Purpose of Planning in an Organization

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Purpose of Planning in an Organization

By | December 2010
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Proper planning is very vital and crucial to the inception, maintenance and sustenance of the business. The incorporator of the business needs to plan before venturing into the business. Once the business has started, the management needs to plan out its strategies for operations, production, marketing, investments and growth.

Different categories of plans are required at all stages and phases of the business. Plans are classified under short, medium and long term plans. Every business draws out its daily, weekly, quarterly and yearly plans. Function

Before chalking out a plan, the organization usually takes stock of the scenario in which it is currently operating in. This is done so by studying the external and internal environments of the business. Plans are chalked out to produce more at the same rates, produce the same output at lower rates, ways to reach out more number of customers and ways to motivate employees to deliver more. The organization often makes extensive use of mathematical and statistical models to draw plans. Significance

Planning helps integrate and connect all the departments in the organization. The departments are the production, marketing, IT, systems, HR, finance and accounting departments. By this mechanism, the organization is able to realize the organization's goals and objectives. All the departments thus work together and in tune with another. Time Frame

Plans are classified under three categories. The tenure for short-term plans is less than a year. All daily, monthly and quarterly plans plans for scheduling production operations and buying raw materials and inventories qualify as short-term plans.

The duration of medium range planning is one to three years, growth and diversification plans come under this purview. Long term planning is between three to five years. Corporate plans are an example of long-term plans. Benefits

Several benefits accrue with planning. The organization is able to gauge and analyze...
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