Planning Introduction

Every organization as part of its life cycle constantly engages in the four essential functions of management – planning, leading, organizing and controlling. The foremost of this is planning. It is the part of management concerned with creating procedures, rules and guidelines for achieving a stated objective. All other managerial functions must be planned if they are to be effective.

Managers at all levels engage in planning as objectives and goals have to be set up for the day-to-day activities as well as the broader long-term initiatives.

What is Planning?

Planning is the most basic of all managerial functions which involves establishing goals, setting out objectives and defining the methods by which these goals and objectives are to be attained. It is, therefore, a rational approach to achieving pre-selected objectives.

Planning involves selecting missions and objectives and the actions to achieve them. An important aspect of planning is decision making - that is, choosing the right alternatives for the future course of action.

Organizations have to typically plan for long-range and short-range future direction. By forecasting and predicting the market and socio-political-economic trends, managers can plan to determine where they desire the company to be in future.

Planning involves determining various types and volumes of physical and other resources to be acquired from outside, allocating these resources in an efficient manner among competing claims and to make arrangement for systematic conversion of these resources into useful outputs.

Since plans are made to attain goals or objectives, every plan should lead to the achievement of the organization’s purpose and objectives. An organized enterprise exists to accomplish group objectives through willing and purposeful co-operation.

Planning bridges the gap between where the organization stands currently and wishes to be in future. In the absence of planning, events are left to chance.

Importance of Planning

The importance of planning as the major constituent in the management process is universally accepted. Planning not only brings stability and certainty to business, it also brings in a unified sense of direction and purpose for the achievement of certain well-defined objectives.

Planning Importance

The basic reasons supporting systematic planning by managers are −

  • Sense of Direction − Planning provides a unity of purpose. It brings together all resources towards achieving common goals. Without plans and goals, organizations will respond to everyday events in an ad-hoc manner without considering long-term possibilities.

  • Resource Paucity − Resource crunch is a major challenge for organizations today. Managements are confronted with the task of optimizing outputs with limited human, material, and financial resources through intelligent planning; otherwise, wasteful inefficiencies would lead to higher prices and severe shortages.

  • Uncertainty − Uncertainty is a major challenge even to the most intelligent planner. Organizations continually face micro and macro-economic uncertainty in the course of accomplishing their tasks. Planning helps managers anticipate such changes and meet these challenges.

Besides the above, there are several practical reasons for formulating plans.

  • To focus organizational activity on a set of consciously created objectives.

  • To provide a systematic guide for future activities.

  • To increase organizational outcome through efficient operation.

  • To encourage systematic thinking. Planning facilitates effective delegation of authority, removes communication gaps, and thereby raises overall efficiency.