Planning: Meaning, Process, Needs, Importance and Limitations of Planning

Planning is the first and foremost function of management. It focuses on the future course of action. It decides in advance as to what is to be done, how is to be done, when is to be done, where is to be done, who will do it and how results are to be evaluate. Planning directs effort of individual and groups as we as resources of an organization towards the common objectives. Planning is the inter-actual process. It includes thinking before doing. So it is initial for management.

According to Marry Cashing Willos, "Planning is the continuous process of selecting, developing the based course of action to objectives."

According to Koontz and O'Donell, "Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are to and where we want to go."

Hence, planning is predetermination of objectives and inter-actual course of action to be taken to achieve specific goal efficiently and on time. It completes the step like analyze the opportunities, setting objectives, determination of premises, determination of alternatives, evaluation of alternatives, selecting a course of action, formulation of derivatives plan, implementation of plan etc.

Planning process/ steps/ stages/ procedures

 1. Analyze opportunities

Generally this is not a step of planning. It is known as pre-step of planning. It is essential to make successful plan. To make successful plan the management needs to analyze the strength, weakness, opportunities and threats  (SWOT) of changing environment of business.

 2. Setting objectives

This is the first step of planning. The objectives must be specific, clear and practical. They should be time bound and expressed in numerical terms. They should not idealistic or over ambitious. Management has to define objectives in clear manner by considering organizational resources and opportunities.

 3. Determination of premises

Determination of premises is the third step of planning process. In this step basis of plan are clarified and the premises for achievement of objective are made clearer. Premises can be about production, sales, price, cost, technology, wage rate, government tax and policies, dividend policies, political and social environment, financial market and so on. Premises can help to attempt organizational objectives.

 4. Determination of alternatives

The next step of planning is to discover the various alternative course of action for the achievement of organizational objectives. For this purpose it is essential to identify all the possible hidden alternative. The information about alternative course of action may be obtained from primary and secondary sources.

 5. Evaluation of alternatives

This is another step after determination of alternative course of action to evaluate them from their respected cost and benefits. This is the logical step to evaluate each alternative from its plus (+) and minus (-) point. Each alternative is studied and evaluated in terms of some common factors such as risk, responsibility, planning premises, resources, technology etc.

 6. Selecting a course of action

Next step of planning after evaluation of alternative courses is to select a best course of action. At the time of selection of one cource of action management has to consider past experience, present situation and future contingencies of such decisions. Besides it is needed to forecast about the comparative cost and benefit factors.

 7. Formulation of derivative plan

After selection of course of action, it is essential to formulate action plans for each step of work and to all departments of the organization. These action plans involve in formulation of policies, rules, schedule and budget to complete defined objectives.

 8. Implementation of plan

This is one of the significant steps of planning. This step brings all the procedures of plan into action. For implementation of plan management has to take steps such as provide necessary instruction or guidance, make arrangement of all and timely supervision and control over subordinates.

 9. Reviewing the planning process

The planning procedure is continuous function up to the attainment of defined objectives. For this purpose evaluation of achievement of work according to the time is necessary to know about actual performance and far corrective action in proper time.

Needs for Planning

Planning provides direction, reduce uncertainty, minimize wastes, objective focus and sets standard. This is very crucial in management. The following are the needs of planning with short explanation:

 1. Provide direction

Planning provides direction to managers and others to act for organizational success. It serves as a road map and coordinates all the activities of an organization.

 2. Reduces uncertainty

Planning reduces future uncertainties by forcing managers to think ahead. It helps to anticipate change, considers the impact of change and develops appropriate response. It scans environment.

 3. Minimize waste

Planning minimize probable wastes and enhances productivity and profitability. It also promotes coordination and brings environment of mutual cooperation which minimizes the waste of the organization.

 4. Objective focus

Planning defines objectives and course of action, to achieve these objectives  managers and others have the clear idea about what, when, how and who will do the work for the organizational success.

 5. Sets standard

Planning sets the standard that is used in controlling, without standards or goals controlling cannot be possible. Through controlling we can compare actual performance with pre-determined standards, identify differences if any and take necessary corrective action in time.

Importance/ Benefits of Planning

 1. Focus on objectives/ goals

Organizational goal is the desired future destination point or result which an organization attempt to achieve. Planning coordinates all the activities which are essential to achieve organizational goal. Planning determines about how to coordinate all the activities which are to be performed. Thus, planning helps manager to focus on goal.

 2. Optimum utilization of resources

All the resources which are essential to achieve organizational goals are utilize according to the systematic and in a planned way which will decrease the chances of misappropriation or leakage of the resources. Neither machinery or equipment remain ideal nor excessively used. In this way, optimum utilization of resources is possible.

 3. Minimize uncertainties

Manager has to work in an environment which is uncertain and ever changing. Thus, manager have to face with uncertainties and risks. Well designed plan only help organization to meet their challenges. Planning provide strength and confidence to the manager so, managers can think ahead, anticipate change, consider the impact of change and developed appropriate quick response.

 4. Improve efficiencies

Planning help to select the best course of action out of many alternatives, it also helps to determine objectives. Besides, it clearly defines work, responsibility, authority and accountability for the employees. Similarly, optimum utilization of resources is possible through planning. In this way planning contribute to improve overall working efficiency of the organization.

 5. Facilities to control

Planning is the basic of control. It determines the minimum standard of work to be performed and the time to complete the job. Actual performance is compared with palnned targets to find deviations and make corrections. Control without planning is not possible. Hence, planning makes control effective and meaningful.

 6. Helps in co-ordination

In order to achieve objectives of an organization there should be better co-ordination at individual, group and organizational level. Planning ensure better co-ordination of effort and resources at each level. There is no possibility of better co-ordination without proper planning.

 7. To identify potential opportunities and threats 

Planning cannot completely eliminate the risk and uncertainties of a decision in long term. It can help to identify the potential opportunities and threats and at least minimize the risk or uncertainties.

 8. Tackling complexity of modern business

A business enterprise lives in dynamic and complex environment. For this purpose economic, social, political, and technological trends must be noted and their influence must be taken into account in plans and policies from time to time.

 9. To secure economy in operation

It focuses on efficiency and economy in operation. Planning is a course of action that can take the organization to its objectives at the minimum cost.

Limitations of Planning

 1. Lack of initiative

Organizational activities should be performed remaining within the framework of planning. Employees have no root to apply their skills, knowledge, efficiency and experience. As a result, creativeness gets decline and enthusiasm courage and initiative of employees are lost.

 2. Time consuming and costly process

Process of planning is time consuming and costly. For planning different preliminary tasks such as collecting information, identifying alternatives, evaluating and analysing alternatives, selecting best alternative, preparing detail action of plan etc are needed. Such works take long time and large cost.

 3. Rapid change

In rapidly changing conditions, planning activity taken one period cannot be relevant for another period. So rapid changes in technology, consumers tastes and fashions are further constraints to planning.

 4. Rigidity

Rigidity is also one of the limitation of planning. Planning only focuses on pre-determined policies, procedures and programmes and deviation are consider to be undesirable.

 5. Lack of reliable data

Planning depends upon future data and future is unpredictable and uncertain. If reliable information or data are not available for planning,  it is sure to lose much of its value.

 6. Practical problems

Plans are prepared with expectation but events and situations may not be as we expect. In such conditions, plan should be changed as per requirement but frequent change in plan is difficult and impractical. In reality plan can be changed only in principle or paper.

 7. External constraints

External factors involve changes in government policies, technology, competitors, strategy, costumers tastes, change in fashion etc. Management cannot control this factors it means that the plan which is already defined is not possible to change.

 8. Internal and external inflexibilities

Different types of inflexibilities are also the constraints of planning. Internal inflexibilities may be psychology, policy and procedures and capital investment. External inflexibilities are changes in technology, changes in government policies, industrial unrest, etc.

 9. Repetitive operations

Standing plans demand repetitive operations and in the absence of this such plans lose their significance.

 10. False sense

Planning encourages a false sense of security against risk and uncertainty.