• Reduces Uncertainties

Planning is essential to overcome future uncertainties. It enables the organization to face these uncertainties with minimum wastage of resources. Planning is concerned with forecasting the future. It helps to reduce future uncertainties to some extent. 

  • Economical Operation

Planning focuses on efficiency and economy in operation. Guess work is banished, facilities used to the best advantage which minimizes costs of performance. It saves time, effort and money. 

  • Facilitates Control

Planning and control functions are said to be the inseparable twins of management. There is nothing to control without planning and without control planning becomes a futile exercise. Against the backdrop of planning, standards are set, which help in channeling behavior in the right direction.

  • Provides Basis for Team Work

The plan defines the goals. On its basis, works assignments can be fixed. Once member knows what is expected of them, they can contribute better. Further, planning permits employees to participate in the ‘thinking’ process. This helps them to develop a board mentality which leads to their whole hearted effort.

  • Improves Competitive Strength

Planned activities are definitely systematic. Hence they are expected to produce better results in comparison to the non-planned as they are prepared with great exercise based on facts and figures. The result increases in efficiency. It makes the organization strong and capable enough to face competition.

  • Better Coordination

The accomplishment of goals in the absence of coordination is really a difficult task. Well, prepared plans unify interdepartmental activities. Each department knows what it must do to contribute to the objectives of the organization. Without planning such coordination would be a dream, with planning a reality.

  • Systematized and Smoothens Flow of Work

Planning develops a system of working. There exists no place for trial and error. The result is a smooth flow of work as an everyday activity is set, controlled and coordinated as well.

The needs of planning are as follows:

  • Achieve Objective

The plan focuses action in the light of objectives. Planning avoids confusion and misunderstanding and ensures unity of action with the assignment of responsibilities and authority at all levels.

  • Help to Tackle Business Complexity

Running a business in today’s competitive environments, not an easy task. Planning gives proper direction as to how, what, when and by whom the works are to be done. It makes the job of a manager easy and helps to tackle business complexities.

  • Basis of effective control

Planning is basis for effective control. Creative actions of managers require for an organizational goal. Planning is a useful technique for helping managers cope with uncertainty and change by promoting creativity.

  • Minimize the Chance of Business Failure

Planning involves the selection of the most appropriate alternatives and best objectives. Hence, there is the greater possibility of avoiding business failure through sound planning.

  • Best Utilization of Resources

Planning is a must for efficient and effective utilization of the scarce resources by reducing the wastage. Such use of resources can be identified while preparing the plan and selecting the best course of action. Hence the need for planning.

  • Basis for Management Functions

All other managerial activities have no direction in the absence of planning. It is planning which set all management functions towards a move for successfully completing the organizational activities.

1. Fundamental Limitation

The fundamental limitation of planning lies in forecasting. Planning, as we know, is concerned with future, which is uncertain and unpredictable. Assumptions regarding future are forecasting which the essence of planning is. The fate of planning depends on the accuracy of the forecast. It is true that no forecast can be unreliable and inadequate information. There is some element of truth in the statement ‘the only certain thing about a forecast is that it will be wrong.’ After all, forecasting is not as exact science. This is the biggest hindrance for drafting a sound plan.

2. Other Limitations

Other limitations are as follow:

  • Rapid change in environment: Rapid change in technology, fashion, consumer;s taste and preferences etc, are great constraints to planning. They change very frequently. In this situation, plans prepared in one period may not be suitable in another period.

  • Attitudes of Management: Lower level managers not involved in a preparing plan may ignore the need of planning and exert minimal effort to make it a success. Plans imposed offer lead to resentment and resistance among those forced to execute. Managers prefer to sit through immediate problems because they offer instant feedback. 

  • Costly and Time Consuming: Planning is expensive in terms of time spent to formulate, manpower used and different resources needed for execution. Considerable time, money and effort are required for collecting information, evaluating alternatives, selecting the course of action. Such a time and money consuming exercise may not always be desirable.

  • Rigidity: Another serious limitation of planning is its rigidity (inflexible). Planning sets the limit which may curb the initiative of managers. It may sometimes mean foregoing new opportunities and better options.  That is why they do not whole hardly support the implementation of the plan.

  • Lack of action-orientation and Training for Managers: Rapid fire decision making without having to think is more fun. Manager would prefer to fight fires, meet crisis than plan. It is not at all exciting to them. That is why most other well-prepared plans are never implemented.