What ate the Advantage and Disadvantages of Planning?
In the business world, the success of an organization depends very much on its capability of looking ahead i.e. planning. Good planning needs better thinking by the manager and it can the following Advantage and Disadvantage of Planning.
Advantage and Disadvantage of Planning
Advantage / Benefits of Planning
Advantage of Planning are as follow:
- Reduces Uncertainty
- Focus on Objectives/Goals
- Economical Operation
- Facilitates Control
- Encourages Innovation and Creativity
- Improves Motivation
- Avoids Random Activity
- Improves Competitive Strength
- Focuses attention on objectives and results
- Establishes a basis for teamwork
- Helps anticipate problems and cope with change
- Better coordination
(1) Reduces Uncertainty
An organization has to work in an environment, which uncertain and ever-changing.
Planning gives an opportunity to a manager to foresee various uncertainties, which may because of changes in technology, taste, and fashion of the people, etc.
It h in reducing uncertainties of the future because it involves anticipation of future event.
Effective planning is the result of deliberate thinking based on past experience and present situations.
(2) Focus on Objectives/Goals
Organizations exist to pursue and achieve certain goals or objectives. Planning focuses on these objectives and direct actions for achieving these objectives.
Planning defines these objectives more clearly while determining the course of action to achieve them. It eliminates aimless activities.
A plan serves as the blueprint of the action to be followed for the achievement of objectives. Hence, good management is management by objectives.
(3) Economical Operations
Planning involves a selection of the best possible course of action. It helps to eliminate all types of waste and to achieve the utilization of available resources.
Planning is a rational activity that leads to efficient and economical operations. It helps to minimize the cost of operations and improve the competitive strength of an organization.
(4) Facilitates Control
Planning and control are inseparable. Planning provides the standard against which the actual performance can be measured and evaluated.
Actual performance is compared with standards fixed by the plans. Deviation if any is located.
Control involves keeping activities on the predetermined course b rectifying deviations from plans. Thus, planning helps to control by setting standards and comparing actual performance.
(5) Encourages Innovation and Creativity
Planning is basically the deciding function of management. Planning It helps innovative and creative thinking among managers when they are planning.
It helps to think out new ideas and adjust to the realities of the existing situation. It creates a forward-looking attitude among the managers.
(6) Improves Motivation
Good planning ensures the participation of all managers which will improve their motivation. It encourages a sense of involvement and team spirit.
It improves the motivation and morale of workers because they know clearly what is expected of them.
(7) Ensures Better Coordination
Planning provides the basis for an organized and coordinated effort of the organization. It secures the unity of direction towards the organizational objectives.
All the activities are directed towards common goals. There is an integrated effort throughout the organization. This will lead to better coordination in the organization.
(8) Avoids Random Activity
Planning means deciding in advance what objectives are to be achieved and how they are to be achieved.
It makes systematically integrated and orderly efforts possible and avoids random activity It avoids the need for snap decisions based on impulse and intuition.
Planning provides order and rationality to the organization. It avoids duplication of works and overlapping efforts.
(9) Improves Competitive Strength
Effective planning increases the competitive strength of an organization. Planning is based on systematic and careful forecasts.
It enables the organization to discover new opportunities and thereby shape its own future. It ensures the orderly progress of the organization.
Thus, planning is essential to the successful functioning of every organization. It makes systematic, integrated, and orderly efforts.
In fact, it increases the overall efficiency of the organization and the timely completion of jobs at minimum cost. It avoids duplication of work, random activity, and over-lapping efforts.
Advantages and Disadvantages of planning can be used for all the business development processes and many more.
(10) Focuses attention on objectives and results
Plans keep the people who carry them out focused on the anticipated results. In addition, keeping sight of the goal also motivates employees.
(11) Establishes a basis for teamwork
Diverse groups cannot effectively cooperate in joint projects without an integrated plan. Examples are numerous: Plumbers, carpenters, and electricians cannot build a house without blueprints. In addition, military activities require the coordination of Army, Navy, and Air Force units.
(12) Helps anticipate problems and cope with change
When management plans, it can help forecast future problems and make any necessary changes up front to avoid them. Of course, surprises — such as the 1973 quadrupling of oil prices — can always catch an organization short, but many changes are easier to forecast. Planning for these potential problems helps to minimize mistakes and reduce the “surprises” that inevitably occur.
(13) Economy in operations:
in case of planning, first of all the objectives of the organization are decided and then the best course of action that can be adopted for achieving these goals is decided. In this way the operations that are selected for this purpose are the better alternative out of all the alternatives that are available and this result in an economy in operations.
It also allows avoiding the method of trial and error and at the same time, the resources of the organization are not wasted while making choices. Such economy can be achieved by all the departments of the organization like production, sales and finance etc.
(14) Encourages innovation and creativity:
A better system of planning is the system that is capable of encouraging the managers to come up with new ways of doing things. In this way, it should encourage creative thinking and innovation among the managers because in this case they think regarding new ways while involved in the process of planning.
This process should provide awareness regarding the individual participation and at the same time it should encourage an atmosphere of openness which in turn helps in achieving the goals of the organization.
(15) Better coordination:
as the organizational goals are common, all the persons make concerted efforts to achieve these objectives. At the same time, planning also helps in avoiding the duplication of efforts. In this way planning results in better coordination and ultimately results in the achievement of better results.
Constraints / Disadvantage or Limitations of Planning
Planning plays an important role in directing organizational activity. It is a primary and pervasive function. Hence, the need for planning is unquestioned.
Despite the many benefits of planning, there are several constraints and limitations of planning. Some constraints are inherent in the planning process whereas others are associated with planning technique s and planners themselves.
Disadvantage or Limitations of Planning are as follow
- Lack of Reliable Data
- Time Consuming Process
- Costly Process
- Rapid Change
- Internal Inflexibility
- External Inflexibility
- Resistance to Change
(1) Lack of Reliable Data
Planning is undertaken on the basis of certain assumptions in the future. The future is unpredictable and uncertain. Hence. future cannot be known accurately because reliable information d data are not available.
If reliable information and data are not available for planning it is sure to lose much of its value. Planning becomes inaccurate and unreliable due to errors in individual judgment and imperfect techniques of planning.
A wrong assumption or lack of required competence on the part of planners also reduces the effectiveness of planning. Thus, planning for future risks and uncertainties can give no perfect assurance.
Planning implies strict adherence to predetermined policies procedures and programs. This restricts an individual's freedom. initiative and desire for creativity.
Business is by nature dynamic and the red-tapism created by detailed planning can prove disastrous for an organization. However, this difficulty can be overcome by making flexible plans.
(3) Time Consuming Process
Planning is a time-consuming process. The various steps of planning may consume a lot of time. Considerable time is required for the collection, analysis, and interpretation of information for planning.
It is, therefore, unsuitable in those situations where sudden or immediate action is required to meet unexpected contingencies.
In some cases, advance planning can delay action, resulting in the loss of profitable opportunities.
(4) Costly Process
Planning is also a costly process. Money and effort have to be spent on collecting information, preparing estimates, forecasting, and evaluating alternatives.
Services of experts are necessary to select the best and most economical course of action for the organization.
Planning costs may go on increasing if planning becomes more elaborate and formulated due to additional st time and proper work.
(5) Rapid Change
Rapid changes in technology, consumer tastes, and fashions are further constraints to planning. In a complex and rapidly changing environment planning is more difficult as it adds new problems. In rapidly changing conditions planning activity taken in one period can not be relevant for another period.
(6) Internal Inflexibility
Internal inflexibility may be psychological, policy and procedures, and capital investment which creates difficulties in planning and implementation.
Psychological inflexibility lies in the form of resistance to change. Whenever a change is undertaken employees resistance to change, as they believe that the present is more desirable and more reliable.
Similarly, once policies and procedures are established they are hard to change. In most cases, once capital is invested in fixed assets, it becomes more difficult to change work procedures in the near future.
This inflexibility continues during the entire life of fixed assets.
(7) External Inflexibility
There is certain external inflexibility over which managers do not have any control. Changes in technology, changes in government policies, industrial unrest, etc are important external inflexibility on planning.
They greatly hamper managerial planning in the organization.
The above limitations of planning point out the complexities and problems involved in the planning process. Recognition of these limitations will help managers in more careful and systematic planning.
it also needs to be noted that the process of planning can be very expensive. For example, collecting information and testing different course of action require much investment by the company.
In the same way, sometimes these expenses can be so high that it is very difficult for small enterprises to become involved in planning. Therefore, particularly the long-term planning is out of reach for a large number of organizations due to the heavy expenses that are involved in it.
It is very important that the utility that has been derived from planning should not be less than the expenses that have been incurred on planning.
(9) Resistance to Change:
Most of the persons, generally, do not like any change. Their passive outlook to new ideas becomes a limitation to planning. McFarland writes. “The principal psychological barrier is that executives, like most people have more regard for the present than for the future.
The present is not only more certain than the future, it is also more desirable. Resistance to change is commonly experienced phenomenon in the business world. Planning often implies changes which the executive would like to ignore, hoping they would not materialize.”
The notion that things planned for future are unlikely to happen is not based on logical thinking. It is the planning which helps in minimizing future uncertainties.
In this way, we can discuss the Advantage and Disadvantages of Planning.