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What is the 5 importance of planning?

(5) DECISION MAKING Through planning, managers compare different alternatives with their benefits and limitations. Planning helps make rational decisions by choosing the best most profitable alternative which may bring lower cost, adaptable to the organisation and situations.

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Planning

What is Planning?

Planning is ascertaining prior to what to do and how to do. It is one of the primary managerial duties. Before doing something, the manager must form an opinion on how to work on a specific job. Hence, planning is firmly correlated with discovery and creativity. But the manager would first have to set goals. Planning is an essential step what managers at all levels take. It needs holding on to the decisions since it includes selecting a choice from alternative ways of performance.

Also see: Difference Between Planning And Controlling

Importance of Planning

Planning is definitely significant as it directs us where to go, it furnishes direction and decreases the danger of risk by making predictions. The significant advantages of planning are provided below: Planning provides directions : Planning assures that the objectives are certainly asserted so that they serve as a model for determining what action should be taken and in which direction. If objects are well established, employees are informed of what the company has to do and what they need do to accomplish those purposes. : Planning assures that the objectives are certainly asserted so that they serve as a model for determining what action should be taken and in which direction. If objects are well established, employees are informed of what the company has to do and what they need do to accomplish those purposes. Planning decreases the chances of risk : Planning is an activity which permits a manager to look forward and predict changes. By determining in prior the tasks to be completed, planning notes the way to deal with changes and unpredictable effects. : Planning is an activity which permits a manager to look forward and predict changes. By determining in prior the tasks to be completed, planning notes the way to deal with changes and unpredictable effects. Planning decreases overlapping and wasteful activities : Planning works as the foundation of organising the activities and purposes of distinct branches, departments, and people. It assists in avoiding chaos and confusion. Since planning guarantees precision in understanding and action, work is conducted on easily without delays. : Planning works as the foundation of organising the activities and purposes of distinct branches, departments, and people. It assists in avoiding chaos and confusion. Since planning guarantees precision in understanding and action, work is conducted on easily without delays. Planning encourages innovative ideas : Since it is the primary function of management, new approaches can take the form of actual plans. It is the most challenging project for the management as it leads all planned actions pointing to growth and of the business. : Since it is the primary function of management, new approaches can take the form of actual plans. It is the most challenging project for the management as it leads all planned actions pointing to growth and of the business. Planning aids decision making: It encourages the manager to look into the future and make a decision from amongst several alternative plans of action. The manager has to assess each option and pick the most viable plan.

Example:

Through innovative products, the companies maintain a competitive edge in the market and it is planning through which it is decided how to innovate. In a company of real estate, there are different departments like Marketing, HR, Sales, and Finance. Each department has assigned targets and jobs. This reduces overlapping of work and wastage of efforts. (4) REDUCES THE RISKS OF UNCERTAINTY Planning is done for the future and the future is full of uncertainties. Planning enables a manager to look forward and take appropriate steps to deal with future uncertainties and changes. Mis-happenings and uncertain events cannot be eliminated completely but their effect on the organisation can be minimised if we plan how to overcome such situations. Example:An organization might ensure its inventory yet an accident can take place and damage its assets. So, the future is uncertain yet we can minimise the risks by proper planning. (5) DECISION MAKING Through planning, managers compare different alternatives with their benefits and limitations. Planning helps make rational decisions by choosing the best most profitable alternative which may bring lower cost, adaptable to the organisation and situations. Example: A group of marketing experts (deciding for best marketing strategy for the product) chalk out different alternatives evaluates these alternatives and finally selects the best alternative. (6) SET STANDARDS FOR CONTROLLING Planning involves the setting of goals and these predetermined goals are accomplished with the help of managerial functions like planning, organising, staffing, directing and controlling.

Planning provides standards against which actual performance is measured.

Without standards, the actual performance of each individual, department, and division cannot be measured. With the help of standards, deviations in the performance are found and such deviations become the basis of effective planning for future planning. Planning provides a basis to bring the desired output under controlling function and result of controlling function provides guidelines for effective planning. Example: A torch manufacturing company decides to manufacture 8000 torches in the month of December. However with the passage of 15 days only 2000 torches were manufactured. So the company decided to revise its standard for production. Q.1- “Lack of planning brings chaos and lack of coordination.” Identify the statement and choose the correct answer. a. Planning reduces the risks of uncertainty b. Planning reduces overlapping and wasteful activities c. Planning provides directions d. None of the above Answer : d. None of the above Q.2- “Planning provides _________________ and reducing the risk of uncertainty, planning helps managers in the many other ways.” a. Actions b. Direction c. Coordination d. None of the above Answer : b. Direction Q.3-“Without _________________, actual performance of each individual, department, and division cannot be measured.” a. Planning b. Directing c. Coordination d. Standards Answer : a. Planning 5-6 MARKS QUESTIONS Q.1 WHAT IS PLANNING? HOW DOES IT HELP AN ORGANISATION IN ACHIEVING ITS GOALS? (OR) DEFINE ‘PLANNING’ STATE ANY FOUR POINTS OF IMPORTANCE OF PLANNING. (OUTSIDE DELHI 2014) (OR) IN ADDITION TO PROVIDING DIRECTIONS AND REDUCING THE RISK OF UNCERTAINTY PLANNING HELPS MANAGERS IN THE MANY OTHER WAYS.’ EXPLAIN ANY FOUR SUCH WAYS. (DELHI COMPTT. 2014) (OR) IS PLANNING ACTUALLY WORTH THE HUGE COSTS INVOLVED? EXPLAIN. (NCERT) ANSWER: (A) MEANING OF PLANNING Planning bridges the gap between where we are (present) and where we want to go (future). Planning is deciding in advance what to do, how to do when to do it and by whom it is to be done. (B) IMPORTANCE OF PLANNING: (a) REDUCES OVERLAPPING AND WASTEFUL ACTIVITIES Through planning, the efforts of various individuals and departments are coordinated properly.

Thus, useless and wasteful activities are reduced or eliminated.

It ensures clarity in thoughts and actions, work is carried on smoothly without any confusion and misunderstanding. (b) PROVIDES DIRECTION By stating in advance how work is to be done, planning provides direction for action. Planning ensures that goals and objectives are clearly defined so that, they act as a guide for deciding what action should be taken and in which direction. (c) PROMOTES INNOVATIVE IDEAS Planning is deciding in advance what to do and how to do it.

New ideas can take the shape of concrete plans and innovation.

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Innovation is required to modify the plans for the growth and expansion of the business. Example:Deciding in advance helps to innovate as a company can foresee what they may be facing in future and accordingly it can bring innovation in their products. (d) REDUCES THE RISKS OF UNCERTAINTY Planning is done for the future and the future is full of uncertainties. Planning enables a manager to look forward and take appropriate steps to deal with future uncertainties and changes. Mishappenings and uncertain events cannot be eliminated completely but their effect on the organisation can be minimised with proper planning. Example:An organisation might take every step to prevent an accident; still, it can take place and damage its assets. So, the future is uncertain but we can minimise the risks by proper planning. (e) FACILITATES DECISION MAKING Through planning, managers compare different alternatives with their benefits and limitations. Planning helps to make rational decisions by choosing the best possible alternative. With correct planning, cost-effective methods can be chosen which can also prove to be the most profitable one. Example: Marketing experts in a company choose the best marketing strategy out of available alternatives, to promote the product of a company. (f) SET STANDARDS FOR CONTROLLING Planning involves the setting of goals and whether these predetermined goals are accomplished that is ensured with controlling.

Planning provides standards against which actual performance is measured.

With the help of standards, deviations in the performance are found and corrective actions are taken.

Therefore, planning set standards for controlling.

Example:A torch manufacturing company decides to manufacture 8000 torches in the month of December. However, with the passage of 15 days, only 3000 torches were manufactured. Thus, the company took corrective actions and made some changes and arrangements to make the remaining 5000 torches in 15 days.

1 MARK QUESTIONS Q.1 DEFINE ‘PLANNING’. (OUTSIDE DELHI COMPARTMENT 2015) ANSWER: Planning bridges the gap between where we are (present) and where we want to go (future). Q.2 PLANNING PROVIDES DIRECTIONS. WHAT IS DIRECTION IN PLANNING? (OR) HOW DOES PLANNING PROVIDE DIRECTION? (NCERT) ANSWER: Planning helps to build a roadmap to achieve the goals of the organisation and directs all activities towards that course of action. Q.3 PLANNING MAY HAVE DIFFERENT ALTERNATIVES AND THE MANAGERS COMPARE THESE ALTERNATIVES TO ACHIEVE THE BEST FEASIBLE ALTERNATIVE. IDENTIFY WHICH POINT OF IMPORTANCE IS HIGHLIGHTED HERE? ANSWER: Planning facilitates decision making. Q.4 WHAT IS THE PURPOSE OF SETTING STANDARDS IN THE PROCESS OF PLANNING? ANSWER: Standards set in the planning process help in the measurement of actual performance and thus, deviations are found and corrected in time Q.5 DREAMS CAN BE TURNED INTO REALITY ONLY WHEN MANAGERS THINK IN ADVANCE WHAT TO DO AND HOW TO DO IT. NAME THE FUNCTION OF MANAGEMENT INDICATED BY THE STATEMENT. (DELHI COMPTT. 2014) ANSWER: Planning. Q.6 ‘DECIDING IN ADVANCE WHAT TO DO AND HOW TO DO’ IS ONE OF THE BASIC MANAGEMENT FUNCTIONS’. GIVE THE MEANING OF THIS FUNCTION. (OUTSIDE DELHI COMPTT. 2014) ANSWER: The function of management referred in the above statement is planning which bridges the gap between where we are (present) and where we want to go (future). Q.7 AT WHICH LEVEL OF MANAGEMENT IS PLANNING FUNCTION PERFORMED? ANSWER: At all levels of management. Q.8 WHAT ARE THE MAIN POINTS IN THE DEFINITION OF PLANNING? (NCERT) ANSWER: (a) What is to be done? (b) How it is to be done? (c) Where is it to be done? (d) When is to be done? (e) By whom it is to be done?

The above mentioned is the concept, that is elucidated in detail about the ‘Planning’ for the class 12 Commerce students. To know more, stay tuned to BYJU’S.