MANAGEMENT PLANNING & IMPORTANCE

INTRODUCTION

Planning is the first and most important function of management. It is needed at every
level of management. In the absence of planning all the business activities of the organisation
will become meaningless. The importance of planning has increased all the more in view of
the increasing size of organisations and their complexities.

Planning helps an organization chart a course for the achievement of its goals. The
process begins with reviewing the current operations of the organization and identifying what
needs to be improved operationally in the upcoming year. From there, planning involves
envisioning the results the organization wants to achieve, and determining the steps necessary
to arrive at the intended destination--success, whether that is measured in financial terms, or
goals that include being the highest-rated organization in customer satisfaction.

MANAGEMENT

Planning has again gained importance because of uncertain and constantly changing
business environment. In the absence of planning, it may not be impossible but certainly
difficult to guess the uncertain events of future.

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EFFICIENT USE OF RESOURCES

All organizations, large and small, have limited resources. The planning process
provides the information top management needs to make effective decisions about how to
allocate the resources in a way that will enable the organization to reach its objectives.
Productivity is maximized and resources are not wasted on projects with little chance of
success.

ESTABLISHING GOALS

Setting goals that challenge everyone in the organization to strive for better
performance is one of the key aspects of the planning process. Goals must be aggressive, but
realistic. Organizations cannot allow themselves to become too satisfied with how they are
currently doing--or they are likely to lose ground to competitors. The goal setting process can
be a wake-up call for managers that have become complacent. The other benefit of goal
setting comes when forecast results are compared to actual results. Organizations analyze
significant variances from forecast and take action to remedy situations where revenues were
lower than plan or expenses higher.

MANAGING RISK AND UNCERTAINTY

Managing risk is essential to an organizations success. Even the largest corporations

cannot control the economic and competitive environment around them. Unforeseen events
occur that must be dealt with quickly, before negative financial consequences from these
events become severe. Planning encourages the development of what-if scenarios, where
managers attempt to envision possible risk factors and develop contingency plans to deal with
them. The pace of change in business is rapid, and organizations must be able to rapidly
adjust their strategies to these changing conditions.

TEAM BUILDING

Planning promotes team building and a spirit of cooperation. When the plan is
completed and communicated to members of the organization, everyone knows what their
responsibilities are, and how other areas of the organization need their assistance and
expertise in order to complete assigned tasks. They see how their work contributes to the
success of the organization as a whole and can take pride in their contributions.

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 Potential conflict can be reduced when top management solicits department or
division managers input during the goal setting process. Individuals are less likely to resent
budgetary targets when they had a say in their creation.

CREATING COMPETITIVE ADVANTAGES

Planning helps organizations get a realistic view of their current strengths and
weaknesses relative to major competitors. The management team sees areas where
competitors may be vulnerable and then crafts marketing strategies to take advantage of these
weaknesses. Observing competitors actions can also help organizations identify
opportunities they may have overlooked, such as emerging international markets or
opportunities to market products to completely different customer groups.

The following facts show the advantages of planning and its importance for a business
organisation:

PLANNING PROVIDES DIRECTION

Under the process of planning the objectives of the organisation are defined in simple
and clear words. The obvious outcome of this is that all the employees get a direction and all
their efforts are focused towards a particular end. In this way, planning has an important role
in the attainment of the objectives of the organisation.

For example, suppose a company fixes a sales target under the process of planning.
Now all the departments, e.g., purchase, personnel, finance, etc., will decide their objectives
in view of the sales target.

In this way, the attention of all the managers will get focused on the attainment of their
objectives. This will make the achievement of sales target a certainty. Thus, in the absence of
objectives an organisation gets disabled and the objectives are laid down under planning.

PLANNING REDUCES RISKS OF UNCERTAINTY

Planning is always done for future and future is uncertain. With the help of planning
possible changes in future are anticipated and various activities are planned in the best
possible way. In this way, the risk of future uncertainties can be minimised.

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PLANNING REDUCES OVERLAPPING AND WASTEFUL ACTIVITIES

Under planning, future activities are planned in order to achieve objectives.

Consequently, the problems of when, where, what and why are almost decided. This puts an
end to disorder and suspicion. In such a situation coordination is established among different
activities and departments. It puts an end to overlapping and wasteful activities.

Consequently, wastages moves towards nil, efficiency increases and costs get to the
lowest level. For example, if it is decided that a particular amount of money will be required
in a particular month, the finance manager will arrange for it in time.

PLANNING PROMOTES INNOVATIVE IDEAS

It is clear that planning selects the best alternative out of the many available. All these
alternatives do not come to the manager on their own, but they have to be discovered. While
making such an effort of discovery, many new ideas emerge and they are studied intensively
in order to determine the best out of them.

In this way, planning imparts a real power of thinking in the managers. It leads to the
birth of innovative and creative ideas. For example, a company wants to expand its business.
This idea leads to the beginning of the planning activity in the mind of the manager. By doing
so, he will become habituated to them. He will always be thinking about doing something
new and creative. Thus, it is a happy situation for a company which is born through the
medium of planning.

PLANNING ESTABLISHES STANDARDS FOR CONTROLLING

By determining the objectives of the organisation through planning all the people
working in the organisation and all the departments are informed about when, what and
how to do things.

Standards are laid down about their work, time and cost, etc. Under controlling, at the
time of completing the work, the actual work done is compared with the standard work and
deviations are found out and if the work has not been done as desired the person concerned
are held responsible.

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CONCLUSION

A good plan provides various financial and non-financial incentives to both managers
and employees. These incentives motivate them to work hard and achieve the objectives of
the organization. Thus, planning through various incentives helps to motivate the personnel
of an organization.

REFERENCES

http://www.yourarticlelibrary.com/planning/what-is-the-importance-of-planning-in-

management/903/

http://smallbusiness.chron.com/importance-planning-organization-1137.html

https://www.reference.com/business-finance/importance-planning-management-

1c1a1da635589df2

http://www.marketing91.com/7-simple-reasons-justify-importance-planning/

http://kalyan-city.blogspot.in/2012/02/importance-of-planning-why-planning-is.html