Purpose of Planning in an Organization

by Suchi Moorty; Updated September 26, 2017
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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.

Types

There are different types of plans for different scenarios. A start-up plan is drawn at the time an individual wants to venture into a business. In this he checks the feasibility and viability of the venture he wants to undertake and financing thereof. Once the business has been started, plans and strategies are required for functioning. Each functional department has an internal plan. This plan is in-house to that particular department and governs its working style and culture.

A strategic plan is one that analyzes all the available options and chooses the one that maximizes volumes and profits and minimizes losses and risks. A growth plan is essential when an organizational is looking out to diversify its product range and venture into newer markets.

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 all the options it has for producing its ware, marketing them and financing its operations and choose the one that is best suited to it. Also once all strategic functions have been planned for, implementing them becomes relatively for the business.

About the Author

Suchi Moorty has vast writing experience in magazines and on various online portals. She has been associated with the print media since 2003, and is very comfortable in writing on fields such as health care, chemistry, physics, life sciences, management, human resources, finance and accounting. Moorty has a Master of Science in biology.

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