8) What is the importance of planning in management?

• 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 organization will become meaningless. 

• The importance of planning has increased all the more in view of the increasing size of organizations and their complexities.

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

(1) Planning Provides Direction:

                                                                                                                 
Under the process of planning the objectives of the organization are defined in simple and clear words. 

In this way, planning has an important role in the attainment of the objectives of the organization.

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.




(2) Planning Reduces Risks:

Planning is always done for future and future is uncertain. 

With the help of planning possible changes in future are activities and planned in the best possible way. 

In this way the risk of future uncertainties can be minimized.

(3) Planning Promotes Innovative Ideas

 

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. 

(4) Planning  Decision Making:

Decision making means the process of taking decisions. 

A variety of alternatives are discovered and the best alternative is chosen. 

The planning sets the target for decision making. 

It also lays down the criteria for evaluating courses of action. 

In this way, planning facilitates decision making.




(5) Planning Establishes Standards for Controlling:

By determining the objectives of the organization through planning all the people working in the organization 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. 

For example 
                      A laborer is to do 10 units of work in a day (it is a matter of planning), but actually he completes 8 units. 

                     Thus there is a negative deviation of 2 units. For this, he is held responsible.