Everything you need to know about the limitations of planning.
Planning is a primary managerial function and an essence of doing business activities. In the absence of plans, employees work in different directions and it becomes impossible to achieve organisational goals.
However, even the best of plans may go wrong because of unforeseen events and changes in the business environment. Despite of many advantages of planning, there may be some obstacles and limitations in this process.
Planning is not a panacea for all the ills of the business. Planning will only help in minimising uncertainties to a certain extent.
Some of the limitations of planning are:-
1. Lack of Accurate Information 2. Lack of Accurate Forecasts 3. Complex and Expensive Process 4. Rigidities 5. Lack of Specific Goals and Objectives 6. Lack of Planning Skills 7. Resistance to Change 8. Lack of Participation 9. Psychological Factors 10. External Factors
11. Powerful Group 12. Undue Influence of Chief Executives 13. Planning may not Work in a Dynamic Environment 14. Planning Reduces Creativity 15. Planning Involves Huge Cost 16. Planning is Time Consuming 17. Planning does not Guarantee Success 18. Unreliability of Forecasts 19. Planning Delays Actions and a Few Others.
Limitations of Planning: Lack of Accurate Forecasts, Lack of Planning skills, Reduces Creativity and a Few Others
Limitations of Planning – With Measures to Overcome the Limitations
1. Lack of Accurate Information:
The planning process starts with the collection of relevant data. The reliability of a plan depends upon facts and information on which, it is based. If reliable information and dependable data are not available, planning is surely to lose much of its relevance.
2. Lack of Accurate Forecasts:
Planning concerns future and its quality is determined by the quality of forecast of future events. As no Manager can predict completely and accurately the events of future, the plans may pose problems in operation. These problems are further intensified by problems in formulating accurate promises.
Many times managers may not be aware about the various conditions within which they have to formulate their plan. It is difficult to measure immediately the correctness of planning, since it takes time for the results to start flowing, in the form of feedback data.
3. Complex and Expensive Process:
Planning is a complex and expensive process. It demands detailed and serious thinking, tremendous hard work. It is time consuming also. Some managers do not like to undergo such a complicated process as they prefer shortcuts. Such short-cut planning may not yield the desired results. Planning is a time consuming and expensive process. Therefore, this may delay action in certain cases. But it is also true that if sufficient time is not given to the planning process, the plan so produced may prove to be unrealistic.
4. Rigidities:
Internal inflexibility in the organisation may compel the planners to make rigid plans. This may prevent the managers from taking initiative and from doing innovative thinking. Rigidities appear from managers’ negligence to revise the plan, policies and procedures.
5. Lack of Specific Goals and Objectives:
Qualitative objectives like social responsibility, management development, quality of work etc. are often expressed in vague generalisations which defy proper evaluation. If these objectives conflict with quantifiable ones, managers tend to ignore them totally. Planning cannot become effective unless goals are specific, clear and actionable.
6. Lack of Planning Skills:
Plan can be no better than the competence of the planner. Planning is an art and takes a special type of person to formulate it. Everyone is not capable of planning and solving organisational problems. A planner must possess not only skill but also intelligence and breadth of vision. Forecasting ability is a must for long term planning.
7. Resistance to Change:
Resistance to change is another factor which puts limits on planning. It is a commonly experienced phenomenon in the business world. Sometimes, planners themselves do not like change and on other occasions, they do not think it desirable to bring change as it will create resistance on the part of the workers. This attitude makes the planning process ineffective.
8. Lack of Participation:
People who are not involved in the formulation of plan may tend to resist the plans at their implementation stage. Plans imposed from above often lead to resentment and resistance among those forced to implement.
9. Psychological Factors:
Psychological factors also limit the effectiveness of planning. Some people consider present more important than future because present is certain. Such persons are psychologically opposed to planning. But it should not be forgotten that dynamic managers always look ahead. Long-range well-being of the enterprise cannot be achieved unless proper planning is done.
10. External Factors:
The planners are often confronted with external forces which are beyond their control. The forces may be economic, social, legal, political, technological, geographical and international too. The managers have to formulate their plan keeping in view the demand of these factors Thus, their scope of action is limited, and thus make planning ineffective in many cases.
The effectiveness of planning is sometimes limited because of external factors which are beyond the control of the planners. External stringencies are very difficult to predict. Sudden break cut of war, Government control, natural havocs and many other factors may make the implementation of plans very difficult.
11. Powerful Group:
Powerful group in the organisation may apply pressure to see that “plan” goes in the direction that increases their power which may not exactly be the direction from the view-point of overall good of the company.
12. Undue Influence of Chief Executives:
The planning organisation may be unduly influenced by what it considers to be the “pet projects” of the Chief Executive and may fail to apply critical analysis to its plans.
Some of the above mentioned limitations of planning can be overcome by taking the following measures:
Firstly, the management information system should be properly organised so that all the relevant facts and figures are made available to the planner before they make any plan.
Secondly, a system of forecasting coupled with a keen insight into the dynamics of future environment will improve the reliability of planned projections and estimates.
Finally, management should give sufficient time and attention to planning’s as it is the basis of every other managerial function.
The limitation of planning must be balanced against the benefits that can be expected, if the plans are simple, flexible and feasible, if we have well-defined objectives which are understood by all, if we evolve plans under democratic participative leadership and above all if we have adequate accurate and up-to-date data for planning, we can safely conclude that planning is bound to be a blessing or a boon to business organisations. In reality no enterprise can exist today without some planning.
In the modern computer era, management information service, research and development department, marketing research section can provide ample raw material for building up the super structure of a comprehensive business plan. The raw material is usually in the form of statistical data i.e. facts and figures. The planners process this data by application of scientific methods involving systematic classification analysis and investigation.
The latest mathematical or quantitative decision-making tools and techniques such as operations research enable us to secure rational solutions with minimum bias for many managerial problems. After the processing of data with the help of scientific methods, we have the finished products viz. a plan on the basis of adequate, accurate and up-to-date information.
We can formulate a good plan of action which can yield optimum results and which can achieve the desired goals when it is implemented efficiently. Plans based on facts and figures can be very sound and realistic. Planning should never be on wishful thinking.
Limitations of Planning – Time and Cost, Absence of Accurate Information, Mental Attitude, False Sense of Security, Environmental Constraints, Rigidity and a Few Others
Planning is a primary and much pervasive function of management and it has so many advantages for the organisation along with this planning.
Planning suffers from the following limitations:
1. Time and Cost – Planning is an expensive and time consuming Process. A good deal of time energy and money is involved in gathering of data and revision of plans. In more detailed planning time and expense will be more involved.
2. Absence of Accurate Information – Quality of planning depends upon accuracy of information and no one can predict the events of future accurately and completely. It is found that accuracy and reliability struggles when the forecasting period increases.
3. Mental Attitude – Most of the people resists the change due to fear of failure and uncertainty. Thus, they consider that present is more important rather than future. In such circumstances planning becomes ineffective.
4. False Sense of Security – Planning may create a false sense of security in the organisation. The people may feel that once the plans are formulated action will be automatically efficient. This may be harmful for organisation because it promotes complacency and slow down action.
5. Environmental Constraints – Environmental constraints play a vital role in planning. Organisations do not have control over technological, social, legal, economic and other outside factors. The assumption in which planning is based may be good and the conditions under which plans are being implemented may differ from the assumed conditions.
6. Rigidity – Rigidity is another limitation of planning due to the pre decided course of action. Once the plans are framed and put into action we cannot change them. This may crab employer initiative and individual freedom.
7. Lack of Ability to Plans – Some people do not believe in the worth of planning, because they struggle with planning ability. A deep and rational thinking with high degree of perception is required for formal planning. Very few peoples are endowed with such capacity.
All the above limitations of planning are internal. There are some external factors also, over which the organisation has little bit or no control at all. Organisation should consider these factors during planning to make an effective planning.
Limitations of Planning – 6 Limitations of Planning (With Examples)
Of course, planning is a primary managerial function and an essence of doing business activities. In the absence of plans, employees work in different directions and it becomes impossible to achieve organisational goals. However, even the best of plans may go wrong because of unforeseen events and changes in the business environment.
Let us discuss why planning may fail despite best of efforts of management:
Limitation # 1. Planning Leads to Rigidity:
Though plans are prepared for the future but they draw framework for managers to follow a specific path with an aim to achieve specific goals within a predetermined time period. The pre-decided plans decide the future course of actions and thus lack flexibility to adapt the changed circumstances, which may at times be against organisational interest.
For example – As part of sales strategy the Director of Sell Well Ltd., instructed the sales staff to offer maximum of 5% discount. Competitors reduced their prices, therefore, customers of Sell Well Ltd. demanded more discounts. The sales staff refused to offer more than 5% and as a result they lost many customers.
Limitation # 2. Planning may not Work in a Dynamic Environment:
The dimensions of business environment are ever changing and business enterprises have to adapt all the changes as and when they happen. Many times, it is difficult to foresee and assess the changes accurately and prepare plans accordingly.
For example – There is change in government and the new government all of sudden imposes ban on imports from Bangladesh. In this case, all plans of the companies importing from Bangladesh will fail. They need to look for another source for supply of products or plan another line of products.
Limitation # 3. Planning Reduces Creativity:
Usually plans are drafted by a group of people at top level of management and implemented by all. At middle and supervisory level of management, the managers are responsible for execution of plans, they are neither consulted while drafting the plans nor allowed to deviate from the framework. As a result, employees prefer to follow as directed and make no efforts to find better alternatives or newer methods to perform same functions. This reduces creativity and the desire to be innovative among employees.
For example – Rohit, a supervisor in a factory is given a predetermined production schedule and the method to be followed. Rohit knows that if one more worker is employed the productivity will improve but he does not act upon as the production manager has told him to do as pre-planned.
Limitation # 4. Planning Involves Huge Cost:
Formulation of plans involves collection of data, checking its accuracy and analysis and evaluation of data by professionals and experts. Lot of meetings and discussions are also required to check the viability of plans. All these activities involve money in terms of professional, legal and other incidental charges. There are times when benefits from plans are lesser than the cost incurred to draft plans.
Limitation # 5. Planning is Time Consuming:
Formulation of plans requires collection and analysis of data, discussions with professionals, top level management or any other concerned people. All this involves lot of time. At times, due to non-availability of people there may be delay in finalization of plans leaving little or no time for its implementation.
For example – Meditech Services has plans to hold health check camps on World Diabetic day. The sales manager has given his plan to the owner for approval. However, the owner gave his approval, just a day before the scheduled day. As a result, the manager could only organise four camps against 20 camps planned.
Limitation # 6. Planning does not Guarantee Success:
The success of an organisation depends on how effectively the plans are formulated and how efficiently they are implemented. Even if managers rely on plans, which were previously tried and tested successfully, the results may not be the same due to changes in business environment.
Therefore, managers must consider all the changes in the business environment while drafting plans to achieve desired results. Plans may be drafted very carefully considering all the factors yet due to the dynamic nature of business environment the plans may not give desired results. Thus, plans do not guarantee success.
From the above discussions, you may think that when there are so many limitations then why plan. But let me tell you planning is not at all a useless exercise. It may not provide solution to all the problems but yet it is a very important managerial tool which provides base for analysing future course of action and gives directions to the entire organisations for achieving organisational objectives and goals.
Limitations of Planning – Unreliability of Forecasts, Planning Delays Actions, Planning is Expensive, Organizational Politics, Rigidity, Misdirection and a Few Others
No doubt that planning is very much essential to carry out various business activities effectively to reach organizational goals.
Let us try to discuss the limitations of planning:
1. Unreliability of Forecasts:
Mostly all plans depend on the ability of manager’s forecasting the future events. Though there is many methods are used for forecasting, it is generally treated as guess working. To certain extent mathematical/ scientific methods forecast nearest the reality. Still these methods cannot control the events happening by change in environment. Hence, there is always of a risk of uncertainty. Hence, forecasts to a certain extent become unrealizable and the decisions made from the forecasts may misguide the manager.
2. Planning Delays Actions:
Planning involves many steps before making a decision. Moreover, planning is generally made from the facts got from forecasts. And these forecasts involve both mathematical and guesswork. This requires time to collect data and to make decisions. Hence, planning consumes time and sometimes it will be costly too.
3. Planning is Expensive:
Planning depends on forecast, which in turn requires the collection of data and use of statistical methods, which is time consuming and costly. Hence, planning is costly.
4. Organizational Politics:
Politics here means domination by influential managers involved in planning. No doubt, planning depends on a systematic method and clubbed with scientific rules and methods. But sometimes one or two influential managers may make decisions to their taste and change the decisions. If the influence is positive in nature, the decision may help the organization to go on its path. In case it is negative in nature, it may spoil the objectives of the organization.
5. Rigidity:
As everybody works to the framework of plans and cannot deviate from the norms set by the plans, it becomes sometimes for manpower of the organization to take timely decisions to answer the spot changes occur from the change of internal and external environment. Hence, the whole process becomes rigid with no scope of individual positive decisions. With all care certain provisions are made in some cases to the lower level managers to communicate the upper level managers to seek permission to deviate from the norms, for the benefit of the organization.
6. Misdirection:
Sometimes, in certain situations it may happen rarely/or wontedly by certain managers to deviate from the plan and guide subordinates to fulfill their individual aims which may spoil the organizational objectives. This particularly true in government organizations.
7. Induces False Sense of Security:
Lower level managers and operational level staff believe that the plans are set with care and caution to meet the goals and if they work to the standards set thins will be safe. But they forget that in case business environmental changes the old programs drafted may not hold good and still they work to satisfy the existing programs, which may cause difficult to meet the targets. Many a time it so happen though the lower level staff has desired knowledge to satisfy the changing needs, because of organizational rigidity they will not do use their knowledge and simply work as per old programs.
8. Lack of Accurate Information:
Every manager prepares plan to meet the future needs and which he does depending the information he got on his hand. This type of forecast may not predict the future events correctly. Plans prepared on such false information may cause problem and put whole thing in confusion.
9. Problems of Change:
As the business environment, especially external environment will undergo changes without any prediction. Hence, the plans prepared for a period depending on the data available, may not work due to changes taking place in the environment. This is the worst problem a manager has to face.
Limitations of Planning
(1) No Human Activity, Including Planning, can be Perfect:
Planning is, and should be, the primary function of management. It sets the framework for determination of objectives, putting in place human, physical, technological and financial resources, and defining relationships between them, as also the direction, coordination and control of all activities within the organization. But it has drawbacks—a brief discussion on them follows.
(2) Uncertainty—Difficult to Accurately Predict Future:
Planning concerns making assumptions about the future, and nothing about the future is certain- except that it will be different from the present. So, description of the vision of future can only be a guesswork and speculation.
A manager who plans the goals and objectives and formulates ways and means to achieve them, runs the risk of failing to achieve them, even though he has done considerable research in doing the job. Given the uncertainty surrounding every kind of planning activity, he prefers to confront any problem or opportunity without any advance planning.
(3) Difficult to Find Time for Planning in Action-Packed Routine:
It is common for manager to be overly busy with routine problems which, if left unaddressed, could hurt both him and the organization. For him planning for the future does not have any urgency. James March and Herbert Simon speak of “Gresham’s law” of planning—Daily routine drives out planning, because the effects of lack of planning will take a long time to be felt.
(4) Planning is an Exercise in Abstract Thinking:
Planning process involves thinking about vague, formless ideas and alternatives. It concerns itself with “what if” questions—what if alternative A’ is chosen over alternatives ‘B’, ‘C’, or ‘D’? Every possible idea is tested and analyzed on the drawing board. There is nothing concrete; mere assumptions and guesswork and its viability will be tested only after it is implemented on the ground. This roller-coaster ride between alternatives may sometimes confuse the planners themselves.
(5) Rigidity— Fixed Thinking and Action:
Planning involves setting of objectives, and determinate of the ideal course of action for their implementation. It implies that there will be no deviation from the chosen path.
However, this is against the dynamics of a business organization which faces ever new problems and opportunities; pursuit of any rigid course of action may not work in every situation; it must adjust and adapt its strategy resources and action plans to suit the needs of the given situation.
(6) Costly— Consumes Lot of Time, Energy and Money:
Planning is an expensive exercise, both in terms of time, energy and money; it necessitates formulation of alternatives, collection of all necessary information and facts, and a careful analysis and evaluation of the various courses of action to decide on the best and the most beneficial course of action. Only a large organization can afford this luxury; its cost in terms of time and money may be unaffordable for a small business unit.
Limitations of Planning – Costly Process, May be Detrimental, Rigid Behaviour, Tends to be Inaccurate, Psychological Barriers and a Few Others
1. Costly Process:
Planning involves a lot of homework. Business conditions have to be forecast and the relevant information collected. If necessary, experts have to be involved. Planning also involves money and effort. It should be economical. The benefits of planning should outweigh its costs.
2. May be Detrimental:
Planning is not a simple or superficial exercise. It is intensive and calls for a high degree of seriousness at the managerial level. The need for advance planning may delay action, and also deprive the organisation of some profitable opportunities.
3. Rigid Behaviour:
Planning may curb initiative and creativity of employees. Creativity and adherence to defined policies and procedures do not go together. Creativity demands a lot of freedom and independence. Progressive organisations provide a lot of freedom to their employees. Otherwise, there is danger of managers developing a rigid behaviour of operating according to certain plans.
4. Tends to be Inaccurate:
Forecasts involve much uncertainty. But future events cannot be anticipated accurately. Assumptions underlying the plans may or may not hold good. Where the assumptions go wrong, forecasts and plans also go wrong. It is advisable to keep an alternative plan as a standby in the event of the failure of the first plan.
5. Poor Degree of Managerial Commitment:
Plans tend to fail when managers are careless, and not committed to organisational objectives. Plans are not made now to be ignored later. In organisations where authority is centralised, managers at the middle and lower levels tend to ignore the plans of the top management. However, only in case of decentralised organisations, managers are encouraged to make their own plans and are also made responsible for their achievements or otherwise.
6. Psychological Barriers:
Resistance to change is one barrier. Planning is a creative task. Planning and psychological barriers cannot go together. A change in the business environment brings a need for planning. But planning may be neglected due to psychological barriers.
7. Effect of Environmental Factors:
Business environment encompasses several forces, which are scientific, technological, economic, political, ethical and social in nature. Any change in any of these forces results in a change in the business environment. Thus, change in business environment is a continuous phenomenon. This further affects the effectiveness of planning.
8. Changing Government Policies:
A change in government policies limits the validity of a given plan. Planning must consider the prevailing government rules and legal provisions. Plans have to be updated as and when the government changes its policies, announce new rules, regulations and legal provisions.
Limitations of Planning – Lack of Reliable Data, Lack of Initiative, Costly Process, Rigidity in Organizational Working, Non-Acceptability of Change and a Few Others
Sometimes, planning fails to achieve the expected results. There are many causes of failure of planning in practice.
These are discussed below:
1. Lack of Reliable Data:
There may be lack of reliable facts and figures over which plans may be based. Planning loses its value if reliable information is not available or if the planner fails to utilize the reliable information. In order to make planning successful, the planner must determine the reliability of facts and figures and must base his plans on reliable information only.
2. Lack of Initiative:
Planning is a forward-looking process. If a manager has a tendency to follow rather than lead, he will not be able to make good plans. Therefore, the planner must take the required initiative. He should be an active planner and should take adequate follow up measure to see that plans are understood and implemented properly.
3. Costly Process:
Planning is time-consuming and expensive process. This may delay action in certain cases. But it is also true that if sufficient time is not given to the planning process, the plans so produced may prove to be unrealistic. Similarly, planning involves costs of gathering and analyzing information and evaluation of various alternatives. If the management is not willing to spend on planning, the results may not be good.
4. Rigidity in Organizational Working:
Internal inflexibility in the organization may compel the planners to make rigid plans. This may deter the managers from taking initiative and doing innovative thinking. So the planners must have sufficient discretion and flexibility in the enterprise. They should not always be required to follow the procedures rigidly.
5. Non-Acceptability of Change:
Resistance to change is another factor, which puts limits on planning. It is a commonly experienced phenomenon in the business world. Sometimes, planners themselves do not like change and on other occasions they do not think it desirable to bring change as it makes the planning process ineffective.
6. External Limitations:
The effectiveness of planning is sometimes limited because of external factors, which are beyond the control of the planners. External strategies are very difficult to predict. Sudden breakout of war, government control, natural havocs and many other factors are beyond the control of management. This makes the execution of plans very difficult.
7. Psychological Barriers:
Psychological factors also limit the scope of planning. Some people consider present more important than future because present is certain. Such persons are psychologically opposed to planning. But it should not be forgotten that dynamic mangers always look ahead. Long-range well-being of the enterprise cannot be achieved unless proper planning is done for future.
Limitations of Planning –12 Major Limitations
Though planning function is a primary function of management and it facilitates other functions of management, it suffers from certain limitations.
1. Inflexibility:
The more detailed and widespread the plans are the greater inflexibility they are. This inflexibility arises an account of the philosophy of management. If the management has the philosophy of production of high quality goods at high cost, it may be difficult for them to plan for a cheaper quality product.
2. Limitation of Forecasts:
Planning is fully based on forecasts. If there is any defect in forecasts, the planning will lose its value.
3. Unsuitability:
In planning, objectives, policies, procedures etc. are set after careful investigation of all the relevant factors. But in practice, business is facing new opportunities and challenges by nature. So, there is a need for modernisation of alteration of such framed objectives and policies in the light of new opportunities and challenges. Hence, planning is unsuitable.
4. Time Consuming:
The management cannot prepare any plan simply. It has to collect various information and hold discussions with others. So, planning is a time-consuming process.
5. Costly:
Planning is preceded with collection of necessary information, careful analysis and interpretation of various courses of action, selection of the best one among them. This work cannot be completed without incurring any expenses. At the same time, there is no guarantee of getting any benefits from such planning. So, planning process is a costly one.
6. Mental Ability:
Planning is a mental exercise. The most careful planning is made only by an able and skillful manager. If the executives or managers do not have such ability, there will be no effective planning. According to George A. Steiner, Planning is hard work. It requires a high level of imagination, analytical ability, creativity and fortitude to choose and become committed. Management must exert pressure to demand the best efforts in managers and the staff. Both the talents required are limited and the maintenance of high quality planning is difficult to achieve.
7. False Sense of Security:
Future is uncertainty. Planning is concerned with future. The management people think that there is security, if planning is properly adhered to. But, this is not true in practice. So, the course of action is limited and planning becomes precise. This difficulty makes the management have a false sense of security.
8. Delay during Emergency Period:
Planning does not give any benefits to an organisation during the emergency period. Spot decision dominates the planning. If planning is followed during the emergency period, there will be a possibility of delay in performing the work.
9. Capital Investment:
If sizeable amounts are invested in fixed assets, the ability to change future course of action will be limited and planning will become precise. This difficulty continues up to the liquidation of investments or it creates a necessity to write off the investment.
10. Political Climate:
Government can change its attitudes according to the changes of the political climate. Taxation policy, regulation of business and finances through financial institutions are generating constraints on the organisational planning process.
11. Trade Unions:
The freedom of planning is restricted through the organisation of trade unions at national level. Trade unions can interfere in the management activities on work rule, fixation of wages, productivity and associated benefits. Hence, managers are not free to take decisions in this area to some extent.
12. Technological Changes:
When there is a change in technology, the management has to face number of problems. The problems may be high cost of production, competition in the market etc. The management is not in a position to change its policies according to technology changes. It will affect the planning.
Limitations of Planning
Managers encounter a great deal of challenges both at the time of preparing and implementing the plans.
These challenges have been listed as follows:
1. Rigidity:
Since policies, procedures and programmes are predetermined and even budgetary limits are laid down, planning cause the administration to be rigid. There is no room for individual initiative. Managers tend to become more concerned with adherence to rules rather than with accomplishment of objectives. This attitude makes the manager and the employees inflexible in their operations. They hesitate to modify their attitude even when there is a total change in the environment.
2. Time Consuming and Expensive Exercise:
Planning requires great effort from people to collect information from various sources, analyse and interpret the data concerning past events, current happenings and future probabilities. Planning turns out to be an elaborate process for small concerns compared to the benefits resulting therefrom. Besides, it is time consuming. Sometimes it causes delay in taking decisions. Emergency situations may not allow the manager the time to think and plan at leisure.
3. Unreliable Planning Premises:
Plans are constructed in terms of certain assumptions (premises). Similarly forecasts are made on the basis of estimates. Longer the period of planning, lesser the accuracy of planning, as no one can accurately predict the trend of events. Effectiveness of planning comes down to die extent to which assumptions turn to be unreal.
4. Loss of Initiative:
Policies, procedures, rules, budgets and so on may not allow the employees to think innovatively. They cause the employees to work like a robot. They do not allow the employees to demonstrate their talents, skills and competence. They tend to kill the initiative. Blind adherence to predetermined guidelines is likely to breed red tapism.
5. Rapid Change:
Planning has to undergo rapid change in competition- driven contemporary business environment. The rapidity with which changes take place in a given industry forces enterprise to adapt the plans to respond to changes. In this context, it is difficult to build long term plans.
6. External Constraints:
External factors like political factors, social factors, trade unions, war situations, civil disturbance, natural calamities, change in fashion, economic recession, inflation, monetary policies pursued by the central banking institution of the country etc., extent an influence on plans. They pose a tough challenge to planners.
7. Sense of Complacence:
Some managers, labour under the impression that once plans are made, it would be automatically accomplished. They do not factor in behaviour of various forces in the environment. They do not make changes in the plans already built in response to behaviour of forces operating therein. This attitude tones down the efficacy of plans.
8. Quality of Input:
Plans are constructed in terms of information and input collated from various sources like outcomes of research, journals, competition, statistical data released by Government, consultancies, etc. Where the information collected is inadequate, incomplete or inaccurate, the reliability and validity of plans made in terms of the data becomes doubtful.
9. Emergency Situations:
Emergency situations like workplace accidents, sudden stoppage of supplies, attrition of key employees, machinery breakdown, strikes, civil disturbance, natural calamities etc., do not allow the planners the luxury of time to build a solid plan. Sometimes spot decisions need to be taken to counter the emerging situations. Such decisions-may go wrong.
10. Attitudinal Handicap:
Managers and employees in the conservative organization tend to be attitudinally opposed to change in the environment. They want the status quo to continue forever. In such organizations, introduction of any change or modification of existing practices prove to be a challenge. This psychological barrier to embrace change is another planning obstacle.
Limitations of Planning – Lack of Reliable Data, Difficulty in Selecting Best Alternative, Difficulty in Taking Quick Decisions, Time Consuming Process and a Few Others
Despite of many advantages of planning, there may be some obstacles and limitations in this process. Planning is not a panacea for all the ills of the business. Planning will only help in minimising uncertainties to a certain extent.
The following are some of the limitations of planning:
1. Lack of Reliable Data:
Planning is based on various facts and figures supplied to the planners. If the data on which decisions are based are not reliable then decisions based on such information will also be unreliable. Planning will lose its value if reliable facts and figures are not supplied.
2. Difficulty in Selecting Best Alternative:
In planning a number of alternatives are developed and one best one is selected. Finding out the best alternative is a difficult task. There may be a difference among managers about the most suitable alternative. Different managers may identify different alternatives as the most suitable but one is to be accepted. Even if there is unanimity over the alternative, it will not be a guarantee that it will provide good results in future. So selection of most suitable alternative is a difficult task.
3. Difficulty in Taking Quick Decisions:
Sometimes quick decisions need to be taken for benefiting from a particular situation. There may be sudden developments which were not anticipated earlier and quick decision needs to be taken. If the proper process of planning is followed then it may take more time to arrive at a particular conclusion and opportunities may not remain up to that period. So planning restricts quick decision making.
4. Time Consuming Process:
Practical utility of planning is sometimes reduced by the time factor. Planning is a time-consuming process and actions on various operations may be delayed because proper planning has not yet been done. The delay may result in loss of opportunities. When time is of essence then advance planning loses its utility. Under certain circumstances an urgent action is needed then one cannot wait for the planning process to complete.
5. Expensive:
The planning process is very expensive. The gathering of information and testing of various courses of action involve greater amounts of money. Sometimes, expenses are so prohibitive that small concerns cannot afford to use planning. The long-term planning is a luxury for most of the concerns because of heavy expenses.
The utility derived from planning in no case should be less than expenditure incurred on it. According to Hainman, “The cost of planning should not be in excess of its contribution, and wise managerial judgment is necessary to balance the expense of preparing the plans against the benefits derived from them.”
6. External Factors may Reduce Utility:
Besides internal factors there are external factors too which adversely affect planning. These factors may be economic, social, political, technological or legal. The general national and international climate also acts as limitation on the planning process.
7. Sudden Emergencies:
In case certain emergencies arise then the need of the hour is quick action and not advance planning. These situations may not be anticipated. In case emergencies are anticipated or they have regularity in occurrence then advance planning should be undertaken for emergencies too.
8. Resistance to Change:
Most of the persons, generally, do not like any change. Their passive outlook to new ideas becomes a limitation to planning.
McFarland writes, “The principal psychological barrier is that executives, like most people have more regard for the present than for the future. The present is not only more certain than the future, it is also more desirable. Resistance to change is commonly experienced phenomenon in the business world. Planning often implies changes which the executive would like to ignore, hoping they would not materialise.”
The notion that things planned for future are unlikely to happen is not based on logical thinking. It is the planning which helps in minimising future uncertainties.