The following points are the importance of planning.
a. Selection of Optimum Goals
- Planning involves rational thinking and decision-making concerning a proposed course of action. It also implies selection of one course of action and rejection of outer possible courses of action.
- The selected course of action is naturally the one that promotes the overall organizational goals within the frame work of the resource availability and economic, social and political factors.
- For optimization of overall organizational operations, it may sometimes be necessary to sub-optimize i.e., to reduce the efficiency of some departments.
b. Tackling increasing complexities
- An organization is a heterogeneous group of human beings who differs from one another in many respects.
- It is unlikely that they will work effectively and harmoniously in the interest of the organization.
- Unless they have a plan in the making of which they have had a share and, which they regard as common property.
- So, planning is essential to any goal-directed activity.
c. Meeting environmental changes
- Business environmental changes move rapidly and sweepingly than can be imaged.
- Change in social values, increase in competition, new product discoveries, change in consumer tastes and preferences, have each the potential to upset any organization.
- Management should discern and exploit the emerging situation by adjusting and adapting the inputs and transformation process to suit the environmental changes.
- Only proper and effective planning can help the management to do so.
d. Safeguard against Business failures
- Business failures are blamed on cut-throat competition, unpredictability of consumer tastes and preferences, rapid technological changes and abrupt economic and political development.
- In general, failure of business is caused due to rash and unscientific decision – making, which is a direct result of lack of proper planning.
e. Unity of Action
- Planning enables the people within an organization to work effectively and harmoniously for accomplishment of common goals.
- It provides them a stake in their own future and thus induces them to do their utmost to meet the challenge.
f. Effective Co-ordination and Control
- Planning makes it easy to exercise effective control and co-ordination.
- The work to be done, the persons and the departments which have to do it, time-limit within which it is to be completed and the costs to be incurred, are all determined in advance.
- This facilitates proper and timely measurement of actual performance and its comparison with the planned performance.
- In case, actual performance is not as per the plans, factors responsible for the same can be ascertained.
- In the absence of planning, there will be no scientific standards to measure and evaluate performance.
