Internal Limitations

1. Planning leads to rigidity.

Plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. Plans need flexibility.

2. Planning may not work in a dynamic environment.

The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organization has to constantly adapt itself to changes.

3. Planning reduces creativity.

Middle level management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. Thus, much of the initiative or creativity inherent in them gets lost or reduced.

4. Planning involves huge costs.

These costs may be in terms of time and money, for example, checking accuracy of facts may involve lot of time. Detailed plans require scientific calculations to ascertain facts and figures. There are a number of incidental costs as well, like expenses on boardroom meetings, etc.

5. Planning is a time-consuming process.

Plans drawn up take so much of time that there is not much time left for their implementation.

6. Planning does not guarantee success.

The effectiveness of plans depends upon the implementation of plans. Every plan is not a solution to the problem. Plans can fail under uncertain circumstances in future.

External Limitations

Plans fail sometimes due to external factors beyond the control of the management:

1. Political Climate:

Changes in the policies of the government, ideology of the ruling party etc.

2. Labour Union:

Labour unions can be a big reason for the failure of plan by using strikes, lockouts and agitations.

3. Technological changes:

The use of latest machinery by the competitor can be a big challenge and fail the plan.

4. Policies of competitors:

Policies of competitors relating to sale of goods, advertising, recruitment of employees etc.can also pose a big problem in the implementation of plans successfully.

5. Natural Calamities:

Natural calamities like earthquake, lightening, heavy rainfall, famines can also be big hurdles in the success of plans.

6. Changes in demand and prices:

Changes in demand due to change in tastes and fashion of customers, prices of raw materials etc. fall under this case.

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