Planning involves in every aspect of people’s life. If an individual wants to achieve success, he or she must have a proper preparation. It is also the same in business. ” Organizations that fail to plan are planning to fail”, I do agree with this opinion. A plan demonstrates your intentions, mission, vision and method to carry it out. It is an important part of doing business. Without planning, an organization may not operate smoothly and may lead to failure. This essay will examine both the advantages and disadvantages of planning and show why planning is essential in business.
In this era of hyper-competition, globalization and technological revolution, companies are forced to make speedy decisions in order to keep up with the market. Responding to the pressure of making quick and right choices, many firms have reduced or even emulated the time allocated to planning. Based on how rapid the market change in today business, cut down planning in doing business seems to be appropriated since the uncertainty and fast timing of entrepreneurial warrant quick action. (Matherne, 2004, p. 156) But should founders of new ventures plan or should they act immediately?
Is planning still a useful activity in doing business? Let’s take a look at planning and what benefits it brings to business. Planning is an activity which consists of defining the organization’s goals, establishing an overall strategy for achieving those goals and developing a comprehensive set of goals to integrate and coordinate activities. It is the primary functions of management since it sets the basic path for managers in organizing, leading and controlling their cooperation.
Planning can also be defined in terms of formal or informal. (Robbins, DeCenzo, Coulter & Woods, 2012, p. 6). Most managers do planning in their works whether it is informal like planning in their head or setting up a formal plan after carefully examined the situation and collect ideas from the staffs. Informal plans are rarely written down onto paper and publicly announced to other people. In contrast, formal planning always takes lots of time and effort of many people. The goals are specific and set with a period of time to achieve. Although it takes time, effort and not always guarantee success but formal planning is still remain as a priority thing to do for every manager.
Planning establishes goals and direction for organizations. With a clear mission and vision, employees can coordinate their work together and managers can make sure that they are on the right track. Goals can also improve the performance of a firm. Latham (2004, p. 216) stated that “a goal is a standard of for assessing one’s satisfaction”. Achieving a goal will not only bring rewards and praises to individual but it can increase their satisfaction. When one’s morale is high, he or she will have a tendency to work better and expect a more difficult challenge.
It is always a benefit for companies when staffs commit to their work and demand harder mission. Also, with a step by step direction, people will not be distracted from outside factors that affect performance. Wasteful, overlapping activities and uncertainty are reduced through planning. In the process of planning, managers have to anticipate changes, gather information and develop responses which help avoid mistakes. (Robbins et al. , 2012, p. 86). It allows people to make faster decisions since things have been predicted and unnecessary trials do not have to be conducted.
Planning also helps people manage their resources, minimizing factors that can slow down their activities. By giving an idea about the availability of resources, the efficiency and effectiveness of works will be increased. (Delma & Shane, 2003, p. 1167). Furthermore, planning provides time for each mission so that each person can track their own process and organize the work to keep up with the whole company. One thing that contributes to the important of formal planning in business is strategic planning. It is proved that the relationship between strategic planning and organization performance is positive.
The standard theory of strategic management surrounds planning of a mission and objectives, implementing a hierarchy of strategies to achieve and controlling to ensure the goals are achievable. The purpose of strategic planning is to make organization’s management become more effective. Combine these two things, indirect improvements of performance could occur. (Falshaw, Glaister & Tatoglu, 2006, p. 12). Moreover, making a strategic plan means manager have to go through the process of collecting data, forecasting, modeling and creating alternatives to respond to unexpected scenario.
Strategic planning also promotes long term thinking, reduces uncertainty, identifies and evaluates alternatives strategies. By doing that organization with proper plans has already had an advantage to those that don’t. There is a link between company size and the use of strategic instruments. As smaller companies possess less time, resources and knowledge, they have a tendency to cut down on planning process and focus more on operational activities. The more the companies grow, the more formal the plan will be. Big enterprises have stable structure so it is more suitable to planning.
Also with more resources in term of personnel, knowledge and time, it will be easier to have a good strategic plans. (Kraus, Reiche & Reschke, 2007, p. 11-12). However, new ventures should not skip the planning process since it is a guideline for long term success. Plans will remind managers about the goals and giving clues on responding to changes. If a new firm just focus on operational details, it might be hard for them to grow bigger. Therefore, a plan could be useful in maintaining as well as developing the company. Tulane University in New Orleans, Louisiana is an example of successful planning.
The university was severe damaged in 2005 by Hurricane Katrina. By 2006, it was reopened thanks to the renewal plan created by its students. The plan is based on the current situation of the university at that time. After going through many processes and revisions, taken student affairs goals accordingly, the university could face the disaster’s aftermath in the best way. (Cherry & Clark, 2010). Having a plan does not guarantee success. There are criticisms about how formal planning were long and does not bring as many worthwhile suggestions as it should.
As the business environment is often changed with a fast pace, a long process like making strategic plans may not give managers suitable choices at certain time. In order to respond to an uncertain environment, plans have to be flexible, but that is what formal planning lacks. A traditional strategic plan is created with specific goals and limited time to achieve those goals. It creates rigidity and may lead to failure if the managers follow the plan strictly without paying attention to changes. Strategic planning is useful when it drive decision making.
Surprisingly, according to Mankins and Steele (2006, p. 77), the structure and timing of strategic planning make it hard to produce a good decision. In their survey which confirmed what they observed over many years, only 2. 5 major strategic decisions are made from companies with standard planning. It demonstrates the fact that, traditional planning model is out of sync from what executives and managers want or need. Therefore, organizations should change their approach in planning. Plans must be specific but also flexible so that managers can respond to changes better without going off track.
A successful plan can also be a path leading to disaster. Since it is hard for people to leave their comfort zone and try something new. Success may breed success, but it can also breed failure, especially in an uncertain environment. (Robbins et al. , 2012, p. 87). Unfortunately, business environment is very unpredictable and with the development of new technology, a plan can be out of date in a short period of time. In order to remain successful, managers must face uncertainty and brave enough to make changes.
Nowadays, in some organizations, planning just contributes a small part in their success. The decisions are made based on sparse information and rely upon shortcuts or heuristics to save time. (Kirsch, GoldFarb & Gera, 2008, p. 487). Another way is making decisions based on actual works. Some of those organizations do success with that method. The best example must be Google. It is a company well-known for freedom at workplace and the majority of its plans are informal. Employees can do whatever they want, work with whoever they like and they can spend 20% of time on their own project.
A company with little structure like that is now very successful and consistently outperformed their competitors in stock market since 1998 (Gargiulo, 2011). Google’s success does not come from those long and unrealistic plans but come from the way they manage people. Motivation, giving benefits and making employees excited going to work are the keys to their success. Managers at Google make their staffs feel like family at workplace. Although there is downside of not having a plan. It could be difficult to figure out the responsibility of each person.
Google had no legal representative for the company at a Belgian law suit. (Schjndel, 2012, p. 17). Still, the benefits are more than enough to make up for problems caused by unstructured way of operating. At the age of 18, I know the important of planning in a person’s life. Most of my failure in the past came from not having a suitable plan or having no plan at all. I used to do thing at the last minutes, therefore, the result was not as good as it should be, especially in study. I now pay more attention to planning and after practicing for a period of time, my planning skill has improved a lot.
When making a plan, I analyze what I need to do, then arrange the task in order and give time to each task. Since the works have become structure, I not only save my time but the efficiency and effectiveness of my works have increased. However, I still have a lot to improve in my planning skill. The plans cannot make impact if you do not carry it out. Sometimes, I made plans and did not do it. Moreover, some of my goals were very hard to achieve. These kinds of goals need a lot of effort and you may not achieve it after all.
In order to prepare for future management challenge, I will practice analyzing the situations, setting more realistic goals and arrange my work more logically. I also find some part time jobs that demand planning or management skills to have practical experience. Practicing in a business environment will help me have a better understanding of all the things I studied as well as give me an idea of how managers do their work. Spending more time research about management theory to expand my knowledge and finding a suitable style to manage people. By doing that my skill will theoretically and practically improved.
I will make a plan to develop my skill in a short time so that I can be more confident in dealing with future challenges in my life. In conclusion, planning is still a useful process for any organization regardless of its size. Formal planning give companies a structure way of operating. Based on the plans managers can at least maintain a stable level of performance and avoid unnecessary mistake. It is also a stepping stone for developing organizations. Although it still remains some disadvantages but nothing is perfect. Planning is just a tool to help managers run the business comfortably.
Whether an organization success or not depends on variety of factors: the environment, personnel and so on. It is up to the managers to make adjustment when unexpected things occurs and make the right decisions. In an era where changes happen at a fast paced, having a plan means better preparation and better chances to achieve success. That is why planning is essential and every business should take planning seriously even though it is a long as well as hard process. The benefits it brings worth the effort. If you fail to plan, there is a high chance that you are planning to fail.