Meaning of Planning Premises
Planning premises are the basic assumptions about the environment.
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These assumptions are essential to make plans more realistic and operational. Planning premises provide a framework. All plans are made within this framework. There are many environmental factors, which influence the plan. Assumptions are made about these factors. These assumptions are called premises.
Types of Planning Premises
Different types of planning premises are depicted in the picture (figure) below.
Types of Planning Premises are briefly explained as follows:-
1. Internal and External Premises
- Internal Premises come from the business itself. It includes skills of the workers, capital investment policies, philosophy of management, sales forecasts, etc.
- External Premises come from the external environment. That is, economic, social, political, cultural and technological environment. External premises cannot be controlled by the business.
2. Controllable, Semi-controllable and Uncontrollable Premises
- Controllable Premises are those which are fully controlled by the management. They include factors like materials, machines and money.
- Semi-controllable Premises are partly controllable. They include marketing strategy.
- Uncontrollable Premises are those over which the management has absolutely no control. They include weather conditions, consumers' behaviour, government policy, natural calamities, wars, etc.
3. Tangible and Intangible Premises
- Tangible Premises can be measured in quantitative terms. They include units of production and sale, money, time, hours of work, etc.
- Intangible Premises cannot be measured in quantitative terms. They include goodwill of the business, employee's morale, employee's attitude and public relations.
4. Constant and Variable Premises
- Constant Premises do not change. They remain the same, even if there is a change in the course of action. They include men, money and machines.
- Variable Premises are subject to change. They change according to the course of action. They include union-management relations.