Draw the hierarchy of planning.

 HIERARCHY OF PLANNING

Different types of plans prepared in the organization form a hierarchy. As the plans are prepared from top level management for long term plans to the operational plans prepared by operational level, planning hierarchy flows down from higher level to lower level. Higher level plans are represented by mission, goals, strategies and policies whereas lower level plans are procedures, rules, programs and budget.

i. Mission: Mission of an organization defines its business which served as a basis of all planning. It reflects the long term commitment of an organization. It provides the reasons of existence of organization.

ii. Goals: Goals are the result to be achieved by organization in certain period of time. It is developed to achieve mission. It provides the direction to the activities of an organization and state about how mission will be accomplished over the years.

iii.Strategy: Strategy reflects to grand plan and broad objectives. It is designed by top level management which represents broad choice made for planning.

iv. Policy: Policy refers to general guideline for decision making to achieve goals. It specifies general response to problem situation. It can be rational and set for different functional levels like production, marketing, research, etc. 

V.Procedure: Procedures are the steps for handling activities systematically. They are also known as standing operating procedures (SOP). It helps in evaluation and control the performance according to policies and overall plans.

vi.Rules: Rules are guidelines to carry out specific activities. Rules specify the system or guidelines or regulations for work performance. Proper rules must be developed to achieve the pre-determined goals and objectives within disciplined manner. Rules are related to law and can't be rational or person specific. 

vii.Programs: Programs are integrated action plans as large set of activities. Program and activities are ranked in the order of their importance. Programs are set in order to set  priorities of activities to be executed. Organization should allocate all its resources on the basis of such order and priority.

viii. Budget: Budgets are financial plans. It is an instrument for allocating resources on the basis of priority. Budgets are prepared for a specific period like monthly, quarterly, one year, three years, five years, etc. Budget is considered as the controlling tool for the activities which assure the expenses or cost of production remains within the scope of expenses.