Limitations of Planning
1. Planning leads to rigidity: most of the times planning leads to rigidity I n functioning because it is not easy to make changes in them. When the circumstances change, following the pre-decided plan may no be in the interest of the organization.
2. Planning may not work in dynamic environment: Business environment is dynamic. The organization has to constantly adapt itself to the changes. For example, if economic policies are modified, or political conditions change, or there is a natural calamity. All these changes may not be predicted by planners and so there may be an obstacle to effective planning.
3. Planning reduces creativity: Planning is an activity done by the top management. Rests of the members just implement it. They are not permitted to deviate from the plans. So the creativity in them gets lost. For them, there is nothing new or innovative.
4. Planning involves huge cost: planning involves a lot of cost in terms of time, money and accuracy. A lot of calculations are required to be done and professional experts are to be hired in order to plan. When the cost of planning exceeds the value of benefits derived from it, it becomes uneconomical to plan.
5. Planning is time consuming: Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.
6. Planning does not guarantee success: The success of an organization depends upon properly drawn plans. Managers generally have a tendency to rely on previously tried and tested successful plan. However, it is not always true that just because a plan has worked before it will work again. It may lead to failure instead of success.


Types of plans
1. Objectives: They are the ends towards which the activities are directed. It is what you would like to achieve. An objective should be:
-Related to a single activity.
-Related to end result and not to the activity performed.
-It should be measurable in quantitative terms.
-It must have a time limit for achievement.
-It must be achievable.
2. Policies: It is an organizational own way of handling a problem. Its general response to a particular situation. They are the guides to thinking and decision making. For example:
· A school’s policy that admissions will be granted to only those applicants scoring minimum 75% marks.
· An organization’s policy of handling complaints within four hours.
3. Procedures: it is the sequence of steps to be followed by employees in different situations. It is the exact manner in which an activity is to be achieved. For example:
-Set up a file for applicants;
-Accept the forms and put them in a file;
-Ask for other certificates to verify marks of students;
-Put those documents into the file;
-Give the file to admission incharge.
4. Rules: They are the directives to do or not to do things, to behave or not to behave in a particular way. They must be strictly followed and if they are not followed, then strict actions can be taken against those who are disobeying the rules. They are spelt out to create an atmosphere of discipline in the organization. For example there can be a rule of no smoking in the organization.
5. Programme: it is a combination of goals, policies, procedures, and rules. They are prepared at different levels. A primary programme is prepared at the top level and then to support the primary plan, supportive programmes at different levels are prepared for smooth functioning of the company.
6. Methods: A method is a systematic way of doing routine and repetitive jobs. It is common way of doing a job so that there is no confusion in the minds of employees and comparisons are possible. For example, method of valuation of stock may be LIFO or FIFO.
7. Budgets: It is the statement of expected result expressed in numerical terms. Most of the times, budgets are financial in nature but it does not mean that company prepares only financial budget. Along with the financial budget, it also prepares capital budget, sales budget etc.

Planning

Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done.” It bridges the gap between where we are and where we want to reach in future.

Features of Planning
1. Primacy of planning: Planning is the primary or first function of management. No other function can be performed without planning. It provides the basis for other functions like organizing, staffing directing and controlling.
2. Forward looking: planning is looking ahead and is a futuristic function. It is never done for the past. Managers try to make predictions for the future according to their past experiences.
3. Pervasive: Planning is required at all levels and in all organizations. At the top level, major plans are framed, departmental heads make plans for their respective departments, and lower level managers make plans for the day to day activities.
4. Continuous: Planning is an on going, never ending process. After making plans, planners keep changing them according to the changing environment needs.
5. Planning is a mental exercise: Planning means looking ahead, anticipating opportunities and threats, evaluating alternatives, and choosing the best alternative. All this requires intelligent imagination, sound judgment and foresight. So it is called an intellectual process.
6. Planning involves choice/ decision making: Planning is required only when different alternatives are available and we have to select the most suitable one. If there is only one way of doing a job, then there is no need of planning. For example, if we have to import technology and the license is only with STC, then companies have no choice but to import from them only.
7. Planning focuses on achieving objectives: while planning, specific goals are set out along with the activities required to achieve the goals. After setting the targets, planning decides the method, procedure, and steps to be taken to achieve them.

Planning Process
1.Setting objectives: planning begins with setting up of objectives. The managers set up objectives keeping in mind the physical and financial resources. Managers prefer the goals which can be achieved quickly and with less time.
2. Developing premises: premises means making assumptions for the future. Before listing out the alternative ways of achieving the objectives, manager makes some assumptions for each such alternative. For example of the alternative is to increase in sales by increasing more line of products then assumption can be that the increased production will automatically lead to increased sale.
3. Listing various alternatives: After setting of objectives the managers makes a list of alternatives through which the organization can achieve its objectives. For example, if the objective is to increase sales, then the alternatives may be :
-Adding more lines of products.
-Offering discount.
-Increasing expenditure on advertisements.
-Increasing share in the market.
-Appointing more salesmen.
4. Evaluating alternatives: After making the list of alternatives, the manager starts evaluating each and every one of it to note down their positive and negative aspects. Then he starts eliminating the alternatives with more of negative aspects.
5. Selecting the best alternative: The alternative with the most positive aspects is then selected. Sometimes instead of selecting one alternative, a combination of different alternatives is selected.
6. Formulation of supporting plans: After making the main plan, a number of small or supporting plans are made related to the performance of routine jobs. They are also called derivative plans. For example if the plan was to import Japanese technology, the supporting plan would be from where to import, selection of employees to operate such machine, finance required to buy and so on.
7.Implementing the plan: Plans are of no use until they are put in action. The managers then start communicating the plans to all employees very clearly. After such communication, the mangers start acting on the plan with their support.
8. Follow up: The managers monitor the plan very carefully while it is implemented. This helps him to verify whether the predictions assumed while planning are holding true or not. If these are not, then immediate changes are made in the plans in order to ensure their success.

Importance of planning
1. Planning provides direction: planning decides in advance how work is to be done. It ensures that goals and objectives are clearly stated, employees know what they are required to do to achieve the objectives, and organizations are able to work in coordination.
2. Planning reduces the risk of uncertainty: Organizations have to face many uncertainties every day. Planners look ahead and anticipate these changes. Planning shows the way to deal with them. So though risk cannot be eliminated, it can be anticipated and reduced.
3.Planning reduces overlapping and wasteful activities; plans are made keeping in mind the requirements of the organization, departments and individuals. Planning ensures clarity of thought and action and thus helps in avoiding confusion and misunderstanding.
4. Planning promotes innovative ideas: planning is a challenging activity that requires high thinking. It forces the managers to think differently and find better ideas and better methods to handle different situations.
5. Planning facilitates decision making: planning helps the managers to look into the future, evaluates alternatives and choose the most profitable proposition. Thus it helps in taking rational decisions.
6. Planning establishes standards for controlling: controlling means comparison between planned and actual output. If there is no planning, then the manager will have no base to compare whether the actual output is adequate or not. So planning is a prerequisite for controlling.