What Is Planning And It's Importance? | Limitations of Planning- A Full Guide


Planning refers to a thinking process that determines in advance what to do. Importance of planning is  the primary function of every organization because without basic functions the objectives cannot be fulfilled. It involves forward-looking and we can say that the planning is futuristic in nature.


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Meaning of Planning?

Planning means is deciding the way of doing the actual work. It helps in achieving the goals of the organization very effectively. It provides the right path for executing the activities in the right direction. 

Definitions of Plannings

"Planning bridges the gap between where we want to go. It makes things possible that wouldn't have happened otherwise."

                                                                              - Koontz and O'Donnell

"The action plan, as well as the envisaged outcome, the line of action to be followed, the steps to be followed, and the methods to be used."

                                                                                                                                                                                                                    — Henry Fiolo

“Planning is deciding in advance what is to be done. When manager plans, he or she plans action for the future, striving to achieve a coherent, coordinated structure of operations aimed at desired results.

Importance of Planning

Importance of planning in management or financial planning, it is an intellectual task and it is very important for organizations. So let's discuss some points:

1. Reduction of Uncertainty:

Organizations also face certain uncertainties and planning helps in reducing the risks. It provides solutions to problems because the manager sets certain assumptions about the future at the time when he makes plans. So those assumptions help mitigate risk in times of uncertainty.

2. Right Direction:

The plan provides the precise direction to proceed. Every manager works on certain arrangements regarding the activities of the organization, and good determination before execution gives better results. It leads to unity of direction.

3. Planning to Raise Innovative Ideas:

The planning process forces managers to think differently so that uncertainties can easily overlap. There is a lot of scope for the managers to set and make a blueprint for the future activities.

4. Planning Facilitates Fast Decision Making:

It helps the management to take the right decisions in the right way. Managers in every organization are setting future goals in advance; through these goals they can take decisions as per the requirement of working conditions.

5. Reduction in Useless Activities: 

Plans confirm the clarity of thoughts and actions, through which all the people of the organization carry out their activities very easily. This leads to less wastage and we can say that managers and employees can achieve their objectives with better utilization of resources at minimum cost due to doing things according to the plans made by them.


We cannot say that thinking in advance is a guarantee of success; there are some limitations which are as follows:

1. Not working in changing environment:

Sometimes planning does not work effectively due to change in economic policy, change in fashion, change in legal environment etc as these are external factors and are not directly controlled by the business units. Hence we can say that the manager cannot predict these changes accurately and the planning may fail.

2. Hardness:

Once the manager makes a plan, each employee has to follow it and execute it in activities. So the determination that is already there may not allow for a new way of doing things. It's difficult to change.

3. Takes a lot of time (time consuming):

The planning process takes a long time as the manager has to evaluate the alternatives and select the best option. This process takes a lot of time and there is delay in action. And he has to avoid planning whenever there is a need to make quick decisions. 

4. Heavy Cost:

Thinking is an intellectual process and companies have to hire experts to do this process. These experts spend a lot of time and companies pay them for their efforts. So we can say that it is a cost consuming process.

5. Doesn't Give Guaranteed Success:

Sometimes forecasts can give wrong results. It does not mean that advance planning always provides a good solution and execution; it can lead to failure as the business entity has an external environment which can affect the business in the opposite direction.

In this article we told you about importance of planning, Meaning of planning and limitations of planning. if you would like this so please share it with friends also.

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