Good Essay About Significance Of Planning In Organizational Management
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The level of uncertainty in the modern business environment has increased tremendously over the last several years. Today organizational managements strive a lot to run their business successfully. Fluctuations in the stock market and oil prices can greatly affect the business outcomes and hence business managements pay specific attention to their strategic management activities. Planning is the most inevitable aspect of strategic management, and therefore the efficacy of the planning process is the key determinant of the business success. Planning will help an organization to clearly determine its objectives and strategies in its goal pursuit. The process of planning can assist the organization to address changing market trends and to prepare for meeting unforeseen contingencies. Evidences suggest that effective planning is beneficial for firms to cut down their operating costs and thereby increase the value of shareholders. Effective planning will avoid business uncertainties and will enhance employee performance. This paper will discuss why planning is necessary for the successful management of contemporary organizations in the light of the benefits and limitations of planning.
Although planning has been traditionally considered as the basic management function, today many managerial practitioners argue that planning would not benefit the business actually as it is a rigid and time-consuming process that may not guarantee success. The current business environment is characterized with intense market competition and increased market uncertainty. In this context, it is particularly essential to determine whether or not the planning process would actually contribute to the supply chain efficiency and the long term sustainability of the business. If the planning process actually contributes nothing to the prosperity of the organization, then it should not be emphasized by organizational management.
Management of Contemporary Organizations
Considering the complex and uncertain nature of the current business environment, the management of contemporary organizations is really a challenging task. Hence, the concepts of planning, goal setting, organizational environment, and contingency planning are of considerable significance in the modern business environments. From traditional times, organizational managements have emphasized the significance of planning, which is one of the basic functions of the management. “Planning is defined as the process of determination of organizational objectives and the formulation of strategies, policies, and programs for achieving them” (Karmakar & Datta, 2012, p.10). It is important to note that planning is future-oriented and is specifically concerned with the development of future strategic plans for directing organizational activities. Good planning will help an organization to make its managers strong competitors and reliable strategic partners to the organization. Managers are the real players of the modern business. Therefore, firms entrust them with the responsibility of making plans and strategic steps. In the process of organizational management, the top level managers will remain policy makers and strategists who set targets and evaluate the existing management strategies. They forward their instructions and guidance to their assistant managers who execute the plans at the lower levels. In most of the organizations, the top level managers will be the project heads who can best design the policies and operational methods. Goal setting can be simply referred to the process of stating the desired future outcomes that are to be achieved within a specified period of time (Hellriegel & Slocum,2010, p.192). The authors add that goal setting is not an easy task but it is essential for the success of business organizations in the today’s stiffly competitive global business environment. When an organization deals with its goal setting process, the management should focus on the business’ long-term organizational objectives, availability of resources, and the productivity of the workforce. Since there are different models of goal setting available for organizations, the top management must choose the most apt model that is effective to motivate individuals and teams.
In a broad sense, environment is infinite and therefore the organizational management may represent everything outside the organization. However, the current business literature describes the concept of organizational environment in a narrowed sense. “Organizational environment is defined as everything that exists outside the boundary of the organization and has the potential to affect all or part of the organization” (Daft, 2015, p.142). The organizational environment can greatly determine the culture of an organization and ultimately the growth of the business.
Contingency planning is simply a business plan that intends to address the likelihood of a future disaster and to enable the business to survive the disaster without much damage (Brown, 2008, p.221). Contingency planning is vital for organizations to respond quickly to unexpected and unfavorable events and to limit the negative consequences of those events on the business. When an organization has planned effectively for meeting contingencies, it can fearlessly engage in its daily business activities and keep employees motivated. In the current context of growing uncertainty in the business environment, firms find it sensible to plan for contingencies to avoid huge financial losses in the future.
Importance of Planning
Management scholars argue that planning is the first and foremost important function of the management and is vital to enhance the performance efficiency at every level of management. Majority of them are of the view that business activities of the organization would not make any sense in the absence of planning. In the light of the growing size of organizations and increasing uncertainty in the global business environment, the importance of planning has extremely increased today. In the absence of proper planning, it would not be possible for businesses to respond to the fast changing market environment and to survive the stiff market competition.
The most significant benefit of the concept of planning is that it provides a direction for the business (Kaul, 2012, p.476). The process of planning is necessary to define the goals and objectives of the organization precisely and to direct the overall organizational efforts toward the accomplishment of those objectives. When the business maintains a set of stated goals and objectives, its employees can obtain a clear direction on which their efforts should be focused. For instance, if an organization has planned to increase its sales by 10 percent by the end of the next year, the organization’s all departments such as the purchase department, sales department, and marketing department would take intense efforts to achieve this goal. Thus, the managers’ attention will be focused on a common goal and hence their efforts may be combined towards the accomplishment of the shared goals.
As noted already, another benefit of planning is that it is effective to manage the risks of uncertainty in the business environment. With the tool of planning, business concerns may be able to anticipate possible changes in the future and to take proper steps to address them. Thus, the risks associated with an uncertain future can be minimized through promoting the planning process. To illustrate, an organization may plan a market survey to get informed of the approximate number of new market entrants and to fix a sensible sales target for the next business quarter. Undoubtedly, such practices can assist the organization to avoid the market uncertainty to a great extent and take sound strategic decisions.
Similarly, planning is helpful for the business to limit overlapping and wasteful activities. Since the concept of planning is capable of charting the future activities of an organization in a proper manner, it can establish coordination among different activities and departments. As a result, there is little chance of overlapping the business tasks. When the activities of the organization are planned effectively, the management can thoughtfully allocate its resources across various departments, and hence the issue of resource wastage may be eliminated. In addition, when there is a precise order for all business activities, the organization will be able to minimize its unproductive labor time. In the modern era, time and resources are particularly valuable for a business to gain competitive edge over its rivals in the marketplace. Therefore planning is inevitable.
A notable benefit of planning is that it is a great way to promote innovative ideas. When there is an active planning process in operation in the organization, the managerial personnel and the staff members would be encouraged to come up with their ideas to resolve a particular business problem. While making such an effort to gather diverse ideas, many innovative ideas may be proposed for the betterment of the organization, and this can be studied further to analyze their ability to support the business’ growth in the long term. Hence, the concept of planning develops creating thinking skill in managers and the workforce. Management professionals indicate that creative thinking is a key skill required for the modern workforce for enhancing their organization’s growth.
Another striking feature of planning is that it facilitates decision making. As noted earlier, a variety of alternatives or difference courses of actions are discussed in an efficient planning process. Hence, the top management is in a position to choose the most recommended alternative or course of action to manage a specific business scenario. The planning process can provide the management with potential criteria for taking sound decisions. In the current business context, the decision making process can extremely influence the long term sustainability of a business because a wrong decision may even end up in the shutdown of the company.
However, the management function of planning has some limitations too. The most recognized limitation of planning is that it creates rigidity. Since an organization is not generally allowed to deviate from its pre-planned strategies, it cannot take advantages of the fast changing market conditions. Since current business environment is highly vulnerable to unexpected changes, firms will have to take short-term plans as well to confront the changing situations. Evidences suggest that firms that keep pace with changes are successful in their operations regardless of the intensity of changes happening in their respective industry. Also, firms that operate in international markets cannot always follow rigid strategies. In order to comply with cultural, legal, and economic factors of the destinations they will have to revisit their plans and strategies at times. Another criticism of the planning process is that it does not often work in a dynamic environment as planning is based largely on the anticipation of future happenings. Some management scholars opine that planning is a time-consuming process but it may not guarantee success. However, planning in its real sense involves several essential advantages, and therefore is a vital aspect in organizational management. In other words, when comparing to the fruitful benefits of the planning process, its limitations are negligible.
Real life Examples
The benefits planning can be easily traced from the New Zealand’s healthcare sector. It is identified that the New Zealand’s health care system has undergone tremendous changes over the past several decades. When the country’s health care system was fully public in the early 20th century, currently it is a mixed public-private health care sector delivering enhanced health products and services to the clients. The successful management of the country’s health care sector over the years could be attributed to its thoughtful and comprehensive planning. The government encouraged the different health authorities to suggest new ideas for the performance improvement of the industry. Hence, the health regulators were able to choose the best course of action from numerous alternatives and hence they could effectively plan for the New Zealand’s health care in the light of the available resources.
Brown, M. E. (2008). Famine Early Warning Systems and Remote Sensing Data. Springer Science & Business Media.
Daft, R. (2015). Organization Theory and Design. Cengage Learning.
Hellriegel, D & Slocum, J. (2010). Organizational Behavior. Cengage Learning
Karmakar, A & Datta, B. (2012). Principles and Practices of Management and Business Communication. Pearson Education India
Kaul, V. K. (2012). Business Organization and Management: Text and Cases. Pearson Education India.
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