Business runs in a dynamic environment and thus there is no scope for being complacent. Change will always be present and thus there will be need for thinking and making strategies. This thinking in advance for what to do, how to do, who will do it, and other related questions are part of planning.
Every enterprise wants to be successful. They want more number of consumers, more and more profit, increase in sales, increase in demand and much more. For achieving all these they need to plan things. Planning things before hand is important. ‘Going with the flow’ can be dangerous while doing business.
For turning dreams into reality, planning in advance and predicting the future is important.
Meaning of planning
Planning means to bridge the gap between “present” and “future”. Where we are today and where we want to go is bridged by planning. Before performing any task, formulating the idea and strategy on how to perform is really important. Planning thus simply means to set up the objectives and then setting a course of action for achieving those objectives.
There are many questions which are to be asked while planning. Such as what to do?, how to do?, who will do it?, when to do? Etc.
What to do?
‘What to do’ includes all the related areas of tasks which are to be performed for achieving the targets and objectives.
How to do?
‘How to do’ includes all the related areas of the course of action which is to be taken to perform the task.
When to do?
‘When to do’ is another important question which needs to be answered so that a particular time can be set for performing a particular task.
Who will do it?
‘Who will do it’ is also as important as other questions because it involves the answers for the task force or the number and type of people who will perform the particular task.
Importance of planning
Planning is very important for any organization. It provides unity of action and unity of direction to the efforts of all employees. Every employee who is working in an organization is working for some target but to unite all the efforts of each and every employee is very important and planning helps in doing that. Other important areas of planning are as follows:
Planning provides direction
Planning is related to the pre-determined objectives and pre-determined course of action. It helps in bringing the unity which is required for achieving the targets. While stating the answers for important questions like what to do, how to do, when to do and who will do it, it becomes easy for the task force to work in a single direction.
Planning reduces the risk of uncertainty
Planning helps in predicting future and to anticipate changes which may take place in future. This helps in looking forward and thus planning is called an activity of looking forward. Changes cannot be eliminated but a response or a course of action can be determined in advance to avoid downfall.
Planning reduces overlapping and wasteful activities
Planning is useful to deciding the actions which are to taken by each department and division and thus helps in coordination between them. It helps in reduction of unnecessary activities and helps in making clear the focal point for each department.
Planning promotes innovative ideas
Planning is the first function of management and it means to look forward for the new ideas. It can sometimes become very challenging to think in advance the course of action. But planning is an intellectual process and innovative ideas come up and thus help the firm in making concrete plans but in a different manner so that it leads to prosperity and growth of the firm.
Planning facilitates decision making
While starting anything we have various ideas and alternative courses of action but planning helps us in shrink those ideas and then choose the perfect or most suitable and viable idea for the business. This decision is made because of planning. Further, when business is already up and running then planning is done regularly and it helps businesses to take various decisions by predicting the future conditions and setting targets and objectives accordingly.
Planning establishes standard for controlling
Planning means to look forward and controlling means to look backward. They both are inter-related. When a plan is made it becomes standard for measuring the actual performance and thus controlling. By measuring the actual performance with standard performance we can plan the future activities accordingly and thus it is said that planning is pre-requisite for controlling.
Features of planning
Planning as a function of management has various features. These features include the following:
Planning focuses on achieving objective
Any organization does not run without an objective. It has some or the other purpose or an objective which is set in advance so that it can be achieved in future. Planning is done for achieving the objectives and specific goals are set before performing any task. Every process or activity needs to be pre planned so that it focuses on achieving the aim.
Planning is primary function of management
Planning s the first function of management. Before doing anything things are planned. Planning helps in setting up the base for other activities. Planning is looking forward and that is why it is called the primary function of management. Planning, organizing, staffing, directing and controlling are all inter – related but are also step b step processes. Planning should be done before organizing or staffing.
Planning is pervasive
Planning is required everywhere. Any type of organization whether it is social, economic or political, planning is required there. Planning is also required at every level in an organization. At top level the policies are planned and strategies are made. At middle level of organization the ways to follow those strategies is planned. At lower level or operational level, the quantity and quality of staff required and planned.
Planning is continuous
Planning does not stop after planning the start of the organization. It is a continuous process. It is process which has no ending. A plan is framed, it is implemented by the mangers then the performance is measured with the standard performance and keeping in mind the results, a new plan is made. Thus, this process is not a single time process but a process which is required throughout the life of business.
Planning is futuristic
Planning is always done for the future. Planning as the definition suggests is bridging the gap between the present position and future target. It simply means to peep into the future and to analyse and predict it. Predicting the future is important for an organization so that it is ready to deal with the upcoming changes. Plans are made for forecasting. For example: sales forecasting is done to predict the amount of sales which will be there in that period of time.
Planning involves decision making
As we know, before starting anything we have alternative course of actions and thus we need to select amongst those. Planning helps in choosing the right course of action and thus it is rightly called the decision making process. Planning also involves decisions regarding the strategies which are to be framed in response to the action taken by the competitors. Planning helps in deciding the best alternative from the available alternatives.
Planning is a mental exercise
Planning is an intellectual process and a mental exercise. Proper planning requires proper amount of time. It is a process where imagination and sound judgement is required. Many a times, planning is assumed as a guess work but in reality it is a systematic thinking based on facts, figures and forecasts.
Limitations of planning
Planning is very important for any organization. It is very important for any organization to plan properly to achieve the pre determined goals. A formal planning is must so that operations can be managed. But there are always unforeseen circumstances and things may not go according the plan made. Thus, there are various limitations of planning. They are:
Planning leads to rigidity
Plans are made so that a course of action can be taken. Plans are made in advance so that specific goals can be achieved. Thus, managers may need to follow the same course of action as defined during planning to avoid any hindrances but this may lead to rigidity and reduces creativity. When circumstances change, following the same course of action becomes difficult and my also go against the interest of organization.
Planning may not work in dynamic environment
Business runs in a dynamic environment and it keeps in changing. There are various factors which affect the business such as economic, social, political, legal and technological. When there is constant change in any of these environmental factors then business needs to update itself accordingly. Plans may not work after the change and a new plan may have to be made. For example: an organization planned to increase its production by 10% within a quarter but due to change in technology it would have to learn to use the technology first and then start producing the products and thus taking longer time than planned .
Planning reduces creativity
Planning is an activity which decides the future course of action in advance thus leading to rigidity and reduction in creativity. Usually the plans are made by the top level management, middle level and lower level management have to follow those plans and pre determined course of action and thus their individual creativity is lost. They only work on the orders and think on the same lines as the top level management.
Planning involves huge costs
While planning huge cost is involved. A lot of time, money and efforts are put in to plan the things. It requires analysing the future and looking into the facts, figures and forecasts. It also requires to scientifically calculating the changes which may take place in future. There are other hidden costs also. Such as, expense on the meetings, expense on forecasting, expense on investigations etc.
Planning does not guarantee success
Planning is very important for the success of organization but success of organization does not depend on planning alone. If any organization thinks that the course of action is decided and now the success will follow then they are wrong. It is also not true that a plan which worked in a particular situation will work in another situation as well. Besides this, there are other factors also which are to be considered so that plan becomes successful.
Planning is a process which involves a lot of brain storming and thinking. Planning is very important for any organization and it helps in deciding the proper course of action and then helps in proper control. But planning alone cannot guarantee success. There are various limitations of planning but despite its limitation, planning is a very useful activity. It is not a solution to every problem and should be used with caution.