What is the need for Planning?

Planning is considered as the first step in the process of management. With the increasing complexities in the business environment, increasing competition in markets, technological changes and the changes taking place in consumer preferences, the need for proper planning has become all the more important. The following reasons can be mentioned in order to emphasize the need for planning:-

1. Growing Complexities of Business: As a result of the increasing complexities in the business environment, planning has become very important for the modern businesses. Apart from these, significant advancements are being made on the technological front. In the same way, the preferences of the consumers are also changing rapidly. Due to all these reasons, it has become important that not only planning should be done for the present business environment but it should also be done for the future business environment. The outlook of the process of planning is future oriented and therefore it can take into account all the developments that are probable in the future.

2. Related with Performance: the process of planning helps the organization in establishing goals for each department and also for each employee. It has been seen that where formal planning process is present, the organizations have performed better as against the organizations where the planning process is not undertaken regularly. The variables for evaluating the performance can be the return on investment, earning per share or sales target etc. It has been established by several studies that the process of planning significantly helps in improving the performance of the organization.

3. Focus on objectives: the emphasis in case of the process of planning is on establishing objectives for the organization and also providing guidelines which can help in achieving these objectives. The organizational goals provide a direction and all the decisions made during the process of planning are directed towards the achievement of these goals. It also helps in ensuring that the time and effort of the management is utilized to its fullest.

4. Proper allocation of resources: The process of planning helps in anticipating the needs of the organization. In this way, it allows proper planning of the Inquisition and the elevation of organizational resources which in turn reduces the wastage of these resources and makes sure that these resources are optimally used.

5. Facilitates control: the process of planning can be used for the purpose of designing a mechanism of control in the organization. For example, quantitative targets can be set and they can be compared with the real performance and the difference between the two can be easily noticed by the management. In this way, a periodical review of the performance can help in identifying low performance areas. Any deviation present in profits, production or sales can be easily noticed during these periodical reviews and therefore the management can immediately take remedial action.

6. Helpful in decision-making: it also needs to be noted that the process of planning is significantly helpful in decision-making. As the process of planning helps in deciding the actions that need to be taken in order to achieve the organizational goals, this process also provides the basis for decision making. The objectives as well as the plans policies etc. act as the guidelines that help in routine decision-making within the organization.

7. Avoiding business failure: the process of planning also helps in avoiding any business failures. The common reasons behind business failures are wrong and unscientific plans. Therefore, if the plans are not formulated properly, the resources of the organization may be wasted. As a result, the organization will not be in a position to deal with its competitors where well-designed plans are in place. In this way, efficient planning helps the organization in optimally using the resources available to it and in this way the chances of business failure are reduced significantly with the help of efficient planning.