Importance of Planning

A plan can play a very vital role in helping to avoid mistakes or recognize hidden opportunities. Preparing a satisfactory plan of an organization is essential. The planning process enables management to understand more clearly what they want to achieve and how and when they can do it. A well prepared business plan demonstrates that the managers know the business and they have though through its development in terms of products, management, finances and most importantly markets and competition. Planning helps in forecasting the future, makes the future visible to some extent, it bridges between where we are and where we want to go. Planning is looking ahead


A good planning process is supported by

  • Reducing risk
  • Reducing uncertainty
  • Supporting better decision
  • Establishing trust
  • Conveying information



As a managerial function planning is important due to following reasons

1. To manage by objectives

All the activities of an organization are designed to achieve certain specified objectives. However, planning makes the objectives more concrete by focusing attention on them.


2. To offset uncertainty and change

Future is always full of uncertainties and changes. Planning foresees the future and makes the necessary provisions for it.


3. To secure economy in operation

Planning involves, the selection of most profitable course of action that would lead to the best result at the minimum costs.


4. To help in co-ordination

Co-ordination is, indeed, the essence of management, the planning is the base of it. Without planning it is not possible to co-ordinate the different activities of an organization.


5. To make control effective

The controlling function of management relates to the comparison of the planned performance with the actual performance. In the absence of plans, a management will have no standards for controlling other’s performance.


6. To increase organizational effectiveness

Mere efficiency in the organization is not important; it should also lead to productivity and effectiveness. Planning enables the manager to measure the organizational effectiveness in the context of the stated objectives and take further actions in this direction.



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