Nature And Functions Of Planning Commerce Essay


Planning- Is the most basic and pervasive management function. It is under taken by managers at all levels. Although it is classified as a distinct managerial function, yet it is integrated with all other management functions and their success greatly depends upon the performance of planning activity .The need for planning arises the very moment a business is undertaken and the success of an organisation throughout its life time.

Nature and functions of planning:

Intellectual Process

Planning is an intellectual process of thinking in advance. It is a process of deciding the future before the event comes up. Planning is a process where the steps are to be taken to decide the future course of action. Managers have to consider various courses of action to achieve the desired goals and to go into the details about the advantages and disadvantages of every course of action and then finally decide what course of action will help achieve the goal .

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Contributes to the Objectives

Planning helps in attaining the business objectives. Planning is there from the very first stage of operation. Because of proper planning the business is able to handle every problem successfully and it helps to set everything right. Effective planning process can help let you know when to tackle a problem which will lead the business to gain success.

Primary Function of Management

Planning progresses other functions in the management process. Setting of goals to be achieved and lines of action to be followed by the organization, direction, supervision and control. Planning progresses other functions of management.

Continuous Process

Planning is a continuous process and a never ending activity of a manager in an enterprise based upon some assumptions which may or may not come true in the future. The manager has to go on modifying and adjusting plans in the light of changing circumstances.

Importance & Advantages of Planning

Without planning, organisations are subject to the winds of organizational change. Planning is one of the most important and crucial functions of management. Planning becomes necessary due to the following reasons:

Reduction of Uncertainty

Future is always full of ups and downs. A business organisation has to function in these ups and downs. The management can operate successfully if it is able to predict the ups and downs of the business. Some of the uncertainties can be predicted by undertaking systematic planning. Some of the uncertainties can be predicted by undertaking systematic forecasting.

Better Utilization of Resources

An important advantage of planning is that it makes effective and proper utilization of enterprise resources. It identifies all such available resources and makes proper use of resources.

Reduces the Cost of Performance

Planning assists in reducing the cost of performance. It includes the selection of only one course of action amongst the different courses of actions that would give the best results at minimum cost. It removes and avoids crisis and chaos, eliminates false steps and protects against improper decision making.

Helps in Co-ordination

Good plans unify the interdepartmental activity and clearly lay down the area of freedom in the development of various sub-plans. Various departments work in accordance with the overall plans of the organisation. Thus, there is harmony in the organisation, and duplication of efforts and conflicts of jurisdiction are avoided.

Makes Control Effective

Planning and control are undividable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying or correcting deviations from plans. Planning helps control by furnishing standards of performance.

Encouragement to Innovation

Planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers.

Increase in Competitive Strength

Effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashions of people and technological changes etc.

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Organizing - It is a function in which a combination of human efforts, physical and financial resources takes place. All the three resources are important to get results.

According to Chester Barnard, -"Organizing is a function by which the concern is able to define the role positions, the jobs related and the co- ordination between authority and responsibility. Hence, a manager always has to organize in order to get results.

These steps are followed while organizing -

Identification of activities -The activities which have to be performed in a concern have to be identified first. For example, preparation of accounts, making sales, record keeping, quality control, inventory control, etc. All these activities have to be grouped and classified into different places.

Departmentally organizing the activities -The management tries to combine and divide the objectives into different departments equally. This makes the business run smoothly and efficiently. Which will lead to success in the management

Classifying the authority - This helps in giving ranks to the management departments and helps to place positions in the business. This is called hierarchy. The top level management makes the policies; the middle level management keeps an eye on all the other departments and lower level management into supervision of foremen. The clarification of authority helps in bringing efficiency in the running of a business.

Co-ordination between authority and responsibility - Relationships are established among various groups to enable smooth interaction toward the achievement of the organizational goal. Each individual is made aware of his authority and knows whom they have to take orders from and to whom they are accountable and to whom they have to report. A clear organizational structure is drawn and all the employees are made aware of it. This sets up a clear mind set for the employee and can progress fast in their objectives

Reference given below

Anon., 2008 - 2012. managementstudyguide. [Online]

Available at:

[Accessed 15/11/2012 november 2012].



According to Keith Davis, -"Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals."

2008 - 2012. managementstudyguide. [Online]

Available at:

[Accessed :20/11/2012 november 2012].

Function of leadership

To develop team work: The first basic function of the leader is to develop his work-group as a team. The responsibility of a leader is to create a friendly work-environment by keeping a close view of his subordinates competence, needs and potential abilities.

To act as a representative of the work-group: The second function of leader is to act as a representative of the work group. The leader of a work-group is to expect to act as a link between the group and top management. The leader is expected to communicate the problems and grievances of his subordinates to top management in desired circumstances.

To act as a counsellor of the people at work: The third function of leader is to act as a counsellor of the people at work. The leader is expected to guide and advise the concerned subordinate when he is facing problems in connection with their performance at the work. The concerned problem can be technical or emotional in nature.

Time management: The fourth important function of leader is time management. The leader function is to check the timeliness completion at different stages of work and also ensuring quality and efficiency of work performed by the group.

Proper use of power: The fifth most important function of leader is the proper use of power. The leader should be intelligible and observant enough to exercise his power in relation to his subordinates in different ways as per the needs of the situation. The leader can use powers like reward power, coercive power, or expert power, formal or informal power to stimulate positive response from his subordinates.

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According to Brech- "Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs."

Function of controlling

Controlling is an end function- A function which comes once the performances are made in conformities with plans.

Controlling is a pervasive function- which means it is performed by managers at all levels and in all type of concerns.

Controlling is forward looking- because effective control is not possible without past being controlled. Controlling always looks to future so that follow-up can be made whenever required.

Controlling is a dynamic process- since controlling requires taking reviewable methods; changes have to be made wherever possible.

Controlling is related to planning- Planning and Controlling are two inseparable functions of management. Without planning, controlling is a meaningless exercise and without controlling, planning is useless. Planning presupposes controlling and controlling succeeds planning.

2008 - 2012. managementstudyguide. [Online]

Available at:

[Accessed :21/11/2012 november 2012].