Meaning, features, importance and limitations of planning

The essentials

Planning is deciding in advance what is to be done and how it is to be done. It involves setting objectives and choosing the best course of action to achieve them. Because the future is uncertain, planning tries to anticipate it, but it cannot remove uncertainty completely.

Key points

• Features: focuses on achieving objectives, is the primary function of management (it comes first and lays the base for the others), is pervasive (needed at all levels and in all departments), is continuous, is futuristic (looks ahead), involves decision-making (choosing among alternatives) and is a mental exercise (needs foresight and sound judgement).
• Importance: provides direction, reduces the risks of uncertainty, reduces overlapping and wasteful activities, promotes innovative ideas, facilitates decision-making and establishes standards for controlling.
• Limitations: leads to rigidity, may not work well in a dynamic environment, reduces creativity (middle and lower managers simply follow plans), involves huge costs, is time-consuming, and does not guarantee success (a plan that worked before may fail now).

Exam tips

• 'Planning provides the standards against which actual performance is measured' links planning to controlling.
• If a case describes a manager unable to change a plan even though conditions have changed, the limitation is rigidity.

Common mistakes

• Saying planning removes uncertainty. It only reduces the risks of uncertainty.
• Saying planning is done only by top management. It is pervasive; every manager plans within his or her area.