Importance of Planning

The importance of planning as the major constituent in the management process is universally accepted. Planning not only brings stability and certainty to business, it also brings in a unified sense of direction and purpose for the achievement of certain well- defined objectives.

The basic reasons supporting systematic planning by managers are:

Sense of Direction - Planning provides a unity of purpose. It brings together all resources towards achieving common goals. Without plans and goals, organizations will respond to everyday events in an ad-hoc manner without considering long- term possibilities.

Resource Paucity - Resource crunch is a major challenge for organizations today.

Managements are confronted with the task of optimizing outputs with limited human, material, and financial resources through intelligent planning; otherwise, wasteful inefficiencies would lead to higher prices and severe shortages.

Uncertainty - Uncertainty is a major challenge even to the most intelligent planner. Organizations continually face micro and macro-economic uncertainty in the course of accomplishing their tasks. Planning helps managers anticipate such changes and meet these challenges.

Besides the above, there are several practical reasons for formulating plans.

- To focus organizational activity on a set of consciously created objectives.

- To provide a systematic guide for future activities.

- To increase organizational outcome through efficient operation.

     -     To encourage systematic thinking. Planning facilitates effective delegation of authority, removes communication gaps, and thereby raises overall efficiency.