Business Studies Part I
Business Studies Part II

Planning: Importance

  • Planning provides direction as it acts as a guide for deciding what course of action should be taken to attain the organisational goals.
  • Planning reduces the risk of uncertainty arising due to the dynamic nature of business environment as it enables a manager to anticipate and meet changes effectively.
  • Planning reduces overlapping & wasteful activities as it serves as the basis for coordinating the activities and efforts of different divisions and individuals.
  • Planning promotes innovation as it encourages new ideas that can take shape of concrete plans.
  • Planning facilitates decision making as it enables a manager to choose the best alternative course ‘of action among the various available alternatives in light of present and future conditions.
  • Planning establishes standards for controlling. Planning provides standards against which the actual performance is measured and timely corrective actions the taken.

The three points indicating the importance of planning is described below:

  1. Reduces the risk of uncertainty:Planning relates to deciding in advance about the tasks to be performed in future. This enables a manager to anticipate changes and devise the way to deal with changes and uncertain events effectively.
  2. Planning promotes innovative ideas:Planning is one of the basic managerial functions. Before doing something, the manager must formulate an idea of how to work on a particular task. Thus, planning is closely connected with creativity and innovation. It is the most challenging activity for the management as it guides all future actions leading to growth and prosperity of the business.
  3. Avoiding overlapping and wasteful activities:Planning ensures clarity in thought and action and serves as the basis of coordinating the activities and efforts of different individuals and departments. Therefore, by curtailing useless and redundant activities it helps in smooth working of the organisations work is without interruptions. Moreover, it makes detection of inefficiencies easier so that timely corrective measures may be taken to avoid them in future.