What is Planning? - Introduction, Importance, Types, Process & Limitations

Planning enables management to command the future rather than being swept away by future. In a fast changing environment the need for planning is all the more important because risk and uncertainty increase. In such an environment contingent plans can be prepared.

Planning is a primary management function which every organisation has to undertake irrespective of its size, nature and origin.

Tlieo Haimann – “Planning is deciding in advance what is to be done. When a manager plans, he projects a course of action, for the future, attempting to achieve a consistent, coordinated structure of operations aimed at the desired results.”

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Learn about:-

1. Introduction to Planning 2. Definitions of Planning 3. Nature 4. Importance 5. Types 6. Features 7. Levels 8. Approaches 9. Process 10. Principles 11. Advantages 12. Limitations 13. Measures.

What is Planning? – Definitions, Nature, Importance, Types, Features, Process, Approaches, Levels and Other Details

What is Planning – Introduction

It is often remarked that ‘Planning is a mere ritual in a fast changing environment’. This statement implies that in a highly turbulent and competitive environment planning becomes an empty academic exercise. Rapid changes in the economic and non-economic environment of business reduce the effectiveness of plans.

It becomes difficult for the planners to accurately forecast future conditions. Planning premises or assumptions may have a low degree of accuracy. The reliability of plans is open to doubt when the environmental forces are not stable.

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Uncertainty and unpredictability of environment reduce the usefulness of planning in a turbulent environment planning becomes a more time-consuming and expensive exercise. Even the best laid planning may become redundant when the assumptions and forecasts on which the plans are based turn out to be different. Plans have to be revised again and again in a highly volatile environment. The plans might fail to guide the destiny of the organization.

It is true that a last changing environment reduces the accuracy and reliability of planning. But planning in advance is better than reacting to the environmental crisis as and when they arise. When events are left to chance the organization has no guide and cannot survive environmental threats. Through planning, it can search for and prepare itself to meet the contingencies and challenges.

Koontz and O’Donnell have suggested the following measures for making planning more effective in a fast changing environment:

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(a) Planning must not be left to chance. Rather a climate conducive to planning should he created.

(b) Planning must start at the top, initiative and support of top management is essential for effective planning.

(d) Goals, premises and policies must be properly communicated.

(e) Long-range planning must be integrated with short range planning.

(f) Planning must include awareness and acceptance of change.

(g) An open system approach involving continuous monitoring of environment should be adopted.

What is Planning – Definitions

Planning is the first as well as most crucial function of management and is considered as a foundation to all other functions of management. It is symbolic to ‘looking ahead’ as is a process of chalking out future plan of action to be followed. In simple sense, it is an act or process of making plans such as – objectives, policies, procedures and strategies.

A plan may be defined as detailed course of action designed today to do something tomorrow. Thus, planning is an intellectual attempt by a manager to anticipate the future for better organisational performance. Planning is a primary management function which every organisation has to undertake irrespective of its size, nature and origin.

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To have organisational effectiveness, the first prerequisite is that people should know what and when things are expected from them. For this purpose, planning comes as a solution whereby managers define broad objectives of organisation which are broken into departmental plans and then finally operational plans and budgets. In a way, planning provides a blueprint of functioning of an organisation aiming at attainment of organisation objectives. Effective planning is a prelude for effective functioning of every other function of management.

Few Definitions of Planning:

Being the starting point in managerial functions, broadly speaking, planning is concerned with determining various courses of action in the light of organisational objectives and premises and then selecting the best possible alternative.

As a function of management, planning has been defined by various authors. Few of them are presented below:

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Koontz and O’Donnell – “Planning is deciding in advance what to do, when to do, how to do and who is to do it. It is bridging the gap from where we are to where we want to go.”

Alford and Beatt – “Planning is the thinking process, the organised foresight, the vision based on fact and experience that is required for intelligent action.”

Louis A. Allen – “Management planning involves the development of forecasts, objectives, policies, programmes, procedures, schedules and budgets.”

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Urwick – “Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses.”

Weihrich and Koontz – “Planning is an intellectually demanding process; it requires that we consciously determine courses of action and base our decisions on purpose, knowledge and considered estimates.”

What is Planning – Nature

There are number of ways available to complete a certain job. Planning chooses any one of the best alternatives out of the available ones. Economy and certainty are considered while selecting the best alternative.

Thus, the nature of planning is briefly discussed below:

1. Primary of Planning:

The functions of management include planning, organising, staffing, directing and controlling. Eminent writers may add other new ones to these functions or those which have not been included in these functions. Anyway, writers unanimously accept that planning is the primary function of all the other functions. The reason is that the manager wants to achieve the pre-determined objectives in a better way.

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2. Planning Contributes to Objectives:

There is a close connection between objectives and planning. Planning is based on the objectives. If there is no link between planning and objectives, the former will only be a mental exercise and of no use. Planning contributes to the attainment of objectives.

3. Planning an Intellectual Activity:

Planning includes the selection of the best alternative available and thinking before selection of the best alternative. It involves the ability to foresee mishaps in future which might affect the smooth functioning of an organisation. So, planning is an intellectual activity.

4. Planning Results in Higher Efficiency:

Planning efficiency is measured in terms of input and output ratios. Planning leads to maximum output with minimum expenditure. This input and output relationship is not only determined by money, labour hours and production units but also by the degree of satisfaction available to the individual as well as the group. The high degree of human satisfaction motivates the workers to produce more within the specified time.

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5. Planning is a Continuous Process:

Planning does not come to an end with the establishment of a business concern. Planning in other functions is also required. After the establishment of a business concern, certain decisions are taken. Planning is necessary to implement the decisions. A number of decisions are taken during the life time of the business concern. So, planning is necessary throughout the running of the business concern as a continuous process.

6. Planning is Flexible:

While planning, any one of the available alternatives is selected. Planning selects the best alternative based on certain assumptions. If the assumptions are proved wrong, the selected alternative tends to be an incorrect one. There is a possibility of a dead log in the functions of the management. Planning has one more alternative to suit future situations.

7. Unity and Consistency:

Every department manager resorts to planning at different times. The planning is related to the achievement of objectives. In other words, managerial actions of different managers are unified in order to achieve the objectives. Policies and procedures of the organisation provide a basis for the consistency of executive behaviour and action in matters of planning.

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8. Planning is Common to All:

Planning work is done by every person who is working in a business unit. He may be a managing director or a foreman.

Being of a higher place, the planning for a managing director is to frame the policies and procedures to be adopted. Being at a lower place, planning for a foreman is to allocate the work to his subordinates. So, planning is common to all.

9. Basis for All Managerial Functions:

Planning is found at all levels of management. Top management looks after strategic planning. Middle management looks after administrative planning and the lower level management looks after operational planning.

10. Getting Co-Ordination:

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Planning co-ordinates various business activities. Without planning, nothing can be co-ordinated.

11. Considering Limiting Factors:

Every plan is formulated after considering the limiting factors. The limiting factors may be money, skilled labour, quality materials, plant and machinery.

What is Planning – Importance

Planning is the first and foremost essential activity in all organisation. It helps in determining and achieving the objectives of the organisation. The sound planning is important condition for effective management.

It helps the organization in the following ways:

1. Making Objectives Clear:

It makes objectives clean, clear, and specific, it also serves as guide for deciding what action should be taken in present and future conditions.

2. Planning Provides Direction:

Planning helps the organisation to keep on the right path. It provides definite direction to manager to decide what to do and when to do it.

3. It Reduces Risk and Uncertainty:

It helps organisation to predict future events and prepare to take necessary actions against unexpected events. It is helpful in assessing and meeting future challenges. As per view of Peter F. Drucker, “Planning enables a manager to affect rather than accept the future”.

4. Planning is Economical:

As per views of Koontz and O’ Donnell,” Planning substitutes jointly directed effort against uncoordinated, piecemeal activity, an even flow of work for an uneven flow, and deliberate decisions for snap judgments”. The effective plans coordinate organisational work and economical.

5. Planning Provides the Basis for Control:

Planning provides the standard against which the actual performance can be measured and evaluated. There is nothing to control without planning and without proper control. Plans serve as yardsticks for measuring performance.

6. Planning Facilitates Decision Making:

Planned targets serve as the criteria for the evaluation of different alternatives so that the best one may be chosen with the help of planning hasty decisions and random actions can be avoided.

7. Planning Improve Efficiency of Operations:

It is rational activity that leads to efficient and economical operations, planned action is always better than unplanned. Planning makes the task of managing more efficient and effective manner. It helps to minimize the cost of operations and improves the competitive strength of an organisation.

8. Planning Improves Morale:

If the role of employee is cleared and well defines goals, then the employee feels highly motivated and contribute his full potential towards accomplishment of objectives. Planning improves the behavioural climate in the organisation and reduces the friction between departments.

9. Effective Co-Ordination:

According to Koontz and O’ Donnell “Plans are selected courses along with the management desires to coordinate group action.” The effective coordination integrates the physical and human resources between departments.

10. Planning Encourages Innovation and Creativity:

Planning compels the managers to be creative and innovative all the time. It forces managers to find out new and improved ways of doing things in order to remain competitive and avoid the threats in the environment.

What is Planning – Classification of Plans: Based on Importance, Time, Level, Formality and Approach

Plans can be classified based on importance, period of planning, level, formality, and approach.

1. Based on Importance:

Plans can be strategic, tactical, or operational. Strategic plans are important, future-oriented plans that form the hub of fulfilling the vision. Usually, they concern the entire organisation. Tactical plans are required to implement strategic plans. Examples, are redesigning the shop floor layout or closing a few non-performing outlets of a retail chain.

Operational plans are related to day-to-day functioning such as production, delivery, or purchase operation. Take for instance, the plan of Precision Connectors to deliver connectors to the two-wheeler manufacturer, which is an illustration of operational plans.

2. Based on Time:

Plans can be short, medium, or long term. Short term usually refers to plans of one year or less; medium term, to two to five years; and long term, to five to 10 or even 20 years. It depends on the nature of the project. Some projects such as building the Metro in Mumbai or Bengaluru may have a short-term plan that covers 50 km of Metro in five years; a medium- term plan that covers 200 km in 10-12 years, and a long-term plan that covers 300 or 400 km of rail that in 20 to 30 years.

3. Based on Level:

A plan can be called corporate level, business level, or functional level plan. The Tatas entering the airlines business is an example of corporate-level plan and Precision Connectors becoming an OEM is an example of a business-level plan. Functional-level plans are made by departments, for example, a plan on how the marketing department will achieve its goals.

4. Based on Formality:

A plan can be formal or informal. It is formal when planning is done as per the defined steps and documented, and informal when the documentation is not very rigorous.

5. Based on Approach:

A plan can be called proactive when it is meant to meet an anticipated situation. For instance, a compensation plan based on a three-year salary negotiation is a proactive plan to ensure industrial peace. If the same compensation plan came up as a result of a flash strike, it would be a reactive plan. The former leads to growth and the latter helps to regain balance and to ensure survival.

What is Planning – 11 Main Features

Feature # 1. Main Focus on Objectives:

While goals are the broad, long-term accomplishments an organisation wishes to attain, objectives are specific, short-term statements detailing how to achieve the organisation’s goals. Planning specifies the objectives to be attained by an organisation in the future. It also lays down the steps to be followed to achieve the objectives. By determining the objectives planning provides clear directions and guidelines to an organisation’s activities — both current and future.

Feature # 2. Basic (Key) Function:

Planning is typically the starting point in the management process. To be successful, organisations need a great deal of planning. People in organisations need goals and the plans to achieve them. Planning lays the foundation for the whole management process. It makes an organisation efficient.

It helps in manpower planning and human resource development. It serves as the yardstick which can be used by the managers to exercise control over resources and activities.

Feature # 3. Universal (Pervasive) Function:

Planning is the basic function of managers at various levels of an organisation. The exercise is carried out by all three levels of managers — the upper, middle and lower. However, the nature, type and scope of planning is not the same at each managerial level. In most organisations upper- level and some middle level managers spend more time developing strategic, broad/directional, long-range and single-use plans for the organisation.

Other middle-level and all low-level managers, in contrast, spend more time specifying how the strategic plans will be accomplished by developing operational, narrow/ specific, short-range plans and implementing standing plans (i.e., policies, procedures and rules).

Feature # 4. Continuous (On-Going) Process:

Planning is a continuous process. A plan which worked yesterday may not be successful in today’s market. Most planning also follows a pattern. Old plans are to be revised and modified and new ones to be introduced as demanded by the needs of the situation for achieving organisational objectives. In today’s rapidly changing environment planning is becoming more and more difficult because changes are occurring so fast that plans — even those for just few months into the future — may soon be obsolete.

Feature # 5. Forward-Looking Nature:

Any planning exercise at the business level is a forward- looking-one. It is carried out to achieve certain objectives in the future. It involves forecasts of future demand, market competition and government policies. And business managers try to cope with future uncertainty effectively through proper planning.

Feature # 6. Decision-Making Aspect:

Decision-making is essentially a choice of an appropriate course of action from among alternatives. The process of planning involves searching for alternatives and choice of the best alternative from those which are available for achieving certain specified and pre-determined organisational objectives.

Thus decision-making is an inherent part of the planning exercise. For example, financial planning involves choice between bond (debenture) financing and equity financing of investment projects. Proper decision-making techniques are crucial for selecting the organisational goals, plans and strategic options.

Feature # 7. Mental Exercise:

Planning involves some sort of intellectual (brain storming) exercise. It requires a lot of thinking in advance, foresight and proper judgment on the part of management.

Feature # 8. Flexibility:

In today’s era of rapid changes in technology, market conditions and government policies, the planning process has to be flexible enough in order to enable managers to face and meet newer and newer challenges. Due to rapidly changing environment, some companies are making shorter-term plans which allow for quick responses to customer needs and requests. The goal is to be flexible and responsive to the market.

Feature # 9. Shared Responsibility:

Planning means that a manager must involve his subordinates actively in order to determine resource requirement, fix goals and identify and exploit opportunities. During the process, the manager may need to go outside the work unit for information about products, competitors, markets, and the like.

Feature # 10. Choice:

Planning involves choice. Planning is essentially an act of choosing from alternative courses of action. And choice involves decision-making. In truth, in order to make a rational choice, it is necessary to evaluate and compare the possible alternatives.

Feature # 11. Efficiency:

Planning seeks to promote efficiency. By helping to economise the use of scarce resources, sound planning leads to accomplishment of desired objectives in the best possible may, i.e., at the minimum possible cost. And this implies efficient operation which is the primary objective of a business.

What is Planning – Top 3 Levels: Strategic, Tactical and Operational Planning

Planning is ubiquitous – that is, it exists in the entire organisation. All levels in the organisation carry out the planning function, but in varying degrees. In other words, the scope and timescale of planning varies. Planning commences at the strategic or top level of the management.

Strategic planning commences with defining the purpose or mission of the organisation, establishing strategic priorities and formulating major policies. Strategic planning becomes the basis for successive levels of planning namely, tactical planning (at the middle level) and operational planning (at the lower level).

These are discussed in detail here:

1. Strategic Planning:

Strategic planning includes plans made by the top management to pursue long term goals with the resources likely to be available.

It involves:

i. Formulating a mission for the entire organisation.

ii. Identifying the business that helps to meet a mission.

iii. Determination of financial requirements.

iv. Working out authority relationships in terms of organisation structure.

v. Allocating resources effectively.

It has a time horizon of five years or more. The chief executive or chairman, members of the board, managing directors, and divisional heads (these constitute the top level management) take part in strategic planning.

2. Tactical Planning:

Tactical planning specifies how the mission of an organisation can be accomplished.

It involves the decisions in respect of:

i. Products or services to be added or deleted

ii. Size of capital investments required

iii. Pricing the products and services to be provided

iv. Facilities, methods and systems necessary

v. Withdrawing investments from, or closing down operations of unprofitable departments or products or services.

Tactical planning has a time horizon of six months to two years. It is done by the middle-level management, which comprises functional managers, product line managers and department heads. Tactical planning is also called intermediate planning.

3. Operational Planning:

Operational planning works out the basic details of how the specific tasks can be accomplished with the available resources.

It involves decisions in respect of:

i. Best suitable production methods.

ii. Effective marketing plans.

iii. Organisation structure in terms of customer, product or region etc.

iv. Facilities required in the office, factory, sales outlets etc.

The time horizon for operational planning is between one week to one month. Operational planning is carried out by lower-level management comprising unit managers, foremen, line supervisors etc.

What is Planning – 4 Important Approaches: Top- Down Approach, Bottom-Up Approach, Composite Approach and Team Approach

Following are the approaches to planning:

Approach # 1. Top-Down:

Under this approach, only echelons of management frame objectives, policies, strategies procedures and so on. Those at the other levels have little to say in the planning exercise, even though they are consulted in plan formulation. The plans made by the top brass are implemented by managers at middle and lower levels.

The approach assumes that only those at the top level have requisite skill, knowledge and authority to plan. Thus plans made reflect the values and visions of the top management. This approach is practised in family-run organizations and centralized organizational structure.

Approach # 2. Bottom-Up:

This is virtual reversal of top-down approach. Under this approach, plan proposals originate from supervisory management level and travels upwards. The top management limits itself only to issuing guidelines for planning. The lower level management evolves planning taking into account the ground reality.

The implicit belief under this approach is that those who are concerned with implementation of plans are more informed, more practical and the plans formulated by them reflect realism. Top management unifies all sub-corporate plans. This approach is called participative approach.

Approach # 3. Composite:

This is the blend of top-down and bottom- up approach. This approach gives broad guidelines and parameters to the line executives at middle and lower level management. It gives support, resources and freedom to evolve plans to middle and lower level managements. But the plans evolved are thoroughly reviewed and adjusted in consultation with other levels of management. This is semi- participative approach. This approach is suited to many organizations.

Approach # 4. Team:

This approach envisages granting autonomy to teams in the matter of planning and execution thereof. It fixes accountability on those empowered with resources and authority in respect of the results expected of them. The team comprising functional specialists is led by a team leader. He, in turn, empowers the members to evolve plans suitable to their area and fixes accountability for the results.

The team leader coordinates the sub-plan, and directs them towards accomplishment of team objectives. The team leader frequently conducts review meetings to ensure that plans are put through smoothly. Contemporary organizations have restructured their vertical organizations into flat organizations.

What is Planning – Process

It is difficult to specify the steps in the planning process for all organisations because of their differences in size and complexity. Nevertheless, it is possible to suggest some important steps for effective planning.

The process which are applicable to the most types of plans are discussed below:

Process # 1. Establishing Objectives:

Planning is an intellectual process which an executive carries out before he does any job with the help of other people. But while planning, the question which must arise in the mind of the executive is “what is the objective of doing the job?” So, the first step in planning is the determination of objectives. Objectives provide direction to various activities in the enterprise. Planning has no utility if it is not related to objectives.

The establishment of objectives can, at times, be more important than the objectives themselves since their establishment emphasizes how various people and units fit into the overall organisation framework. The formalisation of this process can also be used to motivate individuals to achieve objectives which they have helped to establish. Objectives clarify the tasks to be accomplished. Overall objectives define what is to be accomplished in general terms. The derivative objectives focus on more details, that is, what is to be accomplished, where action is to take place, who is to perform it, how it is to be undertaken, and when it is to be accomplished.

Process # 2. Collection of Information and Forecasting:

Sufficient information must be collected in order to make the plans and sub plans. Necessary information includes the critical assessment of the current status of the organisation together with a forward look at the environment that is anticipated. The assessment of external environment may consider the strong and weak points of the organisation. Collection of information and making forecasts serve as an important basis of planning.

Process # 3. Development of Planning Premises:

This step involves making assumptions concerning the behaviour of internal and external factors mentioned in the second step. It is essential to identify the assumptions on which the plans will be based. Assumptions denote the expected environment in the future and are known as planning premises.

Again, forecasting is important in premising. It helps in making realistic assumptions about sales, costs, prices, products, technological developments, etc. in the future. The assumptions along with the future forecasts provide a basis for the plans.

Since future environment is so complex and uncertain, it would not be realistic to make assumptions in greater details about every environmental factor. It is advisable to limit premising to those factors which are critical or strategic to the planning process.

Process # 4. Search of Alternatives:

Usually, there are several alternatives for any plan. The planner must try to find out all the possible alternatives. Without resorting to such a search, he is likely to be guided by his limited imagination. At the time of finding or developing alternatives, the planner should try to screen out the most unviable alternatives so that there are only a limited number of alternative for detailed analysis. It may be noted that determination of alternative plans can be a time consuming task because objectives which have been established initially may be found to be inflexible. It is also possible that the assumptions need revision in the light of the changed circumstances.

Process # . Evaluation of Alternatives:

Once alternative action plans have been determined, they must be evaluated with reference to considerations like cost, long-range objectives, limited resources, expected payback, risk, and many intangible factors to select the satisfactory course of action. Many quantitative techniques are available to evaluate alternatives.

The manager may take the help of these techniques to reach the most objective result. The best possible alternative may be chosen by the manager after detailed analysis. Sometimes, evaluation of available alternatives may disclose that two or more courses are advisable and so the concerned manager may decide to choose two or more alternatives and combine them to suit the requirements of the situation.

Process # 6. Selection of Plan and Development of Derivative Plans:

The final step in the planning process is to select the most feasible plan and develop derivative plans. The plans must also include the feedback mechanism. The hierarchy of plans must be both integrated and flexible to meet the changing internal and external environment.

The derivative plans are required to support the basic or overall plans because the latter cannot be executed effectively unless they are supported by the derivative or sub-plans. The derivative plans are developed within the framework of the basic overall plan. For instance, if an airline decides to acquire a fleet of new planes, it will be followed by the development of a host of derivative plans dealing with the employment and training of various types of personnel, the acquisition of spare parts, the installation of maintenance facilities, scheduling, advertising, financing and insurance.

What is Planning – 9 Main Principles

The principles of planning are as follows:

1. Goal Orientation:

A plan should be absolutely goal focused and adhere to the scope and time frame set by the goal.

2. Specificity:

Plans must be specific and should avoid generalities and non-verifiable statements/propositions such as ‘complete as early as possible’, ‘resources will be mustered in due course’, ‘using least resources’, and so on. Rather one should use terms such as ‘complete the task by 30^th April 2016′, ‘complete the task with an expense not more than Rupees 20 lakhs’ and so on.

3. Accuracy:

Plans are like maps, and we all know that an inaccurate map can lead us to the wrong place. For example, if Rajendra makes a plan to produce 1,000 connectors a day, it must be based on the number of connectors a person/team can make per day and the number of people/teams available.

4. Comprehensiveness:

If plans leave some blanks, either there will be confusion due to different interpretation, or there will be delay for clarifications.

5. Flexibility:

As the execution of the plan progresses, there will be changes to the external environment, internal environment, and resources. Plans must envisage these possible changes and cater for them from the beginning. For example, if you are building a mall and the contracting economy decreases demand, then you should have away to build part of it and open the business leaving the completion for better days to come.

6. Objectivity:

While selecting from various options available, you should be objective. When quantitative parameters are used, the data should be fair and impartial, and when qualitative parameters are used, individual bias should not creep in.

7. Simplicity:

Plans are implemented by several people and more importantly by people who may not be as smart as the planners. Therefore, each part of a plan must be simple, the parts of a plan must be easily connectible, and the overall plan should be simple for everyone to understand and implement.

For example, if you have to set up a chain of coffee shops, the design of each shop should be simple, resources that would be shared such as purchase, promotion, and so on, should also be simple for everyone to understand and manage.

8. Communicability:

A plan needs approval from internal and external agencies. For example, Rajendra’s plan to make connectors as an OEM supplier for two wheelers would need acceptance by internal teams, funding approval from the bank, and approval related to production, quality assurance, and purchase from the two-wheeler company. Hence, it should not be vague, but should be in an easily communicable format.

9. Implementable:

This implies that there should not be any external environmental restrictions to implement the plan. Coca Cola had a bottling plant in Plachimada in Kerala, India. Most bottling plants need copious water, and ground water is a practical source. Plachimada had plenty of water and there is no national law against using it.

Coca Cola planned to establish a bottling plant at Plachimada. The problem they faced was that the use of ground water affects the neighbourhood and the socially aware neighbourhood brought the operations to a halt. Would the fact that there is no law to prevent the company from using ground water, and that it returned more water to the nature than it used, through various means make the plan implementable? The moot point is that what is permissible may not be implementable.

What is Planning – 18 Main Advantages

Planning helps the organisation achieve its objectives early. In this way, planning helps the organisation in many ways.

Some of the advantages of planning are briefly explained below:

1. Better utilisation of resources – Planning decides what to produce and how to produce. Then, there is the possibility of utilising the resources effectively.

2. Helps in achieving objectives – Planning sets goals or objectives of an organisation. This gives effective direction to the control of employees of the organisation. In this way, planning helps the organisation accomplish the pre-determined goals or objectives.

3. Economy in operation – Unnecessary production, ineffective utilisation of resources and unnecessary activities of an organisation are eliminated through planning. This results in the economy of operations.

4. Minimises future uncertainties – The uncertain future increases the importance of planning. Planning foresees the changes and uncertainties taking shape in future and devices methods to face them. Some future uncertainties are thus, minimised through planning.

5. Improves competitive strength – Competitive strength is improved by adding new line of products, changes in quality and size of the product, expansion of plant capacity and changes in methods of work. These are achieved through planning.

6. Effective control – Control without planning is an impossible one. Control is used only when there is a well-chalked out plan. So, planning provides a basis for controlling.

7. Motivation – A well-prepared plan encourages the employees of an organisation and gives them a sense of effective participation. Planning motivates the employees as to what the organisation wants to achieve and defines it to the employees.

8. Co-operation – Planning helps the management pulls the individual to achieve common objectives or goals. Planning provides well-defined objectives, unity of direction, well-published policies, procedures and programmes. All these facilitate to get co-ordination, which consequently avoids duplication of work and interdepartmental conflicts.

9. Promote growth and improvement – Planning sets a standard to control purpose. So, useless and aimless activities are avoided. It leads to the growth and improvement of an individual and the organisation.

10. Develops rationality among management executives – Disciplined thinking of management executives is geared up through formal planning. Management executives take action only after putting their thoughts in blueprint. In this way, planning brings rational thinking and approach among management executives.

11. Prevents hasty judgment – We can analyse a problem through a plan and consider the alternatives before taking a sound decision. It is possible to plan in advance as to what will be done and how it will be done. This process avoids hasty judgment.

12. Reduces red-tapism – junior most executive can act according to pre-planned decisions. There is no need for him to get any fresh permission for his action. It saves time, energy and cost and reduces red-tapism.

13. Encourages innovative thought – A good plan should provide a basis for new thinking in any individual. It seeks a way to encourage people to co-ordinate and to achieve common objectives. According to D.E. Hussey “A good planning process will provide avenues for individual participation, will throw up more ideas about the company and its environment, will encourage an atmosphere of frankness and corporate self-criticism and will stimulate managers to achieve more.”

14. Improves ability to cope with change – Planning helps managers improve their ability to cope with changes but it cannot prevent changes from happening. This creates an awareness among the managers regarding the incidence of change.

15. Creates forward looking attitude in management – Managers may lose their prosperity facing day to day problems. Planning helps a manager to become more prosperous and creates a forward looking attitude in him, thus such a planning ensures stability to management.

16. Development of efficient methods – Planning helps the management develop efficient methods and procedures of action.

17. Delegation of authority facilitated – A well-prepared plan will always facilitate the delegation of authority.

18. Anticipation of crisis – Careful planning will avoid the crisis which is likely to occur. In this way, management can reduce the internal organisational disturbances.

What is Planning – 9 Major Limitations

Planning has various limitations. This is why it becomes less effective in most cases, if not completely ineffective.

The following points are observed in this context:

1. Lack of Flexibility:

Plans lay down a specified course of action regarding the future, which cannot be changed even if situations so demand. This often proves to be costly for the organisation, particularly when there is need for a change in the actual course of action. And this is why some progressive firms now rely on contingency planning. The object is to overcome crisis situations as and when they arise.

2. Lack of Creativity and Initiative:

Due to inherent rigidity of the plans managers lack the initiative to do new things or to venture out in new directions to cope with changes in the environment. So even advance thinking by managers does not lead to the generation of new ideas. And creative thinking or creativity is out of question.

3. Environmental Uncertainty:

At times planning loses its practical relevance due to various uncertainties surrounding the environment. So managers cannot fully rely on existing plans. They have to revise or modify existing plans or change their strategies to get the desired results even in adverse situations. For instance, a company might be required to revise its advertisement budget to maintain competitive parity, i.e., to match the efforts of its major and nearest rivals.

4. Time Lag:

Planning which involves several steps such as – defining objectives, collecting and analysing data and choosing from alternatives is a time-consuming and lengthy exercise. It loses effectiveness due to delay in taking necessary action. In other words, planning loses its relevance in situations which demand quick decision(s) and immediate action(s).

5. Costly Process:

Planning is also a costly exercise. Since management is a valuable resource, the cost of planning varies directly and proportionately with the time managers devote to planning. If managers do not devote sufficient time to planning, their decisions may prove to be impractical or wrong.

6. No Guarantee for Action:

A plan is just a programme of action regarding the future, not a guarantee for action. The success of planning depends on its effective implementation. The effectiveness of planning depends on the outlook and the actual behaviour of the planners. Planning makes managers feel secured. So they just want to maintain the status quo. They just try to fulfill the requirements of existing plans rather than improving their performance or venturing out in new directions.

7. Inaccurate Forecast:

Planning is based on the timely availability of reliable and complete information and accuracy of forecasts of demand, price and technology. If forecasts are based on incomplete information or if the forecasting method is not reliable, then plans are bound to be ineffective or likely to fail.

8. Time Constraint:

Planning requires a manager to set aside necessary time to do it. Managers who have very busy schedules may react adversely when superiors order them to prepare a 5-year plan for their work unit. The reason is that they are expected to do this and still find time to meet the current year’s target. However, the time for planning has to be found. Otherwise, managers will just react to events.

9. Internal and External Constraints:

In spite of Internet connections and speedy access to computer databases, every manager cannot use available information to make an intelligent decision. The caliber of employees he needs may not be immediately available at the salary he is willing to pay. A competitor may quickly enter his market with a more attractive product. A change in buying habits of consumer may occur.

An important supplier may let him down. Rapid technological progress may make his machines and equipment obsolete overnight. And in any of these the manager will not have the time to plan a decision based on these internal and external constraints (over which he has not much control). Nevertheless a plan need not be perfect to be executable. Often a manager has to make a decision based on an incomplete plan.

What is Planning – 10 Measures to Overcome Limitations

The following measures help to overcome the limitations of planning:

1. Scientific Selection of Goals:

Unwillingness to give up alternative goals can be overcome through scientific selection of goals. Managers should carry out cost-benefit analysis for each alternative and accept goals whose returns are greater than the costs.

2. Use of Mathematical Methods:

Fear of failure to achieve the goals can be removed by applying mathematical models to the goal selection process. These models help in accurate predictions and practical implementation of plans. Besides, managers should make flexible plans which be changed according to changing situations.

3. Sound Communication System:

Lack of knowledge can be overcome through a well-connected communication system where managers at all levels remain informed of the organisational activities. A well-developed management information system can solve this problem.

4. Forecasting:

Managers remain informed of the external environment through an effective system of communication. Regular contact with outside parties, through seminars and conferences provides information about the environment. In fact, the need for planning arises because of uncertainties in the environment. If everything could be forecast, there would be no need for planning. The need is to predict the environmental changes through forecasting techniques like time series, forecasts, causal models and other statistical methods. They help to know the environmental factors and their effect on organisational goals.

5. Develop Managerial Confidence:

The above measures develop confidence to build rational and realistic goals which are challenging but attainable. Important, overall organisational goals are set at the top level and goals lower in priority are framed by lower-level managers in consultation with the superiors.

6. Help Organisational Members to Accept Change:

Organisational members should realise that change is the essence of life and reduce resistance to change through the following measures-

(a) Managers should explain the causes and effects of change to organisational members. Members should know the benefits that accrue to them and the organisation because of changes in the current system of working.

(b) The existing benefits should be compared with future benefits that will accrue as a result of change and unwillingness of members to give up existing benefits should be removed.

(c) If members feel that plans have deficiencies and weaknesses, management should involve organisational members in framing the plans. Thus, members become aware of the effects of changes and minimise the impact of their weaknesses, if any.

7. Top Management Support:

Planning process should initiate at the top-level. Managers should keep in mind the barriers to planning and set realistic and attainable goals.

8. Setting Responsibility:

If responsibility is fixed for framing and implementing the plans, plans will be more realistic. Strategic plans should be the responsibility of top management, tactical plans should be the responsibility of middle-level managers and operating plans should be the responsibility of lower-level managers.

9. Encourage Group Participation:

Rather than framing and communicating plans to organisational members for implementation, top managers should encourage group participation where people frame and implement plans collectively in the planning process.

10. Prepare Contingency Plans:

Organisations operating in the dynamic and complex environment should prepare contingency plans which can be adopted if unpredicted situations occur.