Business Studies Part I
Business Studies Part II

Planning: Limitations

  • Planning leads to rigidity as plans are drawn in advance and managers may not be in a position to change them in the light of changed conditions.
  • Planning may not work ina dynamic environment as through planning, everything cannot be foreseen.
  • Planning reduces creativity as the top management undertakes planning of various activities whereas the middle managers are neither allowed to deviate from plans nor are they permitted to act on their own.
  • Planning involves huge costs in terms of time and money required to undertake scientific calculations and sometimes it may not justify the benefits derived from it.
  • Planning is a time consuming process and sometimes there is not much time left for implementation of the plans.
  • Planning does not guarantee success because it is not always essential that if a plan has worked before, it will work again, as things may change. This kind of complacency and false sense of security may actually lead to failure instead of success of a business.

The three limitations of planning are described below:

  1. Planning may not work in a dynamic environment:The business environment is dynamic in nature. Every organisation has to constantly adapt itself to changes in its environment in order to survive and grow. However, it difficult to anticipate all the likely future changes in the environment with utmost accuracy. Hence, even with planning everything cannot be foreseen.
  2. Planning reduces creativity:The top management undertakes planning of various activities whereas the other members are expected to merely implements these plans. This restricts the creativity of the middle managers as they are neither allowed to deviate from plans nor are they permitted to act on their own.
  3. Planning involves huge costs:The process of planning involves huge cost in terms of time and money as detailed planning is based on a series of scientific calculations. Moreover it may include a number of related costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan. As a result the expenses on planning may turn out to be much more than benefits derived from it.