IMPORTANCE OF PLANNING

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.