By means of planning, management determines the goals and directions of the enterprise and the ways and means of achieving the goals most effectively. It ensures proper utilization of human material resources.
Without proper planning, the activities of and enterprise are most likely to be haphazard. There may be any unnecessary repetition of certain business operations leading to wastage of efforts and resources.
As Billy E. Goelz has rightly remarked that “with out plans, action will become merely random activity, producing nothing but chaos”.
Thus, planning is very essential to achieve consistent and coordinated structure of opera ions focused on desired goals/objectives.
George R. Terry viewed “Planning as basic to the other managerial functions. Without planning, there would be nothing to organize, no one to actuate. and no need to control”.
This stresses e rational and need of planning in the management process Thus, good planning is the foundation of efficient management. It is also a prerequisite to good management.
Rationale or Need or Importance for Good Planning
The following points emphasize the rationale or need for planning in the enterprises/organizations:
- Focus on Objectives/Goals
- Offset Uncertainties and Changes
- Relationship Between Planning and Other
- Facilitates Control
- Organizational Effectiveness
- Innovation and Creative
- Tackles Complexity
- Avoiding Business Failure
(1) Focus on Objectives/Goals
Good and effective management means management by objectives. All planning is directed towards achieving enterprise objectives.
The planning function brings the manager’s attention to focus on the formulation of objectives in clear-cut terms. It compels him to prepare a blueprint of the course of action to be pursued for the accomplishment of the same.
This facilitates unity of action and also avoids confusion or misunderstanding at al levels.
(2) Offset Uncertainties and Changes
Planning helps reduce the risks associated with uncertainties Future uncertainties and changes make a planning a necessity. A business concern operates in an environment, which is uncertain and ever-changing.
Planning is an effort to foresee the future and plan the things in a best possible way. Planning helps identify potential dangers and overcome the adverse effects to a large extent.
It involves forecasting in anticipation of future uncertainties and meets the future challenges.
Hence, it helps in reducing uncertainties and risks of future.
(3) Relationship Between Planning and Other Management Functions
The rationale/no for planning lies in the fact that planning precedes all other functions of management. We know that planning is the beginning of the management process. Before a manager can organize, lead, or control he/she must have a plan. Otherwise, these activities have no purpose or direction. Clearly defined objectives and well developed strategies set the other management functions into motion.
(4) Basis of Control
Planning is particularly helpful to control, because it sets targets and standards against which the actual performance may be judged.
The managerial function of controlling is concerned with a comparison between the planned performance and actual performance.
Any deviation is located and corrected. Therefore planning provides the basis for control. Hence, without plannin control is not possible but planning makes control meaningful and effective.
(5) Organizational Effectiveness
Planning ensures organizational effectiveness in many ways It involves selection of the best possible course of action.
It helps to eliminate all types of waste to achieve optimum utilization of available resources and to minimize the cost of production. Planning is a rationale activity that leads to efficient and economical operations.
(6) Innovation and Creative
A better planning should encourage managers to devise new things. It helps innovative and creative thinking Under keen competition and ever changing organizational growth depends on the innovative and creative actions.
Thus, sound planning encourages innovative A better creative actions.
(7) Tackles Complexity of Modern Business
There is a need for large number of people with different specialization and complex machines to run modern enterprises.
As enterprises become larger and more complex, the manager’s jobs also becomes bigger and more complicated.
This makes necessary for the management to depend on planning to get a clear idea of what is to be done, when it is to be done, where it is to be done and how it is to be done.
(8) Helps in Avoiding Business Failure
Planning helps in best utilization of resources reducing wastage. It involves the selection of best objectives, unity of action, coordination of activities, economy in operation and offsetting uncertainty and change.
In planning there is a no scope for trial and error method. Hence there is a great possibility of avoiding business failures.