Question

Explain the following limitations of planning :

(i) Planning leads to rigidity

(ii) Planning may not work in a dynamic environment

(iii) Planning involves huge costs

Hint:

Planning fixes action in advance so it is rigid, it is based on assumptions that fail in changing conditions, and it needs money and time for data and experts.

Answer 1

Step 1: Understanding the question:
We must explain three limitations of planning: rigidity, failure in a dynamic environment and huge costs.
Each limitation will be explained in two points: what it means and how it hurts the business.

Step 2: Limitation 1 - planning leads to rigidity (meaning):
Planning decides the course of action in advance, so it creates a fixed framework.
Managers are expected to follow it even when the situation calls for a change.

Step 3: Limitation 1 - its harm:
The firm cannot use new chances quickly because the plan does not permit changes.
Managers fear to depart from the approved plan, and the organisation loses its flexibility.
For example, a firm tied to a yearly production plan cannot raise output when the demand suddenly jumps.

Step 4: Limitation 2 - dynamic environment (meaning):
Plans are made on assumptions about the future conditions of the market.
The business environment is always changing in tastes, technology, law and competition.

Step 5: Limitation 2 - its harm:
When the real conditions differ from the assumptions, the plan becomes unsuitable.
The firm must either revise it at a cost or suffer a loss.
For example, a sudden change in import rules can upset the plan of a trader who depends on imported goods.

Step 6: Limitation 3 - planning involves huge costs (meaning):
Planning needs data collection, analysis, forecasting and expert advice.
Time of the managers is also used up in meetings and reports.

Step 7: Limitation 3 - its harm:
The expense may be more than the benefit that the plan gives.
Small firms with limited funds find it hard to bear such costs.
For example, a market survey for a new product can cost lakhs of rupees.

Final Answer:
Planning makes work rigid, may fail when the environment changes quickly, and is costly in terms of money and time.