Needs, Benefits and Limitation for Planning

Subject: Business Studies

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Overview

Planning is the primary function of management, which predetermines the future course of action. It provides the foundation for effective management of the organization. It is an important management function. The position of any business organization depends upon planning.

Needs, Benefits and Limitation for Planning

Needs for Planning

Earning fame and fortune is the dream of every organization. To make this dream come true, measurable goals with achievable deadlines have to be set. This is what planning does. In the absence of planning, organizational activities become mealy random activities producing nothing but chaos.

Planning is the primary function of management, which predetermines the future course of action. It provides the foundation for effective management of the organization.

According to George R. Terry, “Planning is basic to other managerial functions. Without the lining, there would be nothing to organize, no one to actuate and no need to control.”

In the words of Peter F. Drucker, “ A management has no choice but to anticipate the future and attempt to mold it.”

It is a fact that planning does not guarantee success. It does not substitute facts for judgment. The necessity for planning arises because of the fact that business organizations have to operate, survive and progress in a highly dynamic economy where change is the rule, not the exception. Change may be sudden or slow. Such changes often give rise to deal with foreseen problems and unsuccessful struggles with unforeseen problems. The following points emphasize the needs of planning for organizations:

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  1. Best Utilization of Resources
    Planning is a must for efficient and effective utilization of scarce resources. Such use of resources can be identified while preparing the plan and selecting the best course of action.

  2. Promotes Creativity
    An effective plan encourages managers and subordinates to determine new ways of doing things. The creative actions of managers require an organizational goal. Planning is a useful technique for helping managers cope with uncertainty and change by promoting creativity.

  3. Help to Tackle Business Complexity
    Running a business in today’s competitive environments, not an easy task. Proper planning is essential to run it successfully. Planning gives proper direction as to how, what, when and by whom the works are to be done. It makes the job of the manager easy and helps to tackle business complexities.

  4. Achieve Objective
    The plan focuses on activities in the light of objectives. Planning serves as a blueprint for the course of action to be taken. It avoids confusion and misunderstanding and ensures the unity of action with the assignment of responsibilities and authority at all levels.

  5. Basis of Effective Control
    Planning establishes the standards used in controlling. When managers control, they see whether the plans have been carried out and the goals met. Without effective planning, there would be no way to control.

  6. Minimize the Chance of Business Failure
    Planning provides confidence to face uncertainty and challenges. The risk of business failure can be minimized as planning considers the probably unfavorable situations by foreseeing the future.

  7. Basis for Management Functions
    All other managerial activities have no direction in the absence of planning. It is planning which sets all management functions towards a move for successfully completing the organizational activities.

Benefits of Planning

(Source:www.library.dmu.ac.uk)

(Source:www.library.dmu.ac.uk)

Though planning is not a sure bet, in today’s competitive world, those who foresee the future only attain success, earn name, fame. The condition of an organization without a planning function can be well compared with a ship without radar. So there are so many points in favor of planning which are listed below:

  1. Better Coordination
    The accomplishment of goals in the absence of coordination is really a difficult task. Well prepared plans unify interdepartmental activities. Each department knows what it must do to contribute to the objectives of the organization. Without planning such coordination would be a dream, with planning a reality.

  2. Provides Basis for Team Work
    The plan defines the goals. On its basis, works assignments can be fixed. Once a member knows what is expected of them, they can contribute better. Further, planning permits employees to participate in the ‘thinking’ process. This helps them to develop a broad mentality which leads to their wholehearted effort.

  3. Economical Operation
    Planning focuses on efficiency and economy in operation. Guesswork is banished, facilities used to the best advantage which minimizes costs of performance. It saves time, effort and money.

  4. Reduces Uncertainties
    The future is uncertain and it is a big challenge for the present-day managers. Planning helps managers anticipate problems before they arise and deal with them before they turn into emergencies. It also helps in crisis management.

  5. Facilitates Control
    Planning and control functions are said to be the inseparable twins of management. There is nothing to control without planning and without control, planning becomes a futile exercise. Against the backdrop of planning, standards are set, which help in channeling behavior in the right direction.

  6. Improves Competitive Strength
    Planned activities are definitely systematic. Hence, they are expected to produce better results in comparison to the non-planned as they are prepared with great exercise based on facts and figures. The result increases efficiency. It makes the organization strong and capable enough to face competition.

  7. Systematize and Smoothens Flow of Work
    Planning develops a system of working. There exists no place for trial and error. The result is a smooth flow of work as an everyday activity is set, controlled and coordinated as well.

To sum up, planning in an indispensable activity for every organization so as to take the advantages as mentioned above. In its absence, business activities become random. Planning works for the organization in the same manner as radar does on a ship.

Limitation/ Constraints of Planning

(Source:managementstudyonline.blogspot.com)
(Source:managementstudyonline.blogspot.com)

Despite the essential need for and the unquestioned value of planning, it must be noted that planning is not all on the credit side of the ledger. It will not solve all the problems and guarantee business success. It has some serious limitations. They may be analyzed under the following two categories:

  1. Fundamental Limitation
    A fundamental limitation of planning lies in forecasting. Planning, as we know, is concerned with the future, which is uncertain and unpredictable. Assumptions regarding the future are forecasting which the essence of planning is. The fate of planning depends on the accuracy of the forecast. It is true that no forecast can be unreliable and lacks information. There is some element of truth in the statement ‘the only certain thing about a forecast is that it will be wrong.’ After all, forecasting is not an exact science. This is the biggest hindrance to drafting a sound plan.

  2. Other Limitations
    Other limitations are as follow:
  • Rapid Change in Environment: Premises are the assumptions about the future. Planning basically depends on a whole set of assumed conditions. In spite of the introduction of modern techniques in this direction, the future is which cannot be anticipated accurately. It has to be based on assumptions. Planning produces fruitful results only when assumptions are substantially correct. In the face of a highly volatile and turbulent political, technological, economic, social environment, even the best-prepared plans with the investment of heavy doses of capital get space in the dustbin.

  • Attitudes of Management: Lower level managers not involved in a preparing plan may ignore the need for planning and exert minimal effort to make it a success. Plans imposed offer lead to resentment and resistance among those forced to execute. Managers prefer to sit through immediate problems because they offer instant feedback. Although there are many exceptions, it is the most common human nature to prefer rewards immediately rather than wait for the future.

  • Costly and Time-Consuming: Planning is expensive in terms of time spent to formulate, manpower used and different resources needed for execution. Considerable time, money and effort are required for collecting information, evaluating alternatives, selecting the course of action. Such a time and money consuming exercise may not always be desirable.

  • Rigidity: Another serious limitation of planning is its rigidity. Planning sets the limit which may curb the initiative of managers. It may sometimes mean foregoing new opportunities and better options. It is not at all exciting for creative managers to work under plans. That is why they do not wholeheartedly support the implementation of the plan.

  • Lack of action-orientation and Training for Managers: Rapid-fire decision making without having to think is more fun. Managers are strongly oriented towards short-term results having a high regard for the present rather than for the future. They would prefer to fight fires, meet crises than plan. It is not at all exciting to them. That is why most other well-prepared plans are never implemented.

(Neupane, Surendra; Parajuli, Ram Prasad; Jha, Deepak Kumar; Chettri, Tuk Bahadur; Dulal, Gopal Prasad) (Shrestha)

 

 

 

 

 

 

References

Neupane, Surendra; Parajuli, Ram Prasad; Jha , Deepak Kumar; Chettri, Tuk Bahadur; Dulal, Gopal Prasad;. "Business Studies: Class : XII." Kathmandu: Nawakala Publishers, 2011.

Sharma, Surendra Raj; Jha , Surendra Kumar;. "Business Studies : Grade XII." Kathmandu: Sukunda Pustak Bhawan, 2011.

Shrestha, Kul Narsingh. "Business Organization and Management." Kathmandu: Nabin Publication, 2065 BS.

Things to remember
  1. Planning is the primary function of management, which predetermines the future course of action. It provides the foundation for effective management of the organization.

  2. Planning and control functions are said to be the inseparable twins of management. There is nothing to control without planning and without control, planning becomes a futile exercise. 

  3. Planning is a must for efficient and effective utilization of scarce resources. Such use of resources can be identified while preparing the plan and selecting the best course of action. Hence the need for planning.

  • It includes every relationship which established among the people.
  • There can be more than one community in a society. Community smaller than society.
  • It is a network of social relationships which cannot see or touched.
  • common interests and common objectives are not necessary for society.
Questions and Answers
  • Reduces Uncertainties

Planning is essential to overcome future uncertainties. It enables the organization to face these uncertainties with minimum wastage of resources. Planning is concerned with forecasting the future. It helps to reduce future uncertainties to some extent. 

  • Economical Operation

Planning focuses on efficiency and economy in operation. Guess work is banished, facilities used to the best advantage which minimizes costs of performance. It saves time, effort and money. 

  • Facilitates Control

Planning and control functions are said to be the inseparable twins of management. There is nothing to control without planning and without control planning becomes a futile exercise. Against the backdrop of planning, standards are set, which help in channeling behavior in the right direction.

  • Provides Basis for Team Work

The plan defines the goals. On its basis, works assignments can be fixed. Once member knows what is expected of them, they can contribute better. Further, planning permits employees to participate in the ‘thinking’ process. This helps them to develop a board mentality which leads to their whole hearted effort.

  • Improves Competitive Strength

Planned activities are definitely systematic. Hence they are expected to produce better results in comparison to the non-planned as they are prepared with great exercise based on facts and figures. The result increases in efficiency. It makes the organization strong and capable enough to face competition.

  • Better Coordination

The accomplishment of goals in the absence of coordination is really a difficult task. Well, prepared plans unify interdepartmental activities. Each department knows what it must do to contribute to the objectives of the organization. Without planning such coordination would be a dream, with planning a reality.

  • Systematized and Smoothens Flow of Work

Planning develops a system of working. There exists no place for trial and error. The result is a smooth flow of work as an everyday activity is set, controlled and coordinated as well.

The needs of planning are as follows:

  • Achieve Objective

The plan focuses action in the light of objectives. Planning avoids confusion and misunderstanding and ensures unity of action with the assignment of responsibilities and authority at all levels.

  • Help to Tackle Business Complexity

Running a business in today’s competitive environments, not an easy task. Planning gives proper direction as to how, what, when and by whom the works are to be done. It makes the job of a manager easy and helps to tackle business complexities.

  • Basis of effective control

Planning is basis for effective control. Creative actions of managers require for an organizational goal. Planning is a useful technique for helping managers cope with uncertainty and change by promoting creativity.

  • Minimize the Chance of Business Failure

Planning involves the selection of the most appropriate alternatives and best objectives. Hence, there is the greater possibility of avoiding business failure through sound planning.

  • Best Utilization of Resources

Planning is a must for efficient and effective utilization of the scarce resources by reducing the wastage. Such use of resources can be identified while preparing the plan and selecting the best course of action. Hence the need for planning.

  • Basis for Management Functions

All other managerial activities have no direction in the absence of planning. It is planning which set all management functions towards a move for successfully completing the organizational activities.

1. Fundamental Limitation

The fundamental limitation of planning lies in forecasting. Planning, as we know, is concerned with future, which is uncertain and unpredictable. Assumptions regarding future are forecasting which the essence of planning is. The fate of planning depends on the accuracy of the forecast. It is true that no forecast can be unreliable and inadequate information. There is some element of truth in the statement ‘the only certain thing about a forecast is that it will be wrong.’ After all, forecasting is not as exact science. This is the biggest hindrance for drafting a sound plan.

2. Other Limitations

Other limitations are as follow:

  • Rapid change in environment: Rapid change in technology, fashion, consumer;s taste and preferences etc, are great constraints to planning. They change very frequently. In this situation, plans prepared in one period may not be suitable in another period.

  • Attitudes of Management: Lower level managers not involved in a preparing plan may ignore the need of planning and exert minimal effort to make it a success. Plans imposed offer lead to resentment and resistance among those forced to execute. Managers prefer to sit through immediate problems because they offer instant feedback. 

  • Costly and Time Consuming: Planning is expensive in terms of time spent to formulate, manpower used and different resources needed for execution. Considerable time, money and effort are required for collecting information, evaluating alternatives, selecting the course of action. Such a time and money consuming exercise may not always be desirable.

  • Rigidity: Another serious limitation of planning is its rigidity (inflexible). Planning sets the limit which may curb the initiative of managers. It may sometimes mean foregoing new opportunities and better options.  That is why they do not whole hardly support the implementation of the plan.

  • Lack of action-orientation and Training for Managers: Rapid fire decision making without having to think is more fun. Manager would prefer to fight fires, meet crisis than plan. It is not at all exciting to them. That is why most other well-prepared plans are never implemented.

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