what are different types of difficulties in business?

planning as a management function is essential to every manager and every organization but there are some practical difficulties/barriers to effective planning, these problems are called business difficulties.

types of difficulties in business planning :

1. Difficulty of accurate premising: Planning activity is undertaken under certain assumptions of future events which are determined by a large number of factors in the environment. Thus, a limiting factor in planning is the difficulty of formulating accurate premises. Since the future cannot be known with accuracy, premising is subject to a margin of error. Though this margin of error can be minimized, making forecast of future events, perfection cannot be expected.
2. Problems of rapid change: Another problem in effective planning is the rapid change that takes place in the environment. In a complex and rapidly changing environment, complications that make planning extremely difficult often magnify the succession of new problems. The problem of change is more complex in long-range planning than in short-range planning. In rapidly changing conditions, planning activities taken in one period may not be relevant for another period because the conditions in the two periods are quite different.
3. Internal inflexibilities:  Managers while going through the planning process have to work in a set of given variables. These variables often provide less flexibility in planning which is needed to cope with the changes in future events. Such inflexibilities may be either internal to the organization or may lie outside. The major inflexibilities are -​​​​​​

• psychological inflexibility: Psychological inflexibility is in the form of resistance to change. Managers and employees in the organization may develop patterns of thought and behavior that are hard to change. For them, planning tends to accelerate change and unrest. Thus, this approach works against planning because planning often depends on the unwillingness of people to accept change.
• Policy and procedural inflexibility: Another internal inflexibility emerges because of organizational policies and procedures. Once these are established, they are difficult to change. Though these policies, procedures, and rules are meant to facilitate managerial action by providing guidelines, they often tend to be too exacting and numerous that they leave very little scope for managerial initiative and flexibility. Since managers have to plan for the future which is not static but changing, they often find themselves in great constraints.
• Capital investment: In most cases, once funds are invested in fixed assets, the ability to switch future course of action becomes rather limited, and investment itself becomes a planning premise. During the entire life of the fixed assets, this inflexibility continues unless the organization can reasonably liquidate its investment or change its course of action, or it can afford to write off the investment.

 

4. External inflexibilities: Besides internal inflexibilities, managers are confronted with many external inflexibilities and they do not have control over these. Three environmental factors that generate inflexibilities for organizational planning are -

• Political climate: Every organization, to a greater or lesser extent is faced with the inflexibility of the political climate existing at any given time. Attitudes of government towards business, taxation policy. regulation of business, etc., generate constraints on the organizational planning process. Government, being the major supplier of certain raw materials, finances through financial institutions may affect the business organizations considerably.
• Trade unions: The existence of trade unions, particularly those organized at the national level, tends to restrict freedom of planning. Apart from wages and other associated benefits, they affect the planning process by putting limitations on the work that can be undertaken by the organization.
• Technological changes: The rate and nature of technology changes also present very definite limitations upon planning. An organization is engaged in its process with a given technology. there is a change in technology, it has to face nurnerous problems resulting into higher cost of production and less competitive competence in the market. Higher the rate of technology changes, more would be the problem of long-range planning.

5.Time and cost factors: Planning process is quite a costly and time consuming. The various steps of planning may go as long as possible because there is no limit of precision in planning tools. Managers can spend unlimited amounts of time in forecasting, evaluating alternatives, developing supporting plans, or attending other aspects of planning, if they do not have limitations of time and money. Planning process suffers because of time and cost factors. Time is a limiting factor for every manager in the organization.

       Besides time factor, planning is also limited because of cost factor. Planning cost increases if planning becomes more elaborate and formalised. Planning cannot be undertaken beyond a certain level. It should be taken at a level where it justifies its cost. Apart from direct cost involved in manager's time, financial compensation for those who are involved in planning, paper work, etc., also makes planning costly to the organization indirectly.

 

Do you dream of turning your thoughts and words into income ? join us now and become blogger now.

PUBLICBLOGS.IN

5. Failure of people in planning: Apart from the above factors, sometimes, people involved in planning process fail to formulate correct plans. Some of the major reasons for failure are - lack of commitment to planning, failure to formulate sound strategies, lack of clear and meaningful objectives, tendency to overlook planning premises, failure to see the scope of plan, failure to see planning as a rational approach, excessive reliance on the past experience, lack of top management support, lack of delegation of authority, lack of adequate control techniques, etc. These personnel factors are responsible for either inadequate planning or wrong planning in the organization.