Internal Limitations

There are several limitations of planning. Some of them are inherit in the process of planning like rigidity and other arise due to shortcoming of the techniques of planning and in the planners themselves.

1. Rigidity

   1. Planning has tendency to make administration inflexible.
   2. Planning implies prior determination of policies, procedures and programmes and a strict adherence to them in all circumstances.
   3. There is no scope for individual freedom.
   4. The development of employees is highly doubted because of which management might have faced lot of difficulties in future.
   5. Planning therefore introduces inelasticity and discourages individual initiative and experimentation.

2. Misdirected Planning

   1. Planning may be used to serve individual interests rather than the interest of the enterprise.
   2. Attempts can be made to influence setting of objectives, formulation of plans and programmes to suit ones own requirement rather than that of whole organization.
   3. Machinery of planning can never be freed of bias. Every planner has his own likes, dislikes, preferences, attitudes and interests which is reflected in planning.

3. Time consuming

   1. Planning is a time consuming process because it involves collection of information, it’s analysis and interpretation thereof. This entire process takes a lot of time specially where there are a number of alternatives available.
   2. Therefore planning is not suitable during emergency or crisis when quick decisions are required.

4. Probability in planning

   1. Planning is based on forecasts which are mere estimates about future.
   2. These estimates may prove to be inexact due to the uncertainty of future.
   3. Any change in the anticipated situation may render plans ineffective.
   4. Plans do not always reflect real situations inspite of the sophisticated techniques of forecasting because future is unpredictable.
   5. Thus, excessive reliance on plans may prove to be fatal.

5. False sense of security

   1. Elaborate planning may create a false sense of security to the effect that everything is taken for granted.
   2. Managers assume that as long as they work as per plans, it is satisfactory.
   3. Therefore they fail to take up timely actions and an opportunity is lost.
   4. Employees are more concerned about fulfillment of plan performance rather than any kind of change.

6. Expensive

   1. Collection, analysis and evaluation of different information, facts and alternatives involves a lot of expense in terms of time, effort and money
   2. According to Koontz and O’Donell, ’ Expenses on planning should never exceed the estimated benefits from planning. ’

External Limitations of Planning

1. Political Climate- Change of government from Congress to some other political party, etc.
2. Labour Union- Strikes, lockouts, agitations.
3. Technological changes- Modern techniques and equipments, computerization.
4. Policies of competitors- Eg. Policies of Coca Cola and Pepsi.
5. Natural Calamities- Earthquakes and floods.
6. Changes in demand and prices- Change in fashion, change in tastes, change in income level, demand falls, price falls, etc.