched - These are factors that have a low probability of impact but a high degree of impact.

Explain the meaning of planning premises with the help of a suitable example.

Planning premises means systemic and logical estimate for the future factors affecting planning.according to dr.g.r.terry, ”planning premise are the assumptions providing a background against which the estimated events affecting the planning will take place”. there are mainly two types of planning premises include external premises and internal premises..

What is an incomplet ecosystem? explain with the help of suitable example.

Explain the meaning of planning premises with example.

With the help of a suitable example, explain the meaning of informal organisation.

Explain the importance of 'selectable marker', with the help of a suitable example. [2 Marks]

What is a change? Explain with the help of a suitable example.

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Chapter 6: Staffing

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Chapter 7: Directing

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Planning is the process of setting objectives for a given period and formulating various courses of action to achieve them and selecting the best possible alternatives from the various courses of action available there. According to this application, planning is a choice-making activity because it involves setting up objectives and deciding the appropriate course of action to achieve the objective. It must be remembered that plans are always developed for a given period.

Planning Process

Steps in Planning Process

Following are the steps in the planning process:

  • Setting Objectives: The idea behind planning is to achieve desired objectives. Therefore, the first step is to clearly define and describe the objectives of the organization. Firstly, the major objectives should be specified, and then they should be broken down into individual, sectional and departmental objectives. Objectives serve as guidelines for discussion-making in terms of resource allocation. Work schedule, nature of actions, etc., are kept in mind while setting objectives. All efforts must be made to anticipate the problems and relevant opportunities that are likely to arise in the future. For example, an enterprise ABC Ltd. is opening their new branch of laptops, firstly they have to specify the objective, i.e., to sell 3,000 units this year, which is double the previous year’s sales. For achieving this aim, they have to distribute this objective into various departments, such as production, marketing, sales, and finance departments. By distributing the main objective into departmental objectives, the company will face fewer problems in managing its organization.
  • Developing Planning Premises: The next step in planning is to establish premises. Planning premises are the anticipated environment in which the plans are expected to operate. These include assumptions and forecasts in the future and knowing conditions that will affect the course of the plan. In short, these provide the environment and the boundaries within which the plans will be executed. Planning premises may be classified as internal and external premises, controllable, semi-controllable, and uncontrollable premises, tangible and intangible premises, and the last foreseeable and unenforceable premises. For example, ABC Ltd. company has set the objective to sell 3,00,000 units of laptops this year. For this, they need to gather information by forecasting, as it is an important technique in developing premises. The enterprise has set this objective after forecasting the increase in demand for laptops due to work from the home policy. An accurate forecast is very important for successful plans.
  • Identifying alternative courses of action: After setting the objectives and making assumptions about the future. The next step is to determine alternative courses of action through which the organization can achieve its objectives. In order to identify the various alternative courses of action, it is required to collect all necessary information from primary and secondary sources. The information collected must be correct and believable. The only information which is directly and strategically related to the achievement of the desired objective should be considered. For every plan, there are several options. All the alternative courses of action should be identified. For example, ABC Ltd. should have an innovative way that can be adopted by involving employees and consumers in sharing their own ideas. The company has many alternatives like decreasing prices, increasing advertisement, promotion, and after-sale service. In important projects, the enterprise generates more alternatives through discussion amongst the members of the organization.
  • Evaluating alternative courses: After identifying different alternatives the next step is to evaluate each alternative. Evaluation means the study of the performance of various actions. All the possible alternatives should be evaluated keeping in mind their expected cost and benefit to the organization. Comparison among the alternatives should be made in terms of factors, such as the risk involved, planning premises, goals to be achieved, etc. The positive and negative points of each alternative must be thoroughly examined, and thereafter planner should make a choice. For example, ABC Ltd. should evaluate all the possible alternatives and check their positive and negative points.
  • Selecting an alternative: After evaluating various alternatives, the next step is to select the most suitable force of action. The basic, detailed, and derivative plans, such as policies, rules, programs, and budgets should be formulated. This is because the derivative plans help in the implementation of the basic plans. Most of the plans may not always be subjected to mathematical analysis. In these cases, the subject and the management experience, judgment, and at times institute play an important role in setting the most suitable alternative. Many times combination of plans is also selected instead of selecting one best course. For example, ABC Ltd. will start T.V advertisements, online marketing, and direct contact with MNCs to increase sales, as selecting the most suitable alternative will increase the profit of the company.  
  • Implementing the plan: This step is concerned with transforming the plan into action. The plan must be communicated to the employees in detail. This, in turn, will help to secure cooperation from them. Useful suggestions from employees must be considered, and they should be motivated to execute the plan to the fullest of their abilities. The plan has to be effectively implemented by the real executor. This step would also involve organizing labour and purchasing machinery. For example, ABC Ltd. starts hiring more salesmen in the company to contact and connect with more MNCs. The company will start creating more interesting advertisements on the online platform. They will establish more service workshops in various cities.
  • Follow-up- action: After implementing the plan, the last step is to periodically review the existing plan to ensure that the plan is effective. The plan must be consistently monitored, and in case of any deficiency, it should be modified and adjusted. For example, a proper feedback mechanism was developed by ABC Ltd. so that they can take all the complaints and reviews from their consumers and provide a better service experience. Actual customer response, revenue collection, employee response, etc., are very important for the company. 

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What do you mean by planning premises?

Answer:  Planning premises are assumptions relating to future conditions and events which are  likely to have an effect on the achievement of goals. These are the bases upon which the entire  structure of planning is built. Every plan is drawn with certain assumptions. To make planning  effective, it is necessary that the premises should be based on accurate forecasts, existing plans  or any past information about policies etc.

For example, demand for a product, cost of raw materials, interest rates, state of technology, the  intensity of competition, government policies etc.

What do you mean by planning premises?

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  • An achievement of which organizational objectives results in “an increase in sales volume, increase in the number of employees, no of products, and increase in capital investment’
  • State any two points which prove that management is multi-dimensional?
  • How is entry to a profession restricted?
  • How does coordination integrate group efforts? State Briefly. (CBSE Board-2015)
  • “Management is considered to be a three-tier machinery”. Why?
  • List any two social objectives of management. (CBSE Board -2011, 2010)
  • 'Is Management concerned only with doing the right task, completing activities and achieving goals without taking into consideration the cost benefit’? Give a reason in support of your answer? (CBSE Board- 2016)
  • “A collection of diverse individuals with different needs but working towards fulfilling the common organizational goals” this statement highlights which characteristic of management?
  • To meet the objectives of the firm the management of Angora Ltd. offer employment to physically challenged persons. Identify the organizational objective it is trying to achieve.
  • In order to be successful, an organization must change its goals according to the need of the environment. Which characteristic of management in highlighted in the statement?
  • What is meant by management? (CBSE Board -2011 )
  • The management principles can be applied to all types of activities. Which type of characteristics is highlighted by this statement? (CBSE Board -2008)
  • The Activities involved in managing an enterprise are common to all organizations whether economic, social or political. Which characteristics of management is highlighted by this statement?

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What Is Meant by 'developing Premises' in the Process of Planning?

Developing premises is referred to as the second step in the planning process. it is necessary for a manager to make certain assumptions for the future and such assumptions are known as premises. assumptions are the base on which plans for the organisation are drawn, these assumptions can be forecasts or changes in the existing plans etc. also read: planning process planning concept features and limitations of planning difference between planning and controlling stay connected with byju’s for more such questions and answers on various commerce topics..


You are a strategic analyst in XYZ Ltd. While developing the planning premises list out certain assumptions regarding

(i) Tangible and intangible premises

(ii) Controllable and uncontrollable premises

What is meant by the 'follow-up action' as the step involved in the process of planning

Explain the meaning of planning premises with example.



what is planning premises

What Is Planning Premises?

Are you curious to know what is planning premises ? You have come to the right place as I am going to tell you everything about planning premises in a very simple explanation. Without further discussion let’s begin to know what is planning premises ?

Planning is an essential aspect of any organization, whether it is a business, government agency, or non-profit organization. One critical component of planning is identifying the factors that could impact the organization’s goals and objectives. These factors are known as planning premises, and they are essential for effective planning. In this blog post, we will define planning premises, explore their importance, and provide examples of common planning premises.

Planning premises are the assumptions, estimates, and forecasts that an organization makes about the future environment in which it will operate. They are the factors that the organization believes will impact its goals and objectives, and they form the basis for planning. Planning premises are typically based on a combination of historical data, industry trends, economic forecasts, and expert opinions.

The purpose of identifying planning premises is to reduce uncertainty and risk in planning. By identifying the key factors that could impact the organization’s goals and objectives, the organization can develop strategies to mitigate risk and take advantage of opportunities.

Why Are Planning Premises Important?

Planning premises are essential for effective planning because they help organizations anticipate and respond to changes in their operating environment. Without planning premises, organizations would be planning in a vacuum, without considering the factors that could impact their success.

For example, if a business were planning to launch a new product, it would need to consider planning premises such as the competition, consumer trends, and economic conditions . Without considering these factors, the business would be at risk of launching a product that fails to meet consumer needs or is priced too high for the market.

Examples Of Planning Premises

There are many different types of planning premises, depending on the organization’s goals and objectives. Here are some examples of common planning premises:

  • Economic Conditions: This includes factors such as interest rates, inflation, and consumer spending. Organizations need to consider economic conditions when planning for growth or expansion.
  • Industry Trends: This includes factors such as new technology, changing consumer preferences, and regulatory changes. Organizations need to stay abreast of industry trends to remain competitive.
  • Political And Legal Environment: This includes factors such as government policies, laws, and regulations. Organizations need to be aware of changes in the political and legal environment to ensure compliance and avoid legal risk.
  • Demographic Factors: This includes factors such as population growth, age distribution, and income levels. Organizations need to consider demographic factors when developing marketing strategies and targeting specific customer segments.

Planning premises are critical for effective planning because they help organizations anticipate and respond to changes in their operating environment. By identifying the key factors that could impact the organization’s goals and objectives, organizations can develop strategies to mitigate risk and take advantage of opportunities. Common planning premises include economic conditions, industry trends, political and legal environment, and demographic factors. By considering these factors when planning, organizations can improve their chances of success and achieve their goals and objectives.

What Is Planning Premises With Example?

A few examples of such planning premises are trade union relations, product demand, etc. Those premises which can not be controlled by the management of an organisation come under uncontrollable planning premises. Some examples are weather conditions, natural disasters, etc.

What Are The Types Of Premises Planning?

Different types of planning premises are:

  • Internal and External Premises.
  • Controllable, semi-controllable, and non-controllable premises.
  • Tangible and Intangible premises.

Planning premises are vital to the success of planning as they supply important facts and information related to the future like population trends, economic conditions, production costs, government control, etc.

What Are The Types Of Premises?

The premise that contains the middle term and major term is called the major premise while the premise that contains the middle term and minor term is called the minor premise.

I Have Covered All The Following Queries And Topics In The Above Article

What Is Planning Premises In Management

What Is Meant By Planning Premises

Types Of Planning Premises

Example Of Planning Premises

Developing Planning Premises

Internal And External Planning Premises

Importance Of Planning Premises

Process Of Planning Premises

What Is Planning Premises

What are the 4 types of planning premises


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