PLANNING PREMISES —MEANING AND TYPES

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Planning is made for the future, but the future is uncertain.

This is why management makes certain assumptions about the future and the business environment when planning.

These assumptions about the business environment are called planning premises.

Planning premises may be defined as the anticipated environment and context in which plans are projected to operate.

They are forecasts and assumptions made during planning regarding the future environment.

The planning premise includes all forecasts of future events and conditions that will have an impact on how the organization executes the course of action it has chosen to follow.

Types of Planning premise

Planning premises can be divided into internal and external premises, tangible and intangible premises, controllable, semi-controllable and uncontrollable premises, constant and variable premises 

Internal and external premises

1. Internal premises: These come from the business itself and exist inside the business.

Men, money, materials, and methods are examples of internal premises.

2. External premises: These come from the business environment and are external to the company.

The business's political, social, legal, and technological environment are considered external premises.

Tangible and Intangible premises

1. Tangible premises: These are premises that can be quantitatively measured.

Tangible premises include units of production, sales, money, and hours of work.

2. Intangible premises: Unlike tangible premises, intangible premises cannot be measured quantitatively.

Staff attitudes, staff morale, public relations, and brand goodwill are a few examples of intangible premises.

Controllable, semi-controllable and uncontrollable premises

1. Controllable premises: As the name suggests, these are premises that can be controlled by the management of an organisation.

Materials, machines, and money are all examples of controllable premises.

2. Semi-controllable premises: Premises that can be partially controlled are those that fall under the category of semi-controllable premises.

Examples include trade union relations and marketing strategies of a business.

3. Uncontrollable premises: These are premises that are out of the organization's control

That is, the organization has no control over them. Consumer behavior, weather, conflict, and government policy are a few examples of uncontrollable premises.

Constant and variable premises

1. Constant premises: These are premises that do not change, even when there is a change in course of action.

Constant premises behave consistently in almost all situations, making them relatively predictable.

Constant premises include money, machines and materials.

2. Variable premises: Unlike constant premises which do not change when there is a change in course of action, constant premises change when there is a change in the course of action.

As variable premises do change, they are unpredictable. Examples are trade-union and management relations which may turn sour or more favourable depending on the course of action taken by an organisation.

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