The compilation of these Planning Notes makes students exam preparation simpler and organised.
Introduction, Meaning, Importance, Features & Limitations of Planning
Just like management is a never-ending activity, so is planning. In fact business planning, it is one of the primary functions of management. It sets up the stage for all further functions of management like organizing, directing, etc. Let us understand the concept of planning.
We already know what planning is, it is the deciding of what is to be done in advance. It is the groundwork for all future plans of the organization. Planning bridges the gap between where the organization currently finds itself and where it wishes to be.
So in essence business planning comprises of setting objectives for the organization and developing a plan of action to achieve these objectives. Once the objectives are set, the managers and workers can have a clear vision of what to work towards.
Managers are a very important part of the function of business planning. Planning requires innovation, creativity and multi-tasking from the managers. And planning is a function that managers of all levels must perform, i.e upper, middle and lower management.
Importance of Business Planning
Planning is an important function of management, it tells the manager where the organization should beheaded. It also helps the organization reduce uncertainty. Let us take a look at some important functions of planning.
1. Planning provides a Sense of Direction
Planning means coming up with a predetermined action plan for the organization. It actually states in advance what and how the work is to be done. This helps provide the workers and the managers with a sense of direction, guidance in a way. Without planning their actions would be uncoordinated and unorganized.
2. Planning reduces Uncertainty
Planning not only sets objectives but also anticipates any future changes in the industry or the organization. So it allows the managers to prepare for these changes and allows them to deal with the uncertainties. Planning takes into consideration past events and trends and prepares the managers to deal with any uncertain events.
3. Planning reduces Wastefulness
The detailed plans are made keeping in mind the needs of all the departments. This ensures that all the departments are on the same page about the plan and that all their activities are coordinated. There is clarity in thought which leads to clarity in action. All work is carried out without interruptions or waste of time or resources,
4. Planning invokes Innovation
Planning actually involves a lot of innovation on the part of the managers. Being the first function of management it is a very difficult activity. It encourages the manager to broaden their horizons and forces them to think differently. So the managers have to be creative, perceptive, and innovative.
5. Makes Decision = Making Easier
In business planning the goals of the organization have been set, an action plan developed and even predictions have been made for future events. This makes it easier for all managers across all levels to make decisions with some ease. The decision-making process also becomes faster.
6. Establishes Standards
Once the business planning is done, the managers now have set goals and standards. This provides the manager’s standards against which they can measure actual performances. This will help the organization measure if the goals have been met or not. So planning is a prerequisite to controlling.
Limitations of Planning
While business planning is important and a requisite for every organization, it does have some limitations. Let us take a look at some limitations of business planning.
Once the planning function is complete and the action plan is set, then the manager tends to only follow the plan. The manager may not be in a position to change the plan according to circumstances. Or the manager may be unwilling to change the plan. This sort of rigidity is not ideal for an organization.
2. Not ideal in Dynamic Conditions
In an economic environment rarely anything is stagnant or static. Economic, political, environmental, legal conditions keep changing. In such a dynamic environment it becomes challenging to predict future changes. And if a manager cannot forecast accurately, the plan may fail.
3. Planning can also reduce creativity
While making a plan takes creativity after that managers blindly follow the plan. They do not change the plan according to the dynamic nature of the business. Sometimes they do not even make the appropriate suggestions to upper management. The work becomes routine.
4. Planning is Expensive
Planning is a cost-consuming process. Since it is an intellectual and creative process, specialized professionals must be hired for the job. Also, it involves a lot of research and facts collection, and number crunching. At certain times the cost of the planning process can outweigh its benefits.
5. Not Completely Accurate
When planning we have to forecast the future and predict certain upcoming events in the organization and the industry. So, of course, there cannot be a hundred percent certainty in such cases. So it can be said that business planning lacks accuracy
Which of the following can be referred to as planning?
b. Government policy
d. All of the above
The correct option is “c”.
Planning is forecasting as it is deciding what to do in advance. Planning is futuristic as it never relates to the past. So planning bridges the gap between where the company is and where it wishes to go.