Aims and Importance of Planning

Planning is of paramount importance both for an organisation and an economy. Sound plans are essential to effective management, be­cause they serve as guides to all management functions.

Lack of well-defined objectives and priorities is the common cause of failure. ‘Failure to plan is planning to fail’. Planning is useful to an organisation in the following ways:

(i) Focuses attention on objectives and results:

Every organisation exists to achieve certain objectives:(Planning concentrates attention on the dominant goals of the organisation. It forces the members of the organisation not to get lost in the maze of routine activities and lose sight’ of the broad objectives for which the organisation was established.


“Plans alone cannot make an enterprise successful. Action is required; the enterprise must operate. Plans can, however, focus attention on purposes.

They can forecast which actions will tend toward the ultimate objective which tends away and which are merely irrelevant. Sound Planning avoids the danger of means becoming ends in themselves. Planning provides a rational approach to predefined objectives. It secures unity of purpose and action.

(ii) Reduces uncertainty and change:

Uncertainly and risks are inevit­able and planning cannot eliminate them. But planning enables an organisation to cope with uncertainty and change.


Although the exact future can seldom be predicted and factors beyond control may interfere with the best-laid plans, without planning events are left to chance. (With the help of planning, an enterprise can predict future opportunities and threats and make due provision for them) Instead of leaving future events to chance, they can be made to occur in a desired manner, plan­ning seeks to minimize risk while taking advantage of opportunities.

Planning helps to identify potential threats and opportunities. It also keeps management alert to the changing environment of business. In this way planning provides additional strength to the organisation for survival and growth in the face of turbulence.

(iii) Provides sense of direction:

Planning saves an organisation from drifting and avoids aimless activities. It directs human efforts into endeavors that contribute to the accomplishment of goals. “If you don’t know where you are going ,any road will get you there. ‘^Planning makes work more meaningful and activities more orderly.


It bridges the gap bet­ween where we are and where we want to go. Without planning action is likely to become random activity, producing nothing bad chaos. Plan­ning replace random and haphazard operation by orderly and mean­ingful action.

(iv) Encourages innovation and creativity:

Innovation and creativity are prerequisites to continuous growth and Steady prosperity of busi­ness. Sound planning encourages innovative thought and creativity of a manager.

According to D.E. Hussey, “a good planning process will pro­vide avenues for individual participation, will throw up more ideas about the company and its environment, will encourage an atmosphere of frankness and appropriate self-criticism and will stimulate managers to achieve more.”


Earning is forward looking and enables an enterprise to cope with technological and other developments. Being anticipatory in nature, planning improves the adaptability of an organisation to the changing environment. Planning keeps the organisation tuned to its environment.

(v) Helps in coordination:

Planning is the best stage for the integra­tion of diverse forces at work. Sound planning interrelates all the acti­vities and resources of an organisation. It also helps to relate internal conditions and processes to external events and forces.

The activities and efforts of various departments and divisions can be harmonized with the help loan overall plan, planning makes for balance and consis­tency in efforts Planning leads to a consistent and coordinated structure of operations.


Effective planning can minimize the dangers of misun­derstandings that result from lack of information and confusion.

(vi) Guides decision making:

Planned targets serve as the criteria for the evaluation of different alternatives so that the best course of action may be chosen. By predicting future, planning helps in taking future-oriented decisions and promotes rationality in executive thinking Sound plans prevent hasty judgment and haphazard action.

“Without planning, business decisions would become random ad hoc choices, as though a pilot set out without knowing whether he wished to fly to London, Hong Kong or Johannesburg.”7planning eliminates the need for trial and error in decision-making)


(vii) Provides a basis for decentralization:

Planning helps in the dis­persal of decision-making power among the lower levels of manage­ment. Well-established plans serve as guides to subordinates and reduce the risk involved in delegation of authority. Planning also helps to improve the motivation and morale of employees by providing targets of performance.

(viii) Provides economy in operation:

Planning facilitates optimum utilization of available resources. It makes at possible for things to occur which would not otherwise happen. It improves the competitive strength of an organization by helping it to discover and exploit opportunities a rational solution to problems, planning results in the use of most efficient methods of work.

“Planning minimizes costs because of the emphasis on efficient operation and consistency. It substitutes joint  directed efforts for uncoordinated piece-meal activity, even flow of work for uneven flow and deliberate decision for snap judgment.”

Planned effort is always more efficient than unplanned action. Thus, planning improves organizational effectiveness. It promotes growth and prosperity.

(ix) Facilitates control:

Planning provides the basis for control. Plans serve as standards or benchmarks for the evaluation of actual performance. Sound planning enables management to control the events rather than be controlled by them.

It permits control by exception. Control cannot be exercised without plans because the function of control is to ensure that the activities conform lo the plans. Any attempt to control without plans is meaningless as there are no gauges for performance.