An organization without planning is like a sailboat minus its rudder. Without planning, organization, are subject to the winds of organizational change. Planning is one of the most important and crucial functions of management.
According to Geroge R. Terry, “Planning is the foundation of most successful actions of any enterprise.”
“Without planning business becomes random in nature and decisions become meaningless and adhoc choices.”Koontz and O’Donnell
Planning becomes necessary due to the following reasons:
1. Reduction of Uncertainty
Future is always full of uncertainties. A business organization has to function in these uncertainties. It can operate successfully if it is able to predict the uncertainties. Some of the uncertainties can be predicted by undertaking systematic. Some of the uncertainties can be predicted by undertaking systematic forecasting. Thus, planning helps in foreseeing uncertainties which may be caused by changes in technology, fashion and taste of people, government rules and regulations, etc.
2. Better Utilization of Resources
An important advantage of planning is that it makes effective and proper utilization of enterprise resources. It identifies all such available resources and makes optimum use of these resources.
3. Increases Organizational Effectiveness
Planning ensures organizational effectiveness. Effectiveness ensures that the organization is in a position to achieve its objective due to increased efficiency of the organization.
4. Reduces the Cost of Performance
Planning assists in reducing the cost of performance. It includes the selection of only one course of action amongst the different courses of action that would yield the best results at minimum cost. It removes hesitancy, avoids crises and chaos, eliminates false steps and protects against improper deviations.
5. Concentration on Objectives
It is a basic characteristic of planning that it is related to the organizational objectives. All the operations are planned to achieve the organizational objectives. Planning facilitates the achievement of objectives by focusing attention on them. It requires the clear definition of objectives so that most appropriate alternative courses of action are chosen.
6. Helps in Co-ordination
Good plans unify the interdepartmental activity and clearly lay down the area of freedom in the development of various sub-plans. Various departments work in accordance with the overall plans of the organization. Thus, there is harmony in the organization, and duplication of efforts and conflict of jurisdiction are avoided.
7. Makes Control Effective
Planning and control are inseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying deviations from plans. Planning helps control by furnishing standards of performance.
8. Encouragement to Innovation
Planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers.
9. Increase in Competitive Strength
Effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashions of people and technological changes etc.
1. Delegation is facilitated
A good plan always facilitates delegation of authority in a better way to subordinates.