Advantages and Disadvantages of Planning

Human being and the nature of human being is unpredictable because whether human beings do not know what will happen in next minute they always tend to make plans for future. In the case of the corporate world also companies tend to make plans about the future so that all interested parties whether its owners, creditors, employees, shareholders and so on can have an idea about where the company is headed in the future. In order to understand the concept of planning better let’s look at some of the advantages and disadvantages of planning –

Advantages of Planning

  1. The first and foremost advantage of planning is that it helps the company in laying specific objectives or goals for the employees of the company and hence there is no confusion about the roles and responsibilities among the employees as everybody has an idea about what is excepted from them.
  2. Planning helps the company in evaluating the actual performance of the company with plans set by the company and if there is any deviation then the company can easily identify where the loopholes were and take corrective measures so that actual performance matches with the plan. Hence in a way planning helps the other important management function that is controlling in carrying out the control function of the management.
  3. Planning reduces the risks and uncertainties in the sense that plans are made after taking into account various risks factors like the risk of fire, theft, competitor’s actions, contingent liabilities etc… Hence in a way company which has made plans is better equipped to handle uncertainties as oppose to those companies which have no plans in place.
  4. Another advantage of planning is that it reduces overlapping and duplication of activities of the employees of the company as every task is assigned to a specific department which reduces the chances of the same task going to different departments which in turn saves a lot of time and energy of the company.

Disadvantages of Planning

  1. Planning kills creativity and innovation because employees have to work according to plan and if an employee has some innovative idea or way of working then it is not easy for the employee to implement that as any deviation even if it leads to the benefit of the company will not be implemented leading to a loss for the company.
  2. When it comes to the corporate world in today’s times where technology and consumer taste change so rapidly planning may not be fruitful as every assumption about the plan may not be turn out to be valid due to dynamic nature of the business and economic environment.
  3. Planning is expensive in the sense that it requires detailed analysis about the future which involves a lot of manpower, money and other running expenses leading to financial strain on the company, hence before going for extensive planning a company should take the financial aspect also into consideration.
  4. Lack of accuracy is another major limitation of planning because no matter how accurate the data is but since the nature of planning is such that it always dependent on the future and we all know that future is always uncertain which in turn leaves the scope of planning being inaccurate.

As one can see from the above that planning has both benefits and limitations, however majority of companies have planning department as planning is considered to be one of the most important aspects of management.

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