LIMITATIONS

OF
PLANNING
Limitations of Planning
 LIMITATIONS OF PLANNING
Costly Process
• Planning is an expensive process. Money, time and effort have to be spent in
forecasting, collection of information and evaluation of alternatives.
• Services of experts may be necessary to select the best and most economical
course of action for the enterprise.
Therefore,
• Planning should be economical – cost of planning should not exceed the gains
expected from it.
• Management must exercise intelligent judgement to balance the expenses of
preparing plans against the benefits derived from them.
• Planning is useful only when its benefits are more than its cost. [COST-BENEFIT
ANALYSIS]
 Time Consuming
• Considerable time is required for collection, analysis and interpretation of
information for planning.
• Planning is not practicable during emergencies and crises when on-the-spot
decisions are necessary, existing plans may have to be abandoned.
• Planning may cause delay in decisions and actions which may deprive the
business of a profitable opportunity.
 Rigidity
• Once plans are formulated, people tend to strictly adhere to them irrespective
of changes in the environment.
• Employees become more concerned with observing the programmes and
procedures* (limitation of policies and procedure) rather than achieving the goals.
• People are reluctant to deviate from plans due to fear of criticism.
• Detailed planning may create a rigid framework*(limitation of policies and procedure) in the
organisation.
• It may discourage individual initiative and creativity* (limitation of policies and procedure).
 Lack of Accuracy
• Planning is based on forecasts which are estimates about the future. When
the forecasts are inaccurate, plans become misleading.
• Factors reducing the accuracy of planning:
a) Longer the plan period greater the degree of inaccuracy.
b) Bias of planners
c) Lack of reliable data
d) Errors of judgment
 False sense of security
• Detailed planning may create a feeling among employees that everything has
been taken care of.
• They may consider work as per plans as fully satisfactory.
• They may fail to improve performance and may confine themselves to
fulfilling the requirements of plans.
• A predetermined course of action might be risky and unprofitable in a
dynamic environment.

Human Elements
• Individuals and groups may use planning to serve their own interests.
• They may try to influence goal setting and formulation of plans to suit their
human interests and ignore the larger interests of the organisation.
• Some reports may be too elaborate to be of much use.
 Psychological Barrier
• People resist change in established practices and behaviour when the become accustomed
to attitudes, beliefs and traditions.
• The principle psychological barrier leading to resistance to change is:
a) Most people have more regard for the present than for the future.
b) The present is not only more certain than the future, it is also more desirable.
• Planning implies changes which the executives and managers would like to ignore hoping
that they would not materialise.

External Limitations
• In a fast changing environment planning may sometimes have little practical value.
• Management has little or no control over the external factors influencing an organisation.
• Some external factors are:
a) Changes in technology b) Changes in government policies
c) Legislative enactments d) Industrial unrest
e) Global business and economic factors